The outgoing chairman of Manx Utilities says he is aware of the problems people will face when their electricity bills rocket.

Tim Johnstone was speaking after announcing that electricity tariffs would rise by more than 50 per cent as a cap on prices is lifted.

The move comes despite wholesale gas prices now falling from their record high.

Manx Utilities on Monday announced a two-stage increase of prices.

The standard domestic rate tariff will increase from 22 to 28p per unit on April 1 with a further rise on July 1, taking prices to 34p per unit. That means the cost of electricity will be 54.5% higher on July 1 than it is now.

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. The inflation rate is currently 8%.

The increases – including the higher standing charge and VAT – will mean that a domestic customer using an average 2,900 kWh per year will see their annual bill increase from £751 to £942 from April, and then to £1,133 from July.

Chairman of Manx Utilities Tim Johnston MHK said: ‘We are very conscious of the impact this will have on our customers and the decision is not one the board has made lightly.

‘Specialist consultants were brought in to review the business and tariff structure to ensure any increase was appropriate.

‘The aim has been to minimise the cost to our customers whilst ensuring Manx Utilities can continue to meet its financial obligations.

‘Manx Utilities is not immune from the impacts of the global energy crisis.

‘The board has been working hard to shield customers from the cost increases we have been facing over the last two years but we have reached a point where we cannot continue to do so.

‘However, we will continue to review wholesale energy costs to ensure our tariffs remain as low as practicable.

‘As always, I would encourage customers who are worried about electricity bills to please get in touch with Manx Utilities who are best placed to help with advice and support.’

Mr Johnstone is to be replaced as chairman of Manx Utilities by Tim Crookall at the next meeting of Tynwald later this month.

Manx Utilities says the price of electricity will still be lower than in the UK.

The UK energy price guarantee level is currently 34p per kWh and due to increase to 40p per kWh from April 1.

Wholesale natural gas prices drive electricity prices in Europe, the UK and the Isle of Man and these have increased by as much as 500% in the past 18 months.

Electricity tariffs were capped at 22p over the winter.

Government also provided a £26m repayable loan to Manx Utilities to cushion the public from higher prices.

In the end the authority did not have to call upon the loan and was able to absorb the tariff freeze by using reserves. Forward-purchasing of gas reduced bills by a total of £40m and cost control measures were imposed.

But now Manx Utilities says it is no longer sustainable for it to absorb price rises, with a deficit of around £50m anticipated for the current financial year.

Although the wholesale cost of gas has come down from its record high, in the medium-term prices are expected to remain around three times what they were before the energy crisis began in 2021.

Isle of Man Energy’s recent 16% cut in tariffs will still mean its unit rate is 83% higher than it was in summer 2021.

Manx Utilities says Tynwald’s loan approval does not extend beyond March and anyway, using the £26m loan now to reduce tariffs would only lead to higher tariffs and costs overall in the longer term.

A few weeks ago, Chief Minister Alfred Cannan warned that electricity prices would rise.

Customers who are concerned about their ability to pay for their electricity can contact Manx Utilities’ customer care team on [email protected] or by calling 687675 or using the Freephone telephone number 0808 1624 115.