The most significant difference between the energy markets in the UK is that 68 per cent of households in Northern Ireland use heating oil as their main heating fuel. The average cost to heat a home with heating oil has risen by 75 per cent over the past three years. Currently, most households in Northern Ireland have an annual energy bill of £2,312. In October 2011, the Department of Energy and Climate Change reported that the highest annual dual fuel bill in Great Britain was in Cardiff, where consumers paid between £1,073 and £1,175 for their energy. The recent Office of Fair Trading report on the off-grid market in the UK said it was “an oddity of the Northern Ireland market that the most common heating fuel, heating oil, is unregulated while electricity and gas, which are less common, are regulated”.
As consumers in Northern Ireland are being asked to pay significantly more for their energy, it is increasingly important that the regulatory and policy frameworks are designed in a manner that provides them with the best possible price. Unlike Scotland and Wales, energy policy and regulation are devolved to Northern Ireland. While this provides Northern Ireland with huge opportunities to develop policy, systems, infrastructure, etc, that meet its particular needs, it can also provide some conflicts as climate change and benefits policy are often set in Westminster. A recent example of this has been the cut in winter fuel payments across the UK. In Great Britain, to some extent the effects of this policy were counterbalanced, with the most vulnerable households receiving the Warm Homes Discount. But this policy has not been extended to Northern Ireland, making it even harder for vulnerable households there to afford their energy needs.
In 2010, Northern Ireland’s Department of Enterprise, Trade and Investment (DETI) published its Strategic Energy Framework, which sets the direction for Northern Ireland energy policy over the next ten years. Its aim is to develop a “more secure and sustainable energy system for Northern Ireland”, and it sets a target of ensuring that 40 per cent of Northern Ireland’s electricity consumption will come from renewable resources by 2020. The DETI estimates that this could mean an annual increase in electricity prices of between £49 and £83 per household, based on electricity prices in September 2010.
However, the issue remains that households in Northern Ireland are already struggling to afford their energy. Research in 2008 from charity Save the Children showed that in Northern Ireland, for every 1 per cent increase in domestic energy prices, an additional 2,800 households became fuel poor. Therefore, without any further policy intervention, a further 50,000 households could become fuel poor in the DETI’s drive to meet the Strategic Energy Framework targets.
It is the view of the Consumer Council for Northern Ireland that more needs to be done to empower energy consumers and place them at the centre of energy policy.
In 2010, Ofgem updated its scenarios for Great Britain’s energy market up to 2020. It estimated that energy prices over this time could rise by between 13 and 52 per cent. However, households in Northern Ireland already spend more than twice as much of their disposable income on energy than households in London and around 60 per cent more than the UK average.
The Consumer Council continues to call for a clear and detailed energy policy for Northern Ireland that works in the best interests of all consumers, and looks proactively and constructively to tackle fairly the priority needs of affordability, energy security and climate change.
After all, as Douglas McIldoon, the former Utility Regulator in Northern Ireland, recently commented: “Let us not deceive ourselves: unless there is a serious and committed effort to formulating energy policy whose priority is first and foremost to defend the interests of the businesses and households of Northern Ireland, things will only get worse.”
Aodhan O’Donnell, director of policy and education, the Consumer Council for Northern Ireland
This article first appeared in Utility Week’s print edition of 24 February 2012.
Get Utility Week’s expert news and comment – unique and indispensible – direct to your desk. Sign up for a trial subscription here: http://bit.ly/zzxQxx