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Beecroft calls for closure of MEA showrooms
RIGHT PRIORITIES?: Kate Beecroft MHK
THE call will be made in Tynwald next week to close the MEA’s loss-making electricity showrooms.
According to the Manx Electricity Authority’s latest annual report, the losses made by retail operations rose from £414,000 in 2009/10 to £592,000 in 2010/11.
Liberal Vannin MHK for Douglas South Kate Beecroft has tabled a Tynwald motion calling for the loss-making retail operation of the MEA to be closed ‘as soon as practical’ and requesting that the Council of Ministers report on progress towards that aim no later than the March 2012 sitting of the court.
She believes government should prioritise services in these difficult financial times.
The MEA has five showrooms – in Douglas, Port Erin, Peel, Castletown and Ramsey – employing about 25 people.
Former chief minister Tony Brown, who retired after the general election remained, implacably opposed to the closure of the showrooms, insisting they provided an important community service in the island’s towns.
He disputed the size of the losses and asked the authority to examine its accounting practices to ensure only the ‘real costs’ associated with the retail operation were identified.
But new Chief Minister Allan Bell has said that the scope of government services must be reviewed. And this could mean that the future of the MEA showrooms is no longer assured.
The MEA’s latest annual report, laid before Tynwald in November, states: ‘Retail turnover reduced by 17.5 per cent, reflecting the difficult trading conditions and reduced margins in this sector. Although we were able to reduce operating costs significantly, the overall loss has increased from £0.4m in 2009/10 to £0.6m in 2010/11.’ Liberal Vannin describes the losses made by the MEA’s retail operations as ‘unacceptable’ and claims they contravene the Gas and Electricity Act 2003.
The party states that the political requirement to retain the MEA retail operations should be reversed and that the government should actively pursue the sale and/or disposal at the earliest opportunity.
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Comments
There are 40 comments to this article
Page 1 of 3
Robert2010
Wednesday, January 11, 2012 at 02:05 PMOn a related theme, in this new age of so called austerity would our newly elected goverment inform us as to why it is necessary to pay well over the odds in generating our own electricity when we could competively tender for the supply via the cable, we must be paying well over the odds to buy the small quanties of gas consumed, we could then focus our efforts on network and distribution support and ensuring cost effective standby capacity for emergencies. This would also solve the current problem of denying consumer choice in their current inability to have freedom of choice in deciding who their electric supplier should be. A win win situation whats stopping us?
666advocate
Tuesday, January 10, 2012 at 09:02 PMMaybe, but the Devil is in the detail Phil. It'll all come out in the debate I guess.
Phil.T
Tuesday, January 10, 2012 at 05:55 PMDamien! Your information has accrued via the media over a number of years. Mine hasn't! Forget TB's posturing on the subject. It was pure theatre.
666advocate
Tuesday, January 10, 2012 at 03:32 PMHi Phil, HNY! My question was how can you justify saying that the MEA Board has subdued debate of this issue (when they were told by TB to keep all shops open, six years ago)? But, having looked in more detail at your inside knowledge (has to be inside or just assumed given the detail) i have lots more to ask, let's start with your assumption about cross charging or allocation of overheads. That was actually TB's wriggle out "the accounting's not right". However, that was 100% refuted by the MEA in a public response to TB (probably "bravest" move of Quentin Gill's political life). The MEA actually are on record saying that the loss is a pure trading loss before any cross charge. that being the case, your entire case folds, doesn't it? Fact remains, the bill payer picks up the tab.
Phil.T
Tuesday, January 10, 2012 at 01:57 PMSorry 'Damien', couldn't find your question that you refer to. Now have. In answer, your assumption isn't correct. Look, I'll make it simple. The services for the core business provided by the shops (of which I agree there are too many and have been for the last 20 years) have a large cost factor in their provision. With a reasonable approach to cross charges evoked by the core business and with a reduction in the number of shops the sale of appliances and repair services through a main outlet would have been a straight forward income against providing core business services. If those services, which must be provided, were to be franchised out that would be sheer cost with nothing to set against it. In other words, pure overhead for the core business services that are provided. The problem for MEA retail is simply too many unnecessary outlets. Closing all those outlets doesn't remove the costs of providing core business services. It simply moves those costs back into the core business through franchise and out-sourcing requirements. Over to you!
switchman
Monday, January 9, 2012 at 11:06 PMThis is a business that has failed year after year. ANY other business in the retail world with the figures that the MEA are producing would have already been shut down. End of story !!
