Tax deal will help keep power bills down
Published 27/03/2013 | 04:20
Northern Ireland's electricity users have avoided a 15% hike in electricity bills after being exempted from a price support mechanism planned for the rest of the UK, according to the Finance Minister.
The Carbon Price Floor comes into effect on April 1 and is designed to encourage investment in so-called low carbon power generation but would have effectively made Northern Ireland's three power stations – Ballylumford, Kilroot and Coolkeeragh – redundant had Chancellor George Osborne not granted a Budget exemption, Sammy Wilson said.
Speaking at business adviser Deloitte's Budget Breakfast Seminar, he said the tax would have pushed up the price of producing electricity here by £20m, rising to £45m in three years time.
By doing so, power generators here would have become uncompetitive compared to those in the Republic and could have been sidelined into standby roles while power was imported across the border.
That would have added 15% to current electricity bills and would also have lessened Northern Ireland's energy security, especially given the question marks surrounding the construction of cross-border electricity interconnector which would allow fully functioning sharing of electricity.
"This was a very important exemption," Mr Wilson said. "It is one of the biggest things to have come out of the Budget for Northern Ireland.
"There was a reluctance from the Treasury there were a number of MP who came to me and said how did you get that? There was initially a reluctance from the Treasury but we pushed our case. Other MPs have been coming up to me and asking how we got it because they are obviously worried about the effect it will have on their own energy prices."
He said both the higher prices and lack of energy security would have had a detrimental impact for Enterprise Minister Arlene Foster when trying to attract foreign direct investment, particularly from high energy users.
Economist John Simpson welcomed the exemption from the carbon price floor but called for a clearer vision of where the electricity market in Northern Ireland is headed.
"Northern Ireland does need greater clarity on how its electricity generating capacity is to be increased," he said. "The Treasury has removed a critical obstacle. Now the policy makers must work to explore how electricity supplies can be traded successfully between Ireland and Great Britain, including an assessment of the value of, and incentives for, renewable energy sources."