Gas prices: More pain for Northern Ireland households on the way as price review announced

Utility Regulator Chief Executive, John French, announced in a statement this morning that tariff reviews are underway for two regulated gas suppliers, SSE Airtricity Gas Supply and Firmus Energy.

Northern Ireland differs from other parts of the UK in that it has no price cap and, instead, the Utility Regulator must approve proposed price increases if suppliers can demonstrate they are not earning excessive profits.

Commenting on the tariff reviews, John French said: “We are reviewing the tariffs of SSE Airtricity Gas Supply and Firmus Energy, as unfortunately wholesale gas prices have significantly increased since the last tariff announcement on June 1.”

He put the price rises down to a reduction in the supply of gas into Europe from Russia.

“Wholesale gas prices have risen considerably over the last six weeks, as Russia has reduced its gas flows into via the key Nord Stream 1 pipeline to Europe by 80%,” he explained.

“These price movements have been further exacerbated by Asian and South American countries buying more liquefied natural gas (LNG), the higher than usual temperatures in Europe, outages in the French nuclear power station fleet, and historic price rises in the US gas market.”

He continued: “The price impact of these events has been considerable. For example, wholesale gas being sold for consumption in winter 2022 was trading at £2.41 per therm on 1 June 2022. By market close on 16 August 2022, it had reached £5.62 per therm. Unfortunately, these increases in wholesale gas price increases will have an impact on consumers in Northern Ireland, as wholesale energy costs now make up three quarters of consumers’ bills.”

Mr French continued: “Therefore, there will be increases in the regulated gas tariffs (SSE Airtricity Gas supply and Firmus Energy) in Northern Ireland. These increases will be announced in the coming weeks, once our reviews have been completed. At this stage, we are reviewing regulated gas tariffs only, and are keeping the situation on regulated electricity tariffs under review.”

He added: “In the middle of this current cost of living crisis, it gives me no pleasure to make this announcement. I recognise that the impact of these further price increases is another severe blow for consumers. While the underlying causes of these tariff increases are outside our control, we remain focused on doing whatever we can to support consumers in these desperate times. Over the last week, I have met the Chancellor of the Exchequer and local ministers twice to work together to deliver the £400 of energy bill support scheme to every Northern Ireland household. The timely delivery of this support to local households is critical, and we continue to work with others to find a pragmatic and robust way of getting this money to consumers as soon as possible.

“It is also incumbent on us as a regulator, and others across government and industry, to work together to support consumers as winter approaches. For that reason, I have invited government departments, energy suppliers and the Consumer Council for Northern Ireland to meet to look urgently at other practical steps that can be taken to support consumers this winter.”

Mr French also offered stern words for the suppliers as he referred struggling households to various charities providing advice.

“I will continue to remind energy suppliers of the need for a sympathetic approach to customers’ ability to pay, and of their obligations to avoid customer disconnections and consider other approaches to protecting people in debt,” he said.

“Consumers who are worried about the impact of these higher prices should always contact their electricity or gas supplier in the first instance, to discuss the options available to them. In addition, there are also a number of agencies who can provide free and independent advice to households, including Advice NI, Christians Against Poverty, and Money and Pensions Service.”

While Mr French did not announce any specific price rises in his statement, he told BBC Radio Ulster this morning that gas prices could go up by nearly a third, saying: “We are looking unfortunately at the moment, if we do the calculations today, you are looking at increases in gas at around 30% from 1 October.”