Following today’s announcement by Power NI of a 5.6% tariff increase for their domestic electricity customers, the Utility Regulator said the main reason was increases in wholesale energy costs.
Jenny Pyper, Utility Regulator Chief Executive commented:
“Agreeing an increase to Power NI’s domestic electricity tariff is not a decision that we take lightly. We carry out extensive scrutiny of Power NI’s costs to ensure that any change to their tariff is justified. Domestic electricity prices in Northern Ireland have not increased in four years, but unfortunately, due to rises in wholesale energy costs, this increase is unavoidable.
“After two price decreases in 2015 and 2016, we signalled last year that we expected the unprecedented period of low global wholesale energy costs to end, with the likelihood that consumer prices would increase. Since the last price decrease in April 2016, forward wholesale costs have risen by around 11%.
“Even after this tariff increase, Northern Ireland will continue to have amongst the lowest domestic electricity prices in the UK and RoI. Power NI’s average annual domestic bill will be around 22% cheaper than the GB average annual bill and around 30% cheaper than the ROI average annual bill.
“We continuously review all the components that make up Power NI’s tariff. Should wholesale energy or other costs decrease, our system of regulation in Northern Ireland allows us to act as soon as possible to ensure that this reduction is reflected in consumer bills.
“Northern Ireland consumers also have a choice of five domestic electricity suppliers and I would encourage them to shop around and explore the options available to them.”
Power NI’s tariff change will come into effect on 1 October 2017.
This tariff announcement marks the conclusion of a review undertaken by the Utility Regulator and Power NI, in consultation with the Department for the Economy and the Consumer Council for Northern Ireland.
The brieing paper on this tariff review is available here.
ENDS
For further information, please contact Adele Boyle on 028 9031 6664 or 07787 279584.
Notes
- The Utility Regulator is the independent non-ministerial government department responsible for regulating the electricity and gas industries and water and sewerage services in Northern Ireland.
- The monthly monitoring review between the Utility Regulator and Power NI indicated in July 2017 that forward wholesale energy prices showed an increase that required a tariff review to be triggered. The tariff has been forecast over a period of 12 months.
- During this period a thorough review of all Power NI’s costs, including examining forecast costs, was carried out by the Utility Regulator and in consultation with DfE and the Consumer Council for Northern Ireland.
- This year’s increase follows a 10.3% decrease in April 2016, a 9.2% decrease in April 2015 and no change in 2014. The last increase to tariffs was 17.8% in 2013.
- The standard Home Energy tariff will increase to 14.78p per kWh (ex VAT) from 1 October 2017.
- The annual bill comparison with GB and RoI is based on annual consumption of 3,200 kWh and based on standard tariffs of the main suppliers in GB and RoI.
- As Power NI’s profits are fixed, any over recovery (and under recovery) made due to a change in the forecast wholesale energy prices is passed on to consumers in the next tariff review. This is not the case for non-price regulated suppliers.
- Since 1 April 2017, we no longer regulate Power NI’s tariff for small business customers as this market is now fully open to competition.