Northern Ireland consumers in grip of worst energy price shock since 1970s
RISING costs have left the average consumer in the north paying £1,000 more for energy than last year, amid the worst price shock since the 1970s.
Northern Ireland’s Utility Regulator has warned that soaring wholesale gas costs mean domestic gas bills could increase by another 50 per cent, or £300, this winter, with electricity bills set to rise 20 per cent.
Home heating oil, used by two-thirds of households in the north, is also at a three-year high after doubling in a year.
The Consumer Council said a 20 per cent rise in road fuel since last year could leave some households with oil-fired burners and with longer daily commutes, more than £1,200 worse off this year than in 2020.
Energy suppliers have already announced multiple price increases during 2021.
Firmus Energy and SSE Airtricity increased their gas tariffs by 35 per cent and 21.8 per cent at the start of October.
That was based on the wholesale price of gas at the end of August.
Some power suppliers have already increased their tariffs three times in 2021.
But wholesale natural gas, which makes up around 50 per cent of gas tariffs, has increased by 109 per cent since then, in a perfect storm of market forces that has sparked a global energy crisis.
Energy firms can trigger a price increase if their wholesale costs increase by more than five per cent.
The Utility Regulator John French has warned that gas and power firms could do that as soon as December 1 in a bid to absorb the spiralling costs.
Constraints on Europe’s supply of gas from Russia is the major factor in the recent surge, while greater competition with Asia and South America has also resulted in greater price pressure.
The cost of coal and crude oil has also rocketed in 2021, generating more demand for gas.
“With such a volatile market, it is really difficult to predict how long gas prices will stay high, said Mr French.
“But as a result of these record global prices we do expect to see a significant upward pressure on bills until summer 2022.
“As wholesale costs make up around half of both our gas and electricity bills, I unfortunately envisage further significant increases on both household and business energy bills in the coming weeks.”
Businesses, who typically have energy contracts which fluctuate in line with wholesale costs, are already enduring massive spikes in costs.
Fermanagh based glass manufacturer Encirc, which also operates from England and Italy, said its energy costs could go up by £60m this year.
The Utility Regulator said there are no immediate signs of wholesale energy prices returning to normal levels any time soon.
“Should wholesale energy prices 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,” said Mr French.
Peter McClenaghan from the Consumer Council said the pressure on household budgets is continuing to increase dramatically.
“This is a worrying time for consumers as these fuel price increases are driven by factors outside their control and coincide with rising inflation, proposed tax rises and increasing food costs.”