Limits to watchdog power mean government should act on company profits, says People Before Profit MLA
The public body tasked with protecting energy consumers’ interests has vetoed just two price hikes in the last five years.
Almost all proposed bill increases – 17 out of 19 – in that time have been waved through by the Utility Regulator.
According to the regulator, its role is to regulate the electricity, gas, water and sewerage industries in Northern Ireland while promoting the interests of consumers.
Energy costs have almost doubled over the last year as suppliers face soaring wholesale gas costs due to the war in Ukraine and a jump in demand following the reopening of the global economy post-lockdown.
But there are calls for the regulator’s powers to be beefed up so that it can force energy companies to fund price increases from profits rather than passing the costs onto consumers.
So far this year, the regulator has accepted five price hikes by Power NI, firmus energy and SSE Airtricity Gas. Customers using gas and electricity face a total energy bill of around £2,000 a year.
In the last five years, the regulator confirmed there had been 19 submissions for price increases — only two were not approved.
Of those which were approved, four were from electricity supplier Power NI, six from SSE Airtricity Gas and seven from firmus energy.
The regulator also approved submissions from price decreases, with one from Power NI, one from SSE Airtricity Gas and three from firmus energy.
No further detail was available on which companies had been knocked back and how much they wanted to hike prices by.
Details on the Utility Regulator’s decisions were disclosed by Economy Minister Gordon Lyons after questions from People Before Profit MLA Gerry Carroll.
Mr Carroll said: “The Utility Regulator is only afforded the statutory regulatory powers to monitor how wholesale prices are reflected in consumers’ bills rather than impose reductions on the profit margins of energy companies or instruct them to absorb the costs.
“Given consumers have been bearing the brunt of the exceptional rise in wholesale costs, I feel it is incumbent upon the Economy Minister, the Utility Regulator and all relevant bodies to now explore taking urgent and exceptional action around reducing energy company profit margins, bringing the major energy companies into public ownership and other measures to alleviate the financial burden being endured by hard-hit households.”
A spokesman for the Utility Regulator said: “The Utility Regulator regulates the prices of three suppliers in Northern Ireland – Power NI, SSE Airtricity gas supply and firmus energy. Our job is to rigorously scrutinise the submissions from suppliers before any change to tariffs are allowed and our tariff review is conducted in consultation with the Consumer Council for Northern Ireland and the Department for the Economy.
“We cannot, and do not, approve any changes to suppliers’ tariffs unless we are totally satisfied that these changes are necessary. In doing so we are required to make sure that consumers’ bills reflect the suppliers’ costs, and we do not have the legal powers to force companies to charge less than it costs them to supply energy.
“Over the last 18 months exceptional increases in wholesale energy costs have been the primary reason driving both the number and extent of the increases in Northern Ireland consumer bills, which has also been the case in Great Britain and Ireland. However, if wholesale prices do begin to reduce, our system of regulation in Northern Ireland allows us to act to make sure that reductions are fully passed onto consumers as quickly as possible.”
According to its most recent accounts for 2020/21, salaries for the regulator’s 80 staff increased from almost £6m to £6.4m.
The chief executive of the Utility Regulator, John French, is paid up to £135,000 per year, according to its annual report and accounts. His predecessor Jenny Pyper, who was in the role from 2013 to 2020, was paid £145,000 to £150,000 in 2020/21.
Ulster Unionist MLA Steve Aiken he was surprised that just two submissions for increases had been turned down. He said Northern Ireland’s energy market could instead be regarded as too small to regulate itself and should instead come under the umbrella of UK regulator Ofgem.
Mr Aiken added: “We would be encouraging the regulator to look more closely at the profits the companies are making because we can’t be in a position of going into the winter with what could eventually be 100% increase in energy prices over the space of a year because that would be catastrophic, to put it mildly.”
The Utility Regulator is governed by the Department for the Economy, which was asked for comment.