Belfast Telegraph

Saturday 19 April 2014

Fury as Northern Ireland electricity prices soar by four times the rate of inflation

Annual cost will be higher than any other UK region

Homes and businesses face a crippling rise of nearly 20% in their electricity bills.

Power NI has announced a massive price hike of 18.6% from October which means the average bill will soar from £496 to £588.

The company blamed rising wholesale fuel costs for the increase, which leaves our electricity bills higher than the rest of the UK.

But the huge rise, which is four times the rate of inflation, has been met with fury by consumer and business groups.

The Consumer Council has warned the price rise will push an extra 52,000 families into fuel poverty, meaning they will struggle to pay their bills this winter.

It said the majority of households in Northern Ireland will have an energy bill of £2,114 a year.

This is around £900 per year more than households in Britain.

And the Northern Ireland Independent Retail Trade Association (NIIRTA) said the increase was devastating.

Chief executive Glyn Roberts said: "The timing of this hike could not have came at a worse time for consumers and independent retailers."

The Federation of Small Businesses (FSB) said the increase was a blow to its members and a further hurdle on the path to economic recovery.

Policy chair Wilfred Mitchell said: "Many small business owners in Northern Ireland have been dealt a 'double whammy' with this news and will now find themselves facing even bigger energy bills at their workplace as well as their home."

Energy supplier Airtricity, which has around 46,000 domestic customers here, accounting for roughly 5% of the market, is also expected to raise its prices in line with Power NI while still maintaining a 14% discount on its competitor's prices.

Power NI, which also supplies 35,000 businesses, was known as NIE Energy until last month.

A spokeswoman for Power NI said: "Tariffs were frozen last year and cut by 15% back in 2009, but since then the cost of wholesale fuels used in electricity generation has increased by as much as 60%, leading to this increase."

She added that all other major electricity suppliers in the UK have increased their prices this year.

Power NI managing director Stephen McCully said: "Our last price increase was three years ago and since then we've managed to either freeze or cut prices, so I'm very disappointed to have to make this announcement today.

"However, we have been faced with steadily rising wholesale gas and oil prices over the last two years and we can't hold our prices any longer."

The company said global events, including the upheaval in the Middle East and the Japanese earthquake and tsunami, had affected prices.

In the financial year to March 2010 NIE Energy had a turnover of £918m and a post-tax profit of £11m.

Irish company Airtricity started supplying Northern Ireland customers from August last year, with a promise to undercut NIE Energy by 14%.

Economist John Simpson said: "Power NI are possibly exaggerating the increase in fuel costs by backdating the reference point by two years instead of one."

He added: "We ought to be looking at long-term issues in terms of electricity provision and policies instead of treating it as a short-term issue."

Such long-term issues included granting planning approval to a cross-border interconnector between Armagh and Monaghan which Mr Simpson said could save around £25m in electricity costs north and south every year.

Utility Regulator Shane Lynch - who is obliged by law to scrutinise the prices of Power NI - said the increase was "a direct result of rising wholesale energy costs".

Those costs accounted for 60% to 70% of consumer bills, Mr Lynch said.

"Northern Ireland continues to be heavily reliant on fossil fuels, particularly gas, for electricity generation.

"This reliance means that electricity prices are particularly vulnerable to rising energy costs on the international energy markets," he added.

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