Manx Utilities Authority chairman Dr Alex Allinson says the MUA does not give Manx Gas a discount.

There was confusion after an answer in the House of Keys caused some to believe that the MUA was selling on gas it had bought to Manx Gas, but at a lower price than the original purchase.

That was not the case, said Dr Allinson.

’In essence, the MUA sells on about a quarter of the total amount of gas we purchase to Manx Gas who then supplies consumers with it,’ he told the Isle of Man Examiner.

’We sell this gas on to Manx Gas without any handling charge and certainly without any discount.’

There was a formula that took into account the level of usage, he said, but that the cost remained approximately the same. The OFT last week defended its regulatory regime, in the face of above-inflation increases to gas consumers this year.

In his original answer to the written Keys question about how much it paid for gas, Dr Allinson included a table that showed that the price paid by Manx Utilities for gas was 2p per unit in 2015/16, but the price paid by Manx Gas was 1.8p per unit.

The answer attempted to clarify why there was a variation.

’Manx Utilities buy gas separately for the power station and Manx Gas, with purchases for Manx Gas based solely on Manx Gas’s instructions,’ it stated.

’Sales to Manx Gas are on a "cost pass-through" basis and therefore Manx Gas is charged exactly what Manx Utilities have paid for natural gas purchased on their behalf.

’The reason for any differences between the total price paid by Manx Utilities and the price paid by Manx Gas is wholly a function of: different forward purchasing strategies pursued separately by Manx Utilities and Manx Gas, and different offtake profiles (i.e. required quantities of gas at specific times) for each of the respective portfolios.’

At last week’s sitting, Dr Allinson was also asked by Rob Callister (Onchan) about the ownership of gas supply infrastructure.

He said: ’The natural gas extension infrastructure was created to supply natural gas to Manx Gas’ distribution networks in Ramsey, Peel and the south, and is wholly owned by Manx Utilities.

’The project was completed under budget in 2012 and funded by loans to the former MEA, approved by Tynwald, at a final completed cost of £20.06 million.

’Manx Gas is repaying these costs, less £1.5 million, as agreed by Treasury, in respect of incremental pipeline costs incurred to improve system security and resilience of the pipeline as a national asset. These repayments have an interest rate of 6 per cent fixed over the next 40 years.’