Ukraine invasion driving increases, warns regulator
Northern Ireland householders will pay high energy prices until at least 2028, the Utility Regulator boss has warned.
John French said the consensus in the industry was that steep bills were set to stay for the foreseeable future after Power NI became the latest energy provider to announce a price hike.
It will increase prices by 27.5% from July 1 – equivalent to an extra £3.92 a week, or more than £200 a year, being added to a typical household electricity bill.
Annually, that rise equates to an average bill of £944 inclusive of Vat, which is 183% higher than what households were paying in April 2006, when the typical annual household electric bill was just £334.
Mr French warned: “Unless conditions change, unless there is peace in Ukraine and we start to see more gas flowing into Europe, or milder winters that could change the current rate, we are looking at these high prices until 2028.”
He said the regulator’s hands were tied because it had no power over the wholesale price of gas, which sets the price for electricity.
“What we’ve seen in the last year is wholesale gas prices going to a level we’ve never seen before,” he added.
Prior to the war in Ukraine and a rise in demand, prices sat at 50p per therm — the measurement for gas. At its peak, it rose to £8 per therm. Today, it is sitting at £2.40 per therm.
It means households are paying more than they ever have for electricity and gas.
“Our hope is we’ve got to the peak and we’ll start to plateau,” Mr French said.
“That’s not to say [prices] will come down. We might end up at this high level. That’s what we’re trying to work out at the moment. It changes on a daily basis.”
He also stressed there was no safeguarding the current price of energy, and that prices could potentially increase “if Russia decides it’s not giving more gas”.
Vladimir Putin has already cut supplies to Poland and Bulgaria, and has demanded other European countries purchase Russian gas in rubles.
The EU has warned European gas companies that complying with Russian demands would breach sanctions, which could cause further issues.
Mr French said: “On current market sentiment and intelligence, we’re looking at prices at the £2.40 per therm market compared to a normal price of 50p per therm.”
He also called on the government to intervene, saying: “We can’t ask companies to sell below market cost, but our constant conversation doesn’t take away from the 27.5% increase.
“This needs government intervention in terms of what can be done to make our homes more energy efficient.”
Mr French said while renewable energy “helps a lot”, it was not a consistent buffer.
“Wind power only works when the wind blows. We’re not like a Nordic country where they can use hydro power,” he added.
“There have been months last year when the wind hasn’t blown. For example, in June and July 2021, there was 60% less wind. That’s equivalent to two Kilroot power stations being offline. Energy is cheaper when the wind blows.”
Despite hiking prices, Power NI is still 17% cheaper than the Republic of Ireland average and the ‘big six’ in Great Britain.
Power NI customer solutions director William Steele said the company “held off” as long as possible before passing rising costs onto customers.