Manx Utilities has forward-purchased 20%of the natural gas that it expects to use this winter.

The anticipated usage is 15.7million therms of natural gas, with the authority forward purchasing 3.2 million therms.

These figures refer to purchases of natural gas for electricity generation for customers.

Forward purchasing, or hedging, is where the price and quantity of a commodity is agreed in advance, that will be delivered and paid for at a future date.

A spokesperson for the authority said: ‘Manx Utilities has not entered into forward contracts for the volumes of natural gas that it would ordinarily have done so for the period.

‘During the last 18 months wholesale energy markets have been highly volatile and prices have been very high.

‘The forward gas market has had reduced liquidity (at times it has not been possible to purchase forward contracts) and forward premiums over the average cost of ‘spot’ natural gas purchases have been very significant.

‘We continue to monitor energy prices on a daily basis and expect to be increasing our forward purchasing volumes when prices allow.’

Over the past two years, forward purchasing has reduced costs for customers by £40 million.

Between September 1 and November 30, 2023, 3.625 million therms have been forward purchased at the price of 104 pence per therm.

Between December 2023 and February 29 2024, 1.375 million therms were forward purchased at a price of 76 pence per therm.

Whilst the current wholesale price (as of Friday June 9) for natural gas is 67.09 pence per therm, on December 1 last year, the wholesale price was 344.20 pence per therm.

Rob Callister, Onchan MHK and former chair of Manx Utilities, who asked a written question on the matter said: ‘It is good that we have managed to secure some forward-purchased gas for the winter at a reasonable price compared to the high energy costs domestic and business customers were facing last winter and the previous winter.

Yet he was concerned about the quantity of natural gas forward-purchased, and whether that would make island customers vulnerable to heightened wholesale prices.

A spokesperson for Manx Utilities said: ‘‘Manx Utilities continues to monitor energy prices on a continual basis and it is likely that further quantities of natural gas will be forward purchased based on wholesale market conditions.

‘Such further purchases will further reduce electricity customers’ exposure to increased wholesale spot prices.

‘The remaining volumes of natural gas required for local electricity generation will be purchased at the spot prices each day they are consumed.

‘Purchasing natural gas on the daily market as it is consumed allows customers to benefit from reductions in wholesale prices but equally exposes them to the risk that wholesale prices risk.

‘The forward purchasing strategy seeks to strike a balance between providing price certainty and price protection for customers whilst also avoiding customers being committed to avoidable high costs.’