Belfast Telegraph

Energy prices 'deter investment'

Almost a third of firms in Northern Ireland believe high energy prices are deterring investment, a survey has found.

Businesses called for reduced power costs and improved regulation and said fracking for shale gas should be investigated for its potential to reduce overall energy prices, according to a study by the Northern Ireland Chamber of Commerce and business advisers BDO.

Building a North/South electricity interconnector was also of key concern amid deteriorating cash flow and lack of momentum for many in the services and manufacturing industries.

Ann McGregor, chief executive at the Northern Ireland Chamber, said: "We know business energy costs in Northern Ireland are higher than the rest of the UK and for some of our businesses they are amongst the highest in Europe.

"This is a real challenge to our competitiveness and needs both government and private sector to work together to address."

The Utility Regulator is reviewing gas and electricity tariffs and Ms McGregor said she hoped to see prices fall later this year.

Last year a company that wanted to drill for shale gas in Co Fermanagh said it planned to take legal action to challenge the termination of its licence. Tamboran planned to extract gas using the controversial fracking technique but faced local opposition.

The Chamber survey said energy costs were the most burdensome on business, with 62% of firms citing power and heating as being costly.

Maureen O'Reilly, economist at the Chamber, said: "Energy was a real issue for them in terms of trying to not lose out on business."

She added: "Almost a third of firms claim energy cost is a key deterrent for future investment."

Francis Martin, partner at BDO, said: "The Executive continues to have a vital role to play in bringing change. They have got to maintain and improve infrastructure, bring through the legislation for the devolution of corporation tax and address the high costs of doing business in Northern Ireland, particularly energy and transport."

The Utility Regulator reviews will conclude in February to allow any changes to bills to take effect from April 1.

The regulatory framework for energy in Northern Ireland means movements in wholesale costs should be reflected in consumer bills.

Wholesale gas prices, a major component in both gas and electricity bills, have been falling in recent months.

The survey, carried out during the last three months of 2014, said domestic sales and orders levels were the weakest across the 12 UK regions.

The Chamber said: "Despite an increase in export sales and orders, there are few signs of stability for Northern Ireland manufacturers, with their domestic sales and orders falling and almost all balances for Northern Ireland below the UK average."

Other manufacturing findings included:

:: Expectations of increasing the size of the workforce over the next three months were lower. Northern Ireland stands out from the rest of the UK in terms of the extent of recruitment of part-time staff, another indicator of the challenges facing manufacturing.

:: Views on cashflow were the most negative in the UK, with more businesses reporting that their position worsened during the last three months than improved.

:: Confidence levels in improvements in profitability over the next years were much less than in other parts of the UK. Businesses were still not innovating as much as their counterparts in Great Britain.

:: Northern Ireland is one of only two UK regions where more manufacturers are expecting to reduce rather than raise prices.

:: Some improvements were recorded in the services industry but Northern Ireland ranks among the bottom two UK regions for all key indicators and is at the bottom for domestic sales, export orders, employment over the last three months and confidence in staff turnover and profitability.

:: Just over a third of businesses believed telecoms to be costly while some also raised issues over the cost of international and transport, calling for better roads to be built to the North West and the removal of the Sprucefield roundabout between Belfast and Newry.

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