A double helping of good news was delivered to hard-pressed householders today as both NIE Energy and Phoenix Gas confirmed price cuts.
NIE Energy is to reduce its electricity tariffs by 10.8% while Phoenix Gas rates will be slashed by 22.1%.
However, despite the cuts, cash-strapped consumers will still be paying 35.5% more for their electricity than they were in June and 18% more for gas.
NIE Energy will pass on the savings from January 1 to its 792,000 customers while Phoenix Gas’ 120,000 customers will benefit from the decrease from January 8. The reduced tariffs are the result of lower wholesale gas and coal prices.
Prior to today’s announcements the average NIE Energy bill was £585 per year meaning that from next month on average consumers will be £63 better off annually. Phoenix Gas customers who pay on average £686 over a 12-month period will make an annual saving of £151.60.
SDLP leader Mark Durkan, who chairs Stormont’s Enterprise, Trade & Investment Committee, has welcomed Phoenix Gas’s 22.1% tariff reduction but he expressed disappointment that NIE Energy is only passing on a 10.8% saving to customers.
“In these times the Phoenix price cut is particularly welcome as customers will feel some confidence that wholesale savings are being passed back to them.
“NIE customers will be conscious that they saw prices go up by 50% this year so this reduction will claw back a fraction of those higher consumer costs,” he said.
Mr Durkan added: “The ETI Committee will want to consider the basis for the smaller decrease in electricity as members had been hoping for more based on reduced oil, gas and coal costs when we wrote to the regulator urging a review of electricity prices.”
His sentiments were echoed by Consumer Council chief executive Eleanor Gill who said: “The Consumer Council commends Phoenix for living up to their commitment to reduce their average bill to reflect falling wholesale gas costs quickly. The announcement of £153 off Phoenix’s average bill wipes out their October price increase and more which is good news for their customers.
“NIEE has also responded to pass on cost reductions quickly with today’s announcement that the annual average electricity bill will go down by £63. However, NIEE’s 10.8% decrease is a long way off their 33.3% increase in October. NIEE’s customers would rightly have expected to see a bigger drop in their bills today as a result of the slump in wholesale energy costs. Customers now have to come to terms with the sad reality that they will have to accept a low reduction because of the regulatory purchasing rules.”
NIE Energy has seen its turnover soar to £700m (end March 2008) compared to £500m in 2007. However, as a result of a 1.8% cap of net turnover imposed by the Utility Regulator its profits were £11.8m. Stephen McCully, NIE managing director said: “We made a commitment in our last pricing announcement that as soon as we were able to secure lower wholesale prices, we would pass the savings onto customers without delay.”
The latest energy review follows two previous hikes by NIE Energy since July when long-suffering householders had to absorb a 47.3% increase. During the past six months the price of gas shot up by 47.2%.
Phoenix Supply general manager David Strahan said: “We made a commitment to our customers in September that should the wholesale cost of gas fall we would reduce prices accordingly. This is a promise we have kept.”
Firmus Energy who supplies gas to 5,000 customers in Northern Ireland also announced today that it will continue to freeze prices until February 1, 2009.
General manager Mark Prentice said: “Firmus Energy has decided, in the interests of consumers, to hold off any price changes until February 2009. We will announce our new tariff in January 2009.”
The Utility Regulator has also welcomed the price cuts. Chief executive, Iain Osborne said: “Today’s announcement delivers on our commitment to consumers; that should underlying costs come down, they will see the benefits in lower energy bills as soon as possible.”
The reductions are expected to be part of a wider economic aid package which is due to be announced by the Northern Ireland Executive today following a special sitting.