Utility Regulator comments on Power NI’s tariff announcement

A 21.4% increase to regulated electricity tariffs has been announced by Power NI. This change in tariff applies to their domestic customers and will come into effect on 1 January 2022.

Commenting on the announcement, John French, Chief Executive of the Utility Regulator said:

“Power NI provided a submission to the Utility Regulator in October to increase their regulated electricity tariff. Following a thorough analysis of all their costs, and in consultation with the Department for the Economy and the Consumer Council for Northern Ireland, we have accepted their submission to increase their tariff by 21.4%. This will unfortunately result in an increase to their standard domestic tariff of £131 per year.  

“The drivers behind this increase are that we have had one of the least windy summers since 1961, meaning generation from cheaper wind power has been very low. This low output from wind has meant that there has been an increased use of conventional gas, coal, and oil fired power stations. 

“The table below shows the reduction in wind generation from the previous year.

Month

Change in wind generation from previous year

September 2020

-1%

October 2020

+20%

November 2020

+25%

December 2020

+10%

January 2021

-23%

February 2021

-7%

March 2021

-15%

April 2021

+16%

May 2021

-9%

June 2021

-14%

July 2021

-62%

August 2021

-13%

September 2021

-31%

“Unfortunately, the cost of gas, coal, and oil has increased significantly on global markets over the last 12 months, and since the wholesale cost of electricity makes up over 60% of a domestic customer’s bill, these sharp increases impact heavily on Power NI’s tariff. The table below shows the increases in the cost of gas, coal, oil, and carbon permits.

Commodity

September 2020

September 2021

% Movement

Gas (pence per therm)

30.00

155.12

+417%

Coal ($ per tonne)

52.35

174.08

+233%

Oil ($ per barrel)

41.52

83.75

+102%

Carbon (€ per tonne)

27.69

61.79

+123%

“Following this increase, Power NI’s tariff for an average domestic credit customer will be £741 a year, which is still 6% cheaper than the GB average standard tariff (£812 per year) and around 16% cheaper than the RoI average standard tariff (£884 per year) . For historic comparison, the table below shows how Power NI’s regulated tariff has moved since 2008.

Effective date

% movement

Average household annual regulated Power NI bill (£) including VAT

Average household annual regulated Power NI bill (£) including inflation

01-Jan-2022

+21.4

£741

£741

01-Jul-2021

+6.90

£610

£616

01-Jul-2020

-4.80

£571

£599

01-Oct-2019

+6.10

£600

£637

01-Oct-2018

+13.80

£565

£613

01-Oct-2017

+5.60

£497

£557

01-Apr-2016

-10.30

£470

£555

01-Apr-2015

-9.20

£524

£627

01-Jul-2013

+17.80

£577

£713

01-Oct-2012

-14.10

£490

£616

01-Oct-2011

+18.60

£570

£739

01-Oct-2009

-5.00

£481

£687

01-Jan-2009

-10.80

£506

£743

01-Oct-2008

+33.30

£567

£804

01-Jul-2008

+14.00

£425

£606

“The make-up of Power NI’s standard domestic electricity bill is as follows:

“Currently, it is unclear how long these higher global prices will last, but increasingly market analysts are predicting that we will be experiencing higher wholesale prices for the next 18-36 months. However, if wholesale prices begin to reduce, our system of regulation in Northern Ireland allows us to act to make sure that reductions are fully passed onto consumers as quickly as possible.

“If you are struggling with your electricity or gas bill, I would encourage you to contact your energy supplier as soon as possible. Help is available. We expect all suppliers to provide the appropriate support and information to help their customers at this time.”

Further information on the support available to energy customers is available at www.nidirect.gov.uk/covid-19-energy-debt-advice and within the consumer protection section of the Utility Regulator’s website. The Consumer Council’s website has energy advice for consumers during these difficult times and also provides an independent energy price comparison tool to help consumers save money.

A number of agencies can provide free and independent advice, including Advice NI, Money and Pensions Service and Christians Against Poverty.

A briefing paper has also been published. 

Media contact - Greg Irwin, 07794 965911.

Additional information: 

  • 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.
  • Following this increase, Power NI’s standard domestic electricity tariff will be 16% lower than RoI and 6% lower than GB.
  • As Power NI’s profits are fixed (at 2.2%), any over recovery (and under recovery) made due to a change in the forecast costs is passed on to consumers in the next tariff review. This is not the case for non-price regulated suppliers.
  • The tariff has been modelled and forecast over a period of 24 months.