Significant increases to energy costs lead to rise in Power NI’s domestic tariffs

16 August 2018

Electricity in use - television

Following a sharp rise in the cost of wholesale energy costs, Power NI has announced an increase to its electricity tariffs for domestic customers by 13.8% from 1 October 2018. This will add around £1.33 a week to the average standard customer’s bill. As regulator of Power NI’s domestic tariffs, Jenny Pyper, Utility Regulator Chief Executive commented further:

“Approving a price increase is always a difficult decision. However, the reason for this increase is due to the rise in forecast wholesale gas prices which drive the price of generating electricity. Since the last tariff review in 2017, wholesale gas prices have increased by around 30%[1]. Consumers will have already seen this rise in world fuel costs this year through increases to home heating oil of almost 50%[2] and the cost of diesel at the pumps which has risen by 15%.[3]

“It is a fact that global energy markets are volatile. Looking back at the last five years there have been two Power NI tariff increases, two decreases and one year where prices were frozen. Whilst the Utility Regulator can provide relative stability in terms of the other regulated costs that make up a customer’s bill, fluctuations in wholesale energy costs are simply outside of our control.

“Following this increase, a typical Power NI domestic credit tariff will continue to be around 15% lower than the GB average and around 29% cheaper than the RoI average standard tariff. It will also see prices back to slightly lower than where they were in 2013.

“We know that price rises are not welcome, which is why we fully scrutinise every element of the tariff to ensure it reflects the actual cost of supplying electricity to Northern Ireland homes. This tariff has been set for a two year period, with the aim of providing some price stability, however, as is our usual practice, we will keep this under review. 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 have five domestic electricity suppliers to choose from and I would encourage them to shop around and explore the options available to them.”

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 briefing paper for the tariff review is available here.

[1] Wholesale gas prices have increased by 30% which affects the costs of electricity as the majority of electricity is produced from gas.

[2] www.boilerjuice.com and Power NI

[3] www.petrolprices.com and Power NI 

For further information, please contact Adele Boyle on 028 9031 6664 or 07787 279584.

Notes to editor

  • 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.
  • 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.
  • The bill comparison with GB and RoI is based on annual consumption of 3,200 kWh and based on the average of the 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.
  • The monthly monitoring review between the Utility Regulator and Power NI indicated in July 2018 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 24 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.
  •  The standard Home Energy tariff will increase to 16.82p per kWh (ex VAT) and 17.66 (incl VAT) from 1 October 2018.