Huge rise in cost of electricity sparks a consumer backlash
Calls for greater choice to help bring down prices
Published 26/08/2011 | 17:00
Consumers have begun a backlash after the announcement of a huge rise in electricity bills.
After Power NI announced that businesses and consumers face an 18.6% hike in charges demands have been made for the local energy market to be made more competitive to ensure consumers get value for money
The demand for greater choice was underlined last night as a growing number of customers considered deserting Power NI.
The price increase means bills will soar by an average of £90 this autumn.
Already competitor Airtricity has reported an upsurge in inquiries from people thinking about switching suppliers in the wake of yesterday's announcement.
The Southern-based company entered the market here last year, and is aiming to lure consumers by pledging discounts of up to 14% against the new Power NI regulated standard prices.
However, there have been calls for consumers to be offered even more choice by demolishing the monopolies which dominate Northern Ireland's energy industry.
While Power NI still controls most of the electricity sector here, the gas network is largely split between two giants - Phoenix Natural Gas and Firmus Energy.
Alban Maginness, who chairs the Assembly's enterprise committee, agreed that more competition in the energy sector was necessary.
"Competition is key to reducing, or at least stabilising, prices," he said.
"In terms of electricity, for the small business person and for the householder these are very severe increases. It is very, very important that people have choice, and a much wider choice than they've got at the minute.
"The opportunity is there for other people to come into the market and give Northern Ireland consumers a wider choice.
"The gas market is also maturing, and when it does it is important to have genuine and sustained competition."
Power NI confirmed yesterday it is putting up the price of the average domestic bill for customers by just over £90 a year from October. The firm's spokeswoman, Kerstie Forsyth, said it could not hold off on an increase any longer due to the sharp rise of wholesale fuel costs.
Airtricity said it had little option but to track the price increase - but pledged to stand by its commitment to offer discounted rates to customers.
Its chief executive Kevin Greenhorn said the company was determined to offer real choice and substantial savings on electricity bills.
And last night the company reported an upsurge in calls from customers considering switching suppliers.
Alliance MLA Stewart Dickson said he hoped more companies would provide greater competition in the future - and also called for the wholesale market to the opened up.
"Two companies do not equal competition - clearly there would need to be a lot of other players to make electricity competitive in Northern Ireland," he said.
"There is no doubt people can and do benefit from competition.
"However, it must be a genuine opening of the market, which means an opening of the wholesale electricity market as well as the retail market.
"Companies need to be buying electricity right across Europe. The grid does exist, so there is no reason why they can't."
But John French, head of energy at the Consumer Council, warned that increased competition did not automatically mean cheaper prices.
"In terms of competition the Consumer Council's position is clear that increased competition in itself is not going to solve the problem of high electricity prices," he said.
"Competition only benefits consumers if it provides lower prices to the consumer, provides better customer service, is available to all types of consumers, and provides increased and targeted protection to vulnerable consumers.
"What's needed now is direct action from the NI Executive, and the Consumer Council has suggested four practical steps it can take to bring lower prices for consumers in Northern Ireland."