Energy Prices (Domestic Supply) (Northern Ireland) Regulations 2022

Lord Browne of Belmont Excerpts

Wednesday 16th November 2022 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, these regulations were laid before the House on 31 October 2022. They are quite narrow and define the terms “Northern Ireland domestic electricity supply” and “Northern Ireland domestic gas supply” for the purposes of the energy price guarantee Northern Ireland schemes. I will refer to these schemes as the “EPG NI”.

Energy is of course an essential and unavoidable expense for households. The economic fallout of the Covid-19 pandemic and the ongoing war in Ukraine have driven a global inflationary surge that is continuing to hit UK households and businesses. A typical household in Northern Ireland has seen its energy costs increase threefold since this time last year, which will put significant financial pressure on Northern Ireland households. The Government have moved swiftly to introduce emergency legislation to protect consumers from these inflated prices and to limit inflation.

The electricity and gas markets operate differently in Northern Ireland. There is a different regulator—the Utility Regulator for Northern Ireland—no price cap and an entirely different set of suppliers. Therefore, Northern Ireland could not fall under the remit of the Great Britain energy price guarantee scheme. The Government have established the energy price guarantee Northern Ireland scheme to deliver much-needed equivalent support.

The EPG NI reduces the unit cost of electricity and gas for domestic consumers in Northern Ireland, via the same mechanism as the energy price guarantee in Great Britain. Energy suppliers reduce consumer bills by a set amount of pence per kilowatt hour, and His Majesty’s Government compensate them for that reduction. Electricity costs are being reduced by 20 pence per kilowatt hour and gas by almost 5 pence per kilo- watt hour.

Importantly, the EPG schemes in Great Britain and Northern Ireland are intended for customers on domestic tariffs. The energy bill relief scheme is for customers on non-domestic tariffs. The Energy Prices Act 2022 set out that the EPG Northern Ireland schemes are to apply to those with “domestic electricity supply” and “domestic gas supply”. These regulations define those terms for Northern Ireland.

These definitions will mean that some non-domestic premises will be in scope of the energy price guarantee electricity scheme in Northern Ireland. This includes some places of worship, which have similar metering and tariff arrangements to domestic premises. These non-domestic premises will receive EPG support. There was no timely way for energy suppliers to disaggregate them from traditional domestic premises with similar metering and tariff arrangements.

The Government want to ensure that energy users in Northern Ireland receive equivalent support to that offered to Great Britain. By a quirk of the electricity market in Northern Ireland, a bespoke definition of domestic electricity supply was required for the timely establishment of a scheme in Northern Ireland. That is what these regulations do, and I therefore commend them to the Committee.

[Lord Browne of Belmont (DUP)]

My Lords, I welcome this instrument. It will go some way towards alleviating hardships in many Northern Ireland households.

Energy supply in Northern Ireland is very complicated because Northern Ireland has a separate energy market from the rest of the UK, with its own rules and regulations, but, as in the rest of the UK, energy costs continue to rise at a very high rate. One problem is that two-thirds of households in Northern Ireland use heating oil but, unlike in Great Britain, the oil market in Northern Ireland is not regulated. Is there any consideration of how those who use oil will be compensated? There is great competition in the oil market in Northern Ireland, and so many suppliers, so the prices can be kept at a reasonable rate.

Turning to gas, in the past 12 months both Northern Ireland gas providers, SSE Airtricity, which supplies Greater Belfast, and Firmus Energy, which supplies townlands, have increased their prices many times. There is a problem here. The gas market is even more complicated because the Utility Regulator must approve any tariff changes proposed by Firmus Energy in its 10 townland networks, but not in Greater Belfast. SSE Airtricity must also go through the regulator.

The main electricity provider in Northern Ireland is Power NI, which is overseen by the Utility Regulator, but there are other electricity providers in Northern Ireland, which increase their prices. They are not subject to the regulator and can put up their prices at any time. Has that been considered?