Belfast Telegraph

Wednesday 1 October 2014

Electricity costs could derail recovery of Northern Ireland economy

FIGURES REVEAL MARKET AT RISK OF BEING LEAST COMPETITIVE IN EUROPE

Companies in Northern Ireland are forking out 20% more than in the Republic

The recovery of the Northern Ireland economy could be derailed by sky-high electricity costs for business customers.

That's the message from industry body Manufacturing Northern Ireland (MNI), which is calling on the Utility Regulator and the enterprise minster to make electricity prices here more competitive.

The call follows the release of figures by the Utility Regulator, which show for the first six months of 2013, Northern Ireland's commercial and industrial users were paid the second highest price in Europe for their electricity.

Only Italy charges users more for electricity to the largest users and only by a fraction, as the gap between the Mediterranean country and Northern Ireland has narrowed to almost parity, according to the regulator's figures.

Comparative prices for European non-domestic electricity consumers have only been available for the last year and in that time prices have become less, not more competitive, according to CEO of Manufacturing NI, Stephen Kelly.

"We find that we are quickly moving to be the most expensive electricity market in Europe," he said. "This is damaging economic recovery, impacting on investment and job retention and creation."

The issue isn't one which has been ignored by government, but the lobby group wants to see action taken to address the problem.

"The Enterprise Trade and Investment Committee in Stormont have been investigating prices since last summer and we hope that their report and recommendations will address this unsustainable situation and send a strong signal that they do not expect the current upward trend on prices to continue." Electricity in Northern Ireland comes from a Single Electricity Market (SEM) in conjunction with the Republic of Ireland, yet prices for industrial and commercial customers remains consistently higher here, by some 20%, than across the border.

Comparisons with Great Britain follow a similar pattern, MNI said. There, domestic customers and small customers enjoy prices around the median for Europe.

It's been suggested that part of the reason Northern Ireland's commercial consumers pay such a high premium for electricity may be down to the large number of small and medium-sized enterprises here.

According to the regulator's report, 66% of all industrial and commercial electricity users in Northern Ireland are classified in the very small bracket, while 33% fall into the small bracket.

For the other brackets, from small/medium up to large and very large users, only Italy is more expensive.

That's an issue because it dents the Northern Ireland's ability to attract inward investment from overseas manufacturers and tempts indigenous manufacturers to base their energy-heavy activities elsewhere.

Where we get power to survive

The electricity industry in Northern Ireland was privatised in 1992-93.

Northern Ireland has three fossil-fuel-generating plants – at Ballylumford, Kilroot and Coolkeeragh – which sell electricity into the SEM pool along with other generators, including renewable energy. Mutual Energy Limited also supplies electricity to the pool via the Moyle interconnector.

As for the rest of the UK, there are separate licences for each component of the value chain, with some companies holding multiple licences. The regulator ensures that each licensed activity is ring-fenced from other activities in the same group of companies. All consumers have metered supply, but more sophisticated meters and tariffs are used for industrial consumers than for households. There are three transmission licences, a distribution licence and also a market operator licence.

The electricity industry operates a single wholesale market across the island of Ireland, known as the Single Electricity Market or SEM. This means that all electricity across the island is bought and sold through a single pool.

FACTFILE

Ranking of European electricity price charged to large users:

Italy

Northern Ireland

Germany

UK

Ireland

Denmark

Portugal

Austria

Greece

Spain

Netherlands

France

Belgium

Sweden

Finland

Luxembourg

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