Electricity consumers in the north, especially business customers, are set to be hit with a huge hike in costs as a result of the Utility Regulator’s final determination on NIE Network’s Price Control, which sets out an investment package that will support the region’s journey to net zero.
The Regulator has approved an investment package (referred to as RP7) for NIE of £2.23 billion over a six year period, starting in April 2025 (which is a 12.6% reduction on its request of £2.55 billion).
And there is likely to be a significant impact on customers (922,489 homes, farms and businesses are connected to the north’s electricity network), some of whose bills could rise by as much as 15%.
All electricity customers pay a network charge as part of the bill that they receive from their supplier, and teh network charge for a typical domestic consumer is currently around a quarter of the overall bill. The amount that business customers currently pay for the network charge is slightly lower than a quarter of the overall bill.
The increased investment within RP7 come at a cost for both households and businesses, depending on the customer’s actual electricity usage.
A domestic consumer who does not change their consumption won’t see any material change in the network charge of their electricity bill, though those who choose to adopt low carbon technology (such as heat pumps and electric vehicles) will see an increase in line with their increased electricity consumption, but this cost will be offset by them not having to pay for petrol/diesel for their car or their previous source of home heating (e.g. home heating oil).
Small businesses will see an increase of less than £10 per year by the end of the six year price control period; medium sized businesses could see a 4%-6% increase to the network element of their bill (which accounts for slightly less than a quarter of the overall bill); and large energy users could see an 8%-15% increase to the network element of their bill.
Elaine Cassidy, director of price controls at the Utility Regulator, says: “This RP7 investment package will facilitate the transition away from fossil fuels to renewable energy sources. It will also secure a robust and resilient network to support innovation and provide increased capacity, while securing long-term value for Northern Ireland’s electricity consumers.
“In our role as economic regulator, we are committed to ensuring that there is a fair, affordable and just transition to net zero for all electricity customers, and our central aim for RP7 was to strike the right balance between making sure that consumers benefit and are protected, while providing the necessary investment to future-proof Northern Ireland’s electricity network, as we journey towards net zero.”
The potential price hikes were lambasted by Manufacturing NI chief executive Stephen Kelly, who said: “Budget Day seems to be a good day to bury bad news, but it’s not gone unnoticed that electricity consumers are about to be slapped with a huge hike in costs as a result of this price control.
“It further confirms that our energy policy and structures, most concerningly, including regulatory control appears that they have been subsumed by our hugely profitable utility providers and global institutional investors. This is at the expense of SME and larger businesses who provide employment in local communities, putting money through wages into family homes.
“We were promised a ‘just transition’ to a decarbonised energy system but this price control clearly demonstrates that policy-makers, regulators, and energy firms think that means ‘just’ business and ultimately pay packets will exclusively pick up the cost.
“It is not only our manufacturers and those that rely on them who will be hurt. Our food retailers and indeed our hospitals and water provider are amongst our largest energy users so all consumers will see the pass-through of these costs on their weekly shop and reduced funding for the vital front-line services provided by our NHS and NI Water.”