Tynwald-approved changes to tariffs for larger commercial customers have been put on hold for three months following a high court challenge by Manx Gas.

The private utility firm launched legal proceedings in the high court this week seeking an interim injunction against the measure.

Regulations had been brought forward by the Communications and Utilities Regulatory Authority in a last minute supplementary order paper only last week and were approved unanimously without debate in less than five minutes.

They were due to come into operation on August 1.

But at a hearing on Wednesday, Deemster Andrew Corlett heard agreement had been reached between the parties to defer the regulations for three months, pending further talks to resolve the dispute.

He adjourned the case to a date to be fixed.

In Tynwald last week, the court’s last sitting of this parliament, CURA member Ann Corlett MHK described the changes to the gas tariff fixing regulations as a measure to ‘protect customers against monopoly power’.

She explained there was evidence that many larger commercial customers are paying tariffs at or above those paid by regulated domestic customers - and that Manx Gas’ returns had increased significantly without compelling explanation.

The changes will see the average tariff for consumers using an average more than 500,000 units a year, including schools and sheltered housing, set at 1.5p per unit below the all-island central heating rate.

This will affect around 30 of the island’s largest commercial customers.

Domestic customers’ bill will not increase as a result, Ms Corlett insisted.

But the high court heard claims that the regulation had been ‘rushed through’.

Advocate Jonathan Wild, representing Manx Gas Ltd (trading at Isle of Man Energy), argued that CURA had acted ultra-vires - ie beyond its powers.

He explained that Manx Gas had a large number of bespoke contracts negotiated quite a long time ago.

The court heard that these agreements are still in place and could only be altered by the Department of Infrastructure and not CURA.

Advocated Oliver Helfrich, on behalf of CURA, said that as the regulations had been approved by Tynwald, Manx Gas would have an ‘extremely high hurdle’ to persuade the court to agree to an interim injunction.

Manx Gas has also raised concerns about the financial impact of the approved changes and questioned some of the analysis that CURA had carried out.

CURA says tariffs for large commercial customers were inconsistent with competitive market behaviour.

The approved regulations introduce a new category of ’regulated commercial customer’ consuming 500,000 units or more of gas per year.

They also amend the definition of ‘special agreement customers to mean those large commercial customers consuming 10,000,000 or more units who are subject to individually negotiated contracts.

These will remain outside the scope of the tariff-setting regulations.

The biggest beneficiary of the changes will be the government and other providers of public services.

CURA insists there will no impact on domestic customers as the regulator specifies the parameters within which tariffs are set, based on how much revenue Manx Gas is allowed to earn.