Utility Regulator comments on Power NI tariff announcement

25 August 2011

The Utility Regulator today said that increased wholesale energy costs are the main reason for an 18.6% increase in electricity tariffs announced by Power NI today.  The tariff increase applies from 1 October 2011.

Commenting on the announcement, Utility Regulator Chief Executive, Shane Lynch said:

“The Utility Regulator sets the maximum tariff Power NI can charge consumers.  We don’t approve proposals for tariff increases without extensive scrutiny.  We apply our expertise and spend a considerable amount of time to make sure that any increase is unavoidable.  The current increase is a direct result of rising wholesale energy costs.

Wholesale energy costs are the single largest component of the cost of electricity generation, and make up approximately 60-70% of consumer bills.  Northern Ireland continues to be heavily reliant on fossil fuels, particularly gas, for electricity generation.  This reliance means that electricity prices are particularly vulnerable to rising energy costs on the international energy markets.

This is the first price increase for electricity consumers in Northern Ireland for almost three years and during that time wholesale energy costs have risen sharply.  This volatility has already led to similar price increases by energy companies across the UK and the RoI.”

Mr Lynch added

“We exist to protect consumers and we know that these are very difficult times for households across Northern Ireland. We regret having to approve price rises and we will act as soon as possible, should wholesale energy costs decrease, to ensure that this reduction is reflected in consumer bills.

Consumers across Northern Ireland now have a choice of electricity supplier.  The Utility Regulator has been working to encourage competition within the electricity market and welcomes the choice this has brought for consumers.  We expect further entry to the electricity market over the coming months.”

ENDS

Notes to Editors

1.  The Utility Regulator is the non-Ministerial Government Department responsible for regulating the electricity and gas industries and water and sewerage services in Northern Ireland.

2.  A Q and A answering key questions on the announcement and a briefing paper explaining electricity tariffs are included here.

3.  For further information please contact Barbara Stevenson on 028 9031 6343 or 07794 965922