Negotiations about the future of gas regulation have taken longer than originally expected, Tynwald has been told.

Policy and Reform Minister Chris Thomas gave a written update on the talks between the government with Manx Gas over a new deal.

He said that Manx Gas believes that currently it is not possible to agree the terms and conditions of a new voluntary regulatory agreement.

But he says the utility company is committed to do this once there is a better understanding of the long-term effect on the business once the coronavirus pandemic is over.

Manx Gas scrapped its much-criticised banded standing charges at the beginning of the year and replaced them with a flat rate.

But under a regulator agreement signed by the government in 2015, the company was guaranteed a 9.99% return on capital employed.

A Chief Minister’s committee report published last year concluded that figure was too high - and a new voluntary regulatory agreement should be ’urgently negotiated’ to include a significantly lower rate of return.

Mr Thomas said that Manx Gas believes it has made progress in delivering the review committee’s recommendations including reintroducing the flat rate standing charge.

But he said: ’Although Manx Gas appears to have accepted that its weighted average cost of capital for retail customers would be lower in any new regulatory agreement, the lower rate of return on capital employed in any new regulatory agreement has not yet been agreed.

’Negotiations on this matter continue.’

Mr Thomas said that Manx Gas has requested, given the risks arising from the Covid pandemic and climate change - certain pre-conditions are agreed before a new voluntary deal begins.

These would cover stable sales volumes, customer numbers and the company’s inclusion in key matters over the development of space heating and energy services, as well as agreement on gas’s role as a transition fuel in the climate change action plan.

Mr Thomas said he now expected to advise Tynwald no later than June this year whether the negotiations for a new regulatory deal have been successful, or whether they need to be put on hold, or government give notice to end the 2015 agreement.