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

Lord Callanan Excerpts

Wednesday 16th November 2022 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Energy Prices (Domestic Supply) (Northern Ireland) Regulations 2022.

[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?

--- Later in debate ---

[Lord Lennie (Lab)]

My Lords, I thank the Minister for bringing the regulations before us and the noble Lords, Lord Browne, Lord McCrea and Lord Teverson, for their comments and questions. I thank the noble Lord, Lord Browne, in particular for clarifying the depth and strength of the market in Northern Ireland. I was going to say that the regulations were not contentious, but there is a bit of contention and, no doubt, the Minister will deal with that.

The instrument defines the terms “NI domestic electricity supply” and “NI domestic gas supply” to scope the extent of premises that will be eligible. Specifically, this is to include some non-domestic premises which due to their similar metering and tariff arrangements would receive EPG support. Given there is no way for energy suppliers to disaggregate, it is difficult to disagree with this. I would be keen to hear from the Minister the scope of this impact, both in terms of the number of non-domestic premises and any additional costs incurred.

The Explanatory Notes use places of worship as an example, as did the Minister, but what other types of non-domestic premises are included? Perhaps we could turn to the experts from Northern Ireland to help us with this.

I would like to raise an issue that was brought up in the other place during the debate on this instrument on Monday. There is a scheme document linked to this instrument, headed “Establishment of domestic electricity price reduction scheme for Northern Ireland”, which in Schedule 5 states that the Government will require suppliers of electricity to hand all meter data to the Government for the purposes of regulating and discussing the domestic supply scheme.

This data will encompass many things; it will be held by the Government for 10 years and can be shared with other departments, law enforcement agencies, regulatory bodies and others. While it is not pertinent to today’s instrument, this is the same for rest of the United Kingdom in the respective document. This appears to be a breach of the data access and privacy framework which was produced when smart meters were first rolled out. It states that smart meter data is the property of the customer and can be disclosed to third parties, including the Government, only with their consent. I understand the Minister in the other place committed to write to Dr Alan Whitehead MP on this issue and I would appreciate it if the Minister could ensure that I receive the same response.

[Lord Callanan (Con)]

I thank all noble Lords for their contributions to the debate. The Government have implemented the EPG Northern Ireland scheme to ensure that consumers are protected from excessively high energy bills over the winter period, and I am sure that is something the Committee supports. The Committee will be reassured to know the scheme is already in force and delivering support to households across Northern Ireland. I hope this will also go some way to assuring the public that the Government are committed to taking decisive action to deal with the energy crisis.

As well as providing immediate relief, this scheme, alongside the EBRS, will support economic growth and limit inflation caused by increasing energy bills and their knock-on impact on prices, labour, goods and services. The scheme has been designed to operate robustly and guard against fraud and gaming, and we will continue to monitor the schemes to ensure that support is provided and limited to those people and businesses who it is designed to help. We are committed to reviewing the schemes and we will consider how best to offer further support to the customers who are most at risk to energy price increases beyond April 2023.

In response to the questions raised, I will concentrate first on the point made by the noble Lord, Lord Browne, about heating oil. The noble Lord will be aware—and this was raised also by the noble Lord, Lord McCrea—that the alternative fuel payment will provide £100 to support households who do not use mains gas for heating. This alternative fuel payment is in addition to the £400 that households will receive through the energy bills support scheme. This applies in Northern Ireland and is designed to compensate for the rise in the price of heating oil from October 2022 in a way that is equivalent to the support received by people who heat their homes using mains gas and receive their support via the energy price guarantee. As the £100 alternative fuel payment is designed by reference to the increases in the price of heating oil and other alternative fuels that happened from September 2021 to September 2022, the Government are committed to continuing to monitor the prices over the coming months and we will consider further intervention if it is required to protect UK householders from extraordinary fuel prices.

The noble Lord, Lord Browne, further asked about unregulated electricity providers in Northern Ireland. Of course, the regulation of prices is a matter for UR, the regulator in Northern Ireland. The noble Lord is right that some electricity suppliers in Northern Ireland are not price regulated. It is a competitive market, but the EPG applies to all suppliers equally—the same discount applies to all.

The noble Lord, Lord McCrea, asked for clarification on backdated payments. The £400 EBSS will not be backdated, as it is paid as a flat sum. The EPG is, of course, backdated via an additional pence-per-kilowatt payment on top of the base EPG rate from November to March.

The noble Lord, Lord Teverson, also raised a point about the particular predominance of the oil provision in Northern Ireland; I think that I answered that in response to the noble Lord, Lord Browne. On the point regarding the single electricity market in Northern Ireland, there is no problem here. The measures that we are implementing are designed to support domestic consumers in Northern Ireland at the supply level as they relate to the retail market and do not impact on the underlying wholesale market. Therefore, they have no effect on the workings of the single electricity market.

The noble Lord, Lord Lennie, raised a point about metering and tariff arrangements and the scope of the impact on the number of non-domestic premises that have been brought into the EPG. In addition to places of worship, he questioned what other premises are included. I can confirm to him that some farms and small businesses are included. In respect of small businesses, it is those that are operating from former dwelling-houses. In reality, very few premises are affected—possibly fewer than 100 non-domestic premises are in scope—and the EPG and the EBRS of course provide equivalent support.

The noble Lord went on to ask about meter data. We are continuing to plan for and assess the use of personal data provided under the scheme documents in Northern Ireland and Great Britain. Obviously, as part of this work we will ensure that we comply with any relevant legal duties under the smart meters Data Access and Privacy Framework, so the data will be used only when necessary to calculate support payments and, of course, to ensure the good use of public money, which I am sure the noble Lord will support.

With that, I think I have answered all the relevant questions—

[Lord McCrea of Magherafelt and Cookstown (DUP)]

I do not think I heard a response from the Minister on whether the payment that was promised—the £400—would be coming out to the people of Northern Ireland before Christmas.

[Lord Callanan (Con)]

I cannot give the noble Lord a precise date for that now; we are working to implement it as quickly as possible. As soon as I can provide him with further information on that, I will do so. However, we are working as fast as possible, and we are aware of the urgency of the situation. We know that the money is required, and we will get it out as fast as we possibly can.

I commend the regulations to the Committee.

Motion agreed.