The extent of Manx Utilities’ financial woes is laid bare in its latest annual report.

Manx Utilities has reported an operational deficit of £30 million for the financial year of 2021-22.

The authority is predicted to run up a deficit ‘in excess of £50m’ for the 2022-23 financial year, according to the report.

It says: ‘The significant and unprecedented increases in the cost of wholesale natural gas in Europe, which has also been mirrored by similar increases in the cost of wholesale electricity, have resulted in the costs of supplying electricity significantly exceeding the income created from it.’

Energy costs rose by £44 million, but forward gas purchasing reduced this figure to £20 million, allowing the authority to report an overall £18m surplus for the year.

A spokesperson for Manx Utilities said: ‘However, an accounting surplus of £18 million is reported for the year as a result of significant unrealised profit on the valuation of forward gas purchase contracts (£40 million) that were revalued under accounting rules.

‘The forward purchasing contracts required to be re-valued to market valuations at the year-end date under UK accounting rules that Manx Utilities is required to follow.’

As reported in the budget for 2023, the standard domestic rate tariff increased from 22 to 28p per unit on April 1 with a further rise on July 1, taking prices to 34p per unit.

inflation

In addition, electricity standing charges, as well as the water and sewerage charges, are going up by 9.8% in line with the rate of inflation as it was in September.

As reported in the Manx Independent on February 16, Manx Utilities has exhausted all other money-saving options.

The electricity and water supplier allowed its financial reserves to reduce to stop customer prices from jumping during the global spike in prices.

Then an MUA spokesperson said: ‘Without a significant tariff increase we would expect what Manx Utilities owes (eg. debts) would exceed what it has (eg. cash, the value of assets) within 12 months’ time.’

The spokesperson said: ‘The current year-end (to March 31, 2023) is projecting a deficit of approximately £50 million, whilst tariff increases in 2023 recently announced, are the minimum increase necessary to ensure Manx Utilities can continue to meet its costs as they fall due.’

The reserve levels of Manx Utilities sit at £109,842,000.

The spokesperson said: ‘Our cash balances have reduced and are expected to reduce further.’

The financial statements show fuel and energy costs to meet electricity demand increasing from £12m to £55m, with corresponding sales revenue reducing by £1 million.

Electricity demand has continued to decline, with tariffs not being increased during 2021-22, therefore leading to an overall reduction in income of £2m.