Belfast Telegraph

Leading economist describes latest electricity price rise as 'unfair burden on consumers'

 

NI householders face a 6.1% increase in electricity bills
NI householders face a 6.1% increase in electricity bills
John Simpson
Claire McNeilly

By Claire McNeilly

The latest hike in Northern Ireland electricity prices is tantamount to overcharging hard-pressed consumers, it has been claimed.

This is the third consecutive year householders here have been hit by increases and the recently announced 6.1% addition, due to take effect in October, will add around £35 to the average home's electricity bill.

Power NI, with almost half a million domestic customers, said the change, which has been agreed with the Utility Regulator, was due to increased costs emanating from the electricity network provider and the market operator.

But economist John Simpson has raised concerns that this latest increase - which coincides with a 5% fall in wholesale gas prices - presents an unfair burden on already-stretched budgets.

"It seems as if consumers may be overcharged for their electricity," he told the Belfast Telegraph.

"Budgets are generally squeezed in the run-up to Christmas and this isn't going to help matters."

Trade sources have said Power NI's price hike is "too much" and questions have also been raised over whether the electricity system is working properly.

SDLP MLA Daniel McCrossan said he was worried that people are being forced to pay more as a result of industry inefficiencies.

"This price increase will hit the poorest and most vulnerable the hardest," he said.

"£35 may not seem a lot to many people, but there are people out there living on the breadline and this could make a substantial impact in terms of disposable income.

"What's concerning is there seems to have been very little scrutiny of the decision. Where are the checks and balances here?"

He added: "Customers should not be suffering the result of inefficiencies."

A spokesman for The Consumer Council said it "remains disappointed" with the electricity tariff increase which he said "is in contrast to the wholesale gas market which has fallen by 49% over the last 12 months".

He added: "The electricity market in Northern Ireland is complex and therefore consumers in Northern Ireland need to receive information and reassurances that they are receiving from the Utility Regulator and Power NI the best possible regulated electricity price."

A spokeswoman for the Utility Regulator defended its recent decision and said: "Power NI's tariff remains around 10% less than the GB price cap and around 25% less than the Republic's average standard tariff.

"We continuously monitor all the drivers that impact on the NI electricity market and intensively challenge the Power NI tariff alongside key stakeholders," she said.

"We have analysed and confirmed all elements of the Power NI tariff to ensure it reflects the forecast costs of supplying electricity for the coming period. We are satisfied these costs are accurate."

A Power NI spokeswoman defended the price rise in light of a fall in wholesale natural gas prices, which represent the biggest single part of costs.

"Power NI, like all suppliers here, is obliged to include costs such as electricity network and market costs in our bills," she said.

"These costs are not ours and not within our control.

"Wholesale prices are not a factor in this price rise as they are largely flat, but there were some seasonally high prices last winter, which had to be covered.

"The Utility Regulator approves all of the input costs that go towards making up an electricity bill from us and would be best placed to provide information on how individual costs are derived."

Writing in today's Belfast Telegraph, Mr Simpson said that Northern Ireland energy market observers "were surprised to learn that the Regulator had approved a 6.1% increase for domestic customers".

He pointed out that it follows "UK-wide comment on the prospect of reduced electricity prices as the wholesale cost of natural gas has recently been falling".

"A contrast between lower wholesale prices and higher NI prices is possible, depending on any major local difference in costs, but it merits a careful explanation," he said.

He also criticised the Utility Regulator for asking the public "to accept on trust the hidden arithmetic" that "demonstrates how a 5% fall in wholesale gas prices converts into a 6.1% household price increase".

Mr Simpson concluded: "The Regulator and the official consultees have done a disservice to customers by failing to offer an adequate explanation of the tariff decision."

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