CHAIRMAN of the Office of Fair Trading Bill Henderson MHK said the forthcoming increases in Manx Gas prices "illustrate the growing need for effective regulation of our energy suppliers".
Mr Henderson said: "It is very disappointing that at a time when people are suffering wage freezes and inflation is high the company feels it must increase its prices.
"I must emphasise that the office is not condoning or supporting Manx Gas price increases.
"It is our job on behalf of the public to try and obtain explanations for any price increases and as far as possible ensure that any price hikes can be reasonably justified.
"We can't stop anyone from increasing prices but we try to ensure that the public are provided with all the information and the reasons behind it.
"These increases illustrate the growing need for effective regulation of our energy suppliers.
"Government is currently considering energy regulation legislation which is something the office supports and has highlighted to government."
From Friday there will be a 5.5 per cent increase in all natural gas tariffs and a 7.6 per cent increase for Liquid Petroleum Gas (LPG) customers on all metered, cylinder and metered tariffs.
The company said it has been forced to increase prices in the face of global market pressures on energy prices.
The OFT said following a request for additional information Manx Gas supplied financial data including its management accounts and written explanations in support of its decision to increase its tariffs.
Examination of that information makes it clear that the company believes an increase of 3.5 per cent in the standing charge levied is necessary to recover increased capital expenses relating to the maintenance of the gas infrastructure and the company's rising staff costs.
With regard to the 5.5 per cent increase in the natural gas tariff and the 7.6 per cent increase in the price charged for Liquid Petroleum Gas (LPG) and Town Gas the company state that this is necessary to offset increases in the wholesale price of gas over the last 12 months, and the forecasted continued upward trend in prices, while maintaining its level of profitability and the rate of financial return expected by its shareholders.
Analysis of the figures provided by Manx Gas to the office does confirm that the wholesale gas purchase prices incurred by the company have increased by more than 20 per cent in the last 12 months.
With regard to the projected upward trend in wholesale prices, the office has examined the latest forecasts published by the UK government regulator Ofgem who anticipate there will be a 13 per cent rise in the wholesale price paid by gas distribution companies by Spring 2011.
Based on a typical household consumption of 20,000 kilowatt hours per year the increase in gas prices will mean that a natural gas consumer will pay an additional £61.40 per year and LPG/Town Gas consumers will pay an additional £115.60 per year.
