Manx Utilities say there’s no certainty that there will be reductions to electricity bills arising from the proposed Mooir Vannin offshore windfarm.
And it says Ørsted’s suggestion that customers could get discounted electricity prices through a power purchase agreement should not form part of the planning considerations.
The comments from Manx Utilities came in a formal response to questions from the independent panel which is examining the windfarm application.
Treasury has also submitted a written response in which it describes Ørsted’s claim that Mooir Vannin will generate £2bn in combined taxation and rent during its 35-year lifespan as a ‘reasonable assumption’.
During the public examination there has been discussion about two ways in which the island could be supplied power generated from the proposed windfarm.
There could be direct island link, with power cabled ashore at Groudle Bay. Alternatively, power supplied to the UK Grid from Mooir Vannin would be re-exported to the Isle of Man via the UK interconnector under a power purchase agreement (PPA).
Ørsted has made media statements claiming that the PPA approach could lead to electricity bills being cut by up to 15% for residents and businesses across the island.
But there has been confusion over whether the power purchase agreement option forms part of the application and is therefore a matter for the examination.
Manx Utilities said its view is that the existence of any future PPA arrangement ‘should not be afforded material weight within the planning balance’.
And it added: ‘Similarly, statements regarding future electricity prices or reductions in customer electricity bills are inherently dependent upon a range of factors including future market conditions, wholesale energy prices, regulatory arrangements, contractual structures and government policy decisions.
‘It is reasonable to assume that any reduction in Manx Utilities’ electricity supply costs would be passed through to its customers due to it being a community owned utility provider, existing for the benefit of its customers.
‘We do not believe that these matters are determined through the examination process and therefore cannot be treated as certain outcomes arising from the proposed development.’
In its response, the Treasury noted that the development would only proceed in the event that it was expected to be commercially viable.
It said: ‘Under the range of modelled scenarios that would seem to be commercially viable, a scheme that generates very material exchequer value in the order of £2bn+ (nominal) would seem a reasonable assumption.’
Treasury officers have created a shadow financial model in order to calculate anticipated government income from Mooir Vannin.
It modelling indicated nominal income ranging between £0.9m and £3.2bn and the real-term income of between £0.6bn and £1.9bn.
Treasury said real government income of £1.4bn would be equivalent to an average of £40m per year in today’s prices.
Were this to be the direct tax take, it would be approximately the fourth-largest sector contribution, behind the major finance sectors of corporate service providers, banking, and insurance, and similar to that of around 2,000 workers earning the median wage.
Treasury officers said they did not believe any tourism loss would be substantial enough to have a material negative impact on the overall economic case.