Belfast Telegraph

Wednesday 30 July 2014

Small firms furious at power price hike

Rise will hinder ability to create much-needed new jobs: manager

The representatives of businesses who are customers of Power NI have said they will be badly affected by the price hike imposed by Ulster's main power supplier.

Power NI has 55,000 business customers who, with domestic customers, face an 18.6% rise in electricity costs from October 1.

Mervyn McCaughey, managing director of Fivemiletown Creamery in Co Tyrone, said the increase would bring higher overheads and ultimately hinder its future growth: "It may inhibit our work to create employment and in trying to build our brand and expand sales of our products in export markets. Success in export markets is essential if we are to continue to grow this business."

UFU deputy president Ian Marshall said most farmers would be affected by Power NI's price rises.

He said some had transferred to alternative operators in the business market like Firmus and Airtricity, but added: "Most farmers have a history of continuity of supply so they are sceptical of changing suppliers."

He said a farm with around 200 cows would face an electricity bill of £12,000 a year, and as a result of the increase in price would be paying an extra £2,232.

"The defence of Power NI is that we have been insulated for a while from price increases and now prices have to go up. But their margins remain as high if not higher than ever, while everyone else in the system is suffering."

He said livestock farmers faced higher electricity costs than arable operators, due to milking machines, heating outhouses and running feeding equipment.

"Product prices are quite stable and food inflation is high. Commodities are trading at a very strong price but those in primary production from April 2010 to 2011, fertiliser is up 40% in price, diesel is up 24% in price and wheat is up 83% in price and now we are staring in the face of a 18.6% rise. A combination of those things means that input production costs is rising at a much faster rate than food inflation."

Bryan Gray, the head of industry group Northern Ireland Manufacturing, estimated that around 3,000 smaller manufacturers would be affected.

"It is very disappointing that we are seeing a price increase at a time when oil prices are already falling and gas prices are likely to follow suit in the near future.

"Unfortunately for tariff customers, if world energy prices do fall it will be a year before they see the benefit."

He said energy costs were one of the top three overheads for business, along with raw materials and labour. A manufacturing company employing 20 people would likely face an electricity bill of £35,000, rising by £6,500 as a result of the latest hike.

Some business customers have contracts where electricity is metered every half hour and constantly subjected to price changes - but others are charged on a business tariff.

The biggest users of electricity in manufacturing, such as Bombardier, buy directly from the market so are unaffected by Power NI's decision to increase prices by 18.6% from October 1.

Other big firms have contract deals, some with Power NI competitors like Firmus, Energia, ESB, Budget Energy and Airtricity.

Those suppliers operate in the unregulated market and, unlike Power NI, do not have to make yearly announcements about price increases.

Wilfred Mitchell of the Federation of Small Businesses, said: "This latest hike in prices comes as world oil prices are actually at their lowest level for three months.

"Unless action is taken by the Government, both at Westminster and at Stormont, small businesses will simply see energy prices rising relentlessly in future.

"Consumers here already face the highest charges for electricity in the UK and these massive increases are yet another blow to both the small business sector and the entire local economy as the extra costs reduce spending capacity at a time when it is needed more than ever."

Case study

Andras House

'This is another body blow to commerce'

Around 270 people are employed by Andras House, the company which owns Belfast hotels The Holiday Inn Express, Days Hotel, the Ramada Plaza at Shaw's Bridge and the Ramada Encore.

It is a customer of Firmus for its electricity provision. Chairman Lord Diljit Rana said the rise in electricity prices at Power NI would weaken competitiveness. "This is another terrible body blow to commerce and industry here and will weaken the competitiveness of every company.

"It weakens the job creation engine and will undermine our efforts to attract further inward investment.

"What chance have the Executive's efforts to turn Northern Ireland into a private sector economy got, when the competitiveness of companies - particularly exporters - and the entire region is being jeopardised."

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