Belfast Telegraph

Tuesday 21 October 2014

Electricity price increase leaves local firm reeling

Northern Ireland businesses battling to stay afloat in the recession have been shocked by a surprise hike in the cost of electricity.

Commercial customers from all electricity suppliers, including NIE, are understood to have been informed their power bills have gone up by as much as a third from October 1 as a result of increased costs to suppliers.

The price hike comes after Ulster Bank's PMI survey last week showed that Northern Ireland is the only region of the UK that has not returned to growth in key industries.

Darragh Cullen, managing director of KMC Engineering in Dungannon, received an email from supplier ESB saying his bill was increasing 39%.

He believes such hikes, adding thousands of pounds a month to bills, could force some firms out of business.

"From my point of view, manufacturing in Northern Ireland is in big trouble at the moment and for the regulator to pass this on is absolutely ridiculous. It's coming at a time when everybody is running at a lower capacity than last year," he said.

"I believe some businesses may close because of this. Most businesses are operating at breakeven point or below breakeven in this sector and this is going to have a devastating effect on some of them."

The charges were brought in by the Utility Regulator and relate to the pass through, or non energy, levies that apply to every unit of electricity to be sold for the next 12 months.

The Public Services Obligation (PFO) and System Support Services levies cover legacy contracts with power stations from the opening of the province's electricity market as well as distribution costs on the power network. Last year saw a rebate on the PSO charges, which rise when energy prices go down.

A spokesman for the regulator said: "For the average business customer, prices are lower in October 2009 than in October 2008. However, a one-off rebate of £100m was distributed across all electricity customers in January 2009.

"This led to the majority of business customers experiencing a large decrease in their bills. Any increase in customer bills now, reflects, in part, the end of the rebate."

The regulator said that prior to this month's change in tariffs it briefed the CBI, Ulster Farmers Union, Federation of Small Businesses, Department of Enterprise, Trade and Investment and other organisations about them.

However, Ian Anderson from Anderson Cost Management, which provides companies with energy advice, said many electricity customers were not informed of the increase by their supplier until after October 1.

"It is only now that companies are receiving letters from their suppliers saying the increase took place on October 1.

"Depending on whether they are on a high voltage tariff or medium voltage tariff and the contract they are in some businesses will have a 10% rise and some could have 35%."

The situation constrasts with the consumer market, where NIE recently lowered its prices 5% - partly due to a decrease in the cost of natural gas used to fuel power stations.

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