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Energy Price Investigation gets underway 30 November 2005

    Following much public concern about the cost of energy over recent months, the Office of Fair Trading will launch its investigation into energy prices this week.

    The investigation will determine whether the prices being charged for petrol and diesel, electricity, gas, central heating oils and solid fuels are excessive and whether recent price movements are due to increases in wholesale prices.

    To assist with this extensive and complex task, the Office is pleased to announce that they will be working with Oxera (Oxford Economic Research Associates), an independent economic consultancy firm, who will provide expert support to the investigation. Oxera are highly experienced in carrying out this type of work having carried out similar investigations for various organisations and Governments throughout the British Isles and Europe.

    The OFT are now working closely with Oxera to produce a request for information which will be sent to the relevant suppliers of energy in the Island in the next few days. The data submitted will provide a baseline of information for consideration by the investigation team and this will lead to further requests for information and meetings with suppliers. The general public (including industry) will be formally invited to make comment at a later stage.

    The Chairman of the Office of Fair Trading, Quintin Gill MHK, said, "I am delighted that we have received support from the Council of Ministers and Treasury to conduct this major investigation into energy prices in the Island. This is the first investigation of its type to look at the prices being charged across the whole energy sector; the last time these powers were used we were only looking at the prices being charged for gas by one company. This time we are involving five major suppliers and many smaller suppliers of solid fuel and so the amount of work involved cannot be underestimated."

    He went on to explain, "We have all been concerned at the prices being charged for energy and this investigation provides a real opportunity for us to ascertain whether the prices being charged are excessive or merely reflect the actual cost of supply in a small and restricted marketplace. It is also important that we are able to calculate how wholesale price movements affect retail prices and it is hoped the investigation will provide us with a model to monitor future price movements to ensure they only reflect increases in wholesale prices."

    The first stage of the investigation is expected to last four months and will result in a report being made to the Council of Ministers which will be laid before Tynwald and be available to the public.

    NOTES

    The investigation is being carried out under Section 19 of the Fair Trading Act 1996 which enables the Office of Fair Trading to conduct an investigation into any price which is of major public concern with a view to providing the Council of Ministers with information.

    The last investigation into gas prices was carried out in 2000 and therefore preceded the introduction of natural gas.

    In 2001 the Fair Trading Act was amended to provide an additional stage of the investigation and where the subsequent report finds that particular prices are excessive and against the public interest the Council of Ministers now have the powers to make a Tynwald Order that can either fix prices or require them to be determined in a particular way.

    The team from Oxera will be lead by Dr Gareth Davies and Alan Horncastle - further details about the work carried out by Gareth, Alan and Oxera can be found at www.oxera.com

    30th November 2005

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