Green energy will add 25% to bills, regulator warns
Northern Ireland's drive to increase renewable energy sources such as wind power will cut carbon emissions but push bills up by as much as 25%, the head of the body which regulates energy prices has warned.
Utility Regulator Shane Lynch and his colleague Kevin Shiels appeared before the Enterprise Committee yesterday to discuss electricity pricing. Last month Power NI, the main electricity provider in Northern Ireland, said it would raise its prices by 17.8% from July 1. A few days later Airtricity, Northern Ireland's second biggest electricity supplier, announced it would be applying the same hike from the same date.
Mr Lynch argued that consumers were paying a fair price for power which is average across the EU. The Utility Regulator estimates that Northern Ireland's target of 40% electricity from renewable sources by 2020 will add 113% to network costs, with an overall impact of 25% on bills.
Mr Lynch, who steps down in October, said that while Northern Ireland domestic and small business consumers were paying an average price for electricity, large business customers – those using more than 20 megawatts each year – paid among the highest prices in Europe.
In March, the Regulator published the first element of new research conducted into comparative electricity costs in Europe for industrial and commercial users.
Although the research shows that 71% of users enjoy competitive electricity costs, these are usually small businesses which purchase electricity on a domestic tariff consuming only 9.7% of industrial and commercial electricity. The remaining 29%, who consume over 90% of such electricity are paying much more.
DUP MLA Paul Frew said the latest electricity hikes would have knock-on effects for both domestic and commercial customers. He warned that if a large global company decided to withdraw from Northern Ireland because of high energy costs, immediately thousands of domestic customers without jobs could be plunged into fuel poverty.
But Mr Lynch replied that investors who contribute to the upgrade of the electricity grid need a fair return as much as consumers needed a fair deal.
He also warned that renewable energy was not a panacea for householders or businesses.
"We are not in a great place for large users and that is not good for international competitiveness," he said. "But I would caution against short-term or knee-jerk reactions to a one-off price rise.
"Renewables are there to reduce carbon, not prices, signs are that it will push the price of energy up. Investing in renewables is a very laudable objective but it will cost, it doesn't come for free.
"There are delays to the North-South interconnector, which is still stuck in planning, and the Moyle Interconnector is at half capacity."
The committee has also been taking evidence from Manufacturing NI, which represents 500 businesses. It argues the cost of power is hampering Northern Ireland's ability to attract foreign companies.