Belfast Telegraph

Saturday 31 January 2015

Who will regulate the electricity regulator?

Utility regulator Iain Osborne’s claims that recent price rises were not approved “without extensive scrutiny” simply does not appear credible.

Based on a 20% gas price increase, gas is now more expensive than oil (5.6 p/kWh for gas compared with 5.2p/kWh) — unique in the Western world.

While gas and oil prices are linked, gas is always the cheaper of the two, as indeed it has been in Northern Ireland until now and still is in England.

Energy prices in Northern Ireland are much higher than in the rest of the UK because we are paying for Phoenix Gas to recoup the cost of its infrastructure development.

And NIE is guaranteed high rates to compensate the owners of NIE for the exaggerated price they agreed with the UK Government.

Simply put, our prices consist of an infrastructure cost and an energy cost.

Since we pay a larger fixed cost, the energy cost is a smaller fraction of the total cost we pay and therefore we should be experiencing smaller percentage price rises than the UK and similar absolute increases.

In fact, the percentage increases are quite comparable and the absolute increases higher.

We are now in the farcical situation of gas prices outstripping oil in Northern Ireland. It appears that tighter regulation of the regulator is called for.

M Zepf


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