666advocate
Monday, January 9, 2012 at 10:09 PMThe retail loss is borne by the electricity consumer through their bills, pure and simple. Phil T, you never answered my question!?
posty
Monday, January 9, 2012 at 10:05 PMWilliamW 23 Would like to know why you include IOM Post in the list to be reviewed? A successful, completely unsubsidised business which has just announced profits of 2.5 million, 1.25 million of which goes straight into the Governments coffers.
Phil.T
Monday, January 9, 2012 at 03:48 PMDP....no, I'm not saying that.........you are!
DP
Monday, January 9, 2012 at 03:46 PMSo, Phil you are actually saying that the public ARE paying for the losses but that this is through our electricity charges which reflect the operating results of the MEA - which include this ongoing annual loss. I had assumed that was the case - you can't simply ignore losses in the accounts and in the pricing structure. As far as I know just about every family on the Island purchases electricity from the MEA so the public are indeed paying for the losses in the shops. I did question whether one option might be to consolidate retailing into one superstore - I wondered about the warehouse at Ronaldsway. This may not be the ideal location but something along these lines, that brings together warehousing and retailing in one place, may be a realistic option. What concerns me is that MEA management seem to have done little in the past few years to radically review retailing in view of the losses. As a state-owned business this makes it vulnerable to questions from politicians in a way that private sector companies are not.
Worthy of Comment
Monday, January 9, 2012 at 10:18 AMIf the MEA is still to retail it would seem logical is to have one superstore. The only other reason to attend the smaller ones is to pay the bill and I am sure the Post Ofices would love that business for those that cannot pay online, over the phone or recharge key fobs..
Phil.T
Monday, January 9, 2012 at 10:16 AMDP....the answer to your question is contained within my previous comment. The loss shown is the result of internal transactions and as such is reflected in the overall profit and loss figure of the MEA as a whole in just the same way as a profit figure would be. Retailing figures are simply a breakdown of inter-departmental activities just the same as meter reading or network maintenance. Whatever is to happen to the shops needs to happen swiftly and sympathetically but with foresight and commercial logic. Further attempts to be all things to all people with regards to island population geography are both pointless and costly. Consolidation with the sale of property assets are essential and should have taken place many years ago. You cannot provide 5 trading outlets indefinitely in a market place with a fixed population and changing trading conditions. There is a requirement for at least one major public service outlet for an organisation such as the MEA and if its operating costs can be more than covered with appliance sales and repairs then that organisation would be the better for it. The MEA has a right to make its own operating decisions within the statutes that exist for it without undue and draconian political interference. To some extent it is that political interference over the years that has brought about the current trading demise of the retailing department. Total closure of all shops would be a mistake both in the short and longer terms for the MEA and the population as a whole. This is the Isle of Man.....not the UK, and that is a more important fact than is currently being considered.
EORH
Monday, January 9, 2012 at 09:40 AMWhy did the MEA retail move from it's own, owned building in Ridgeway Street,and rent expensive premises in the Strand Shopping Centre,move it to their own premises out by B&Q,and close the shops in the other places.
Worthy of Comment
Sunday, January 8, 2012 at 10:24 PMIt would seem that whatever TB 'decided' in the past is now open to a reversal by AB so we will have to wait and see with regards to the MEA's future. Perhaps it is AB that is now cleverly directing Ms Beecroft to test the water again.
666advocate
Sunday, January 8, 2012 at 01:24 PMOut of town store at Film Studio when its just been refused PP for light industrial? Why bother repeating such rubbish?
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