Costing of living crisis: Government must clarify how NI will benefit from energy plan – Stormont minister

Prime Minister Liz Truss tabled plans for an “energy price guarantee” on Thursday, with a pledge to cap average household bills at £2,500 for the next two years.

Ms Truss said there would be a scheme for businesses and other non-domestic energy users, such as schools and hospitals, for six months.

However, the Northern Ireland energy market is structured differently to the one that operates in the rest of the UK.

The Government has acknowledged that a different approach will be required in the region but has not outlined any details, other than a pledge that a “similar” level of support will be offered to people in Northern Ireland.

The picture is potentially complicated further by the absence of functioning devolved executive in Northern Ireland.

The DUP has blocked the formation of an executive in protest at Brexit’s Northern Ireland Protocol. Some ministers remain in post in shadow format but they are limited in the decisions they can take.

Mr Murphy, who remains finance minister, claimed Ms Truss’s speech at Westminster lacked detail on how support would be delivered in Northern Ireland.

He also said the package unveiled by the Government did not go far enough.

“While the British Government has said the energy policy changes will apply here, they have failed to outline what exactly that means,” he said.

“This will bring little comfort to individuals who are having to decide between heating and eating. Likewise, businesses trying to plan ahead for the winter months have no certainty as to when support will be forthcoming.

“The absence of a functioning Executive will require a workaround. At a time of crisis for citizens, businesses and public services, this is completely unacceptable. I am calling for urgent clarity on how energy support will be delivered locally.”

The Sinn Fein minister added: “While the support announced today is to be welcomed, it does not go far enough to support the most vulnerable in society or small businesses. Nor is it likely to meet increased energy costs faced by schools, hospitals and other public-sector bodies.

“Six months does not provide enough certainty for businesses who are facing spiralling and crippling energy costs. Businesses don’t have the luxury of waiting for the outcome of reviews to determine if their business is deemed to be a vulnerable sector entitled to further support.

“Benefits should be uplifted in line with inflation to support low-income households with the increased costs they will face this winter, there should be an uplift in Universal Credit and the reduced VAT rate for the hospitality sector should be reinstated. These measures must be included in the upcoming fiscal statement later this month.”

Mr Murphy said it was “incomprehensible” that the Government was not imposing more taxes on the energy companies.

“Instead of imposing further taxes on energy companies, the Westminster government is increasing borrowing in order to sustain the profits of energy companies,” he said.

“It is our citizens who will in the longer-term foot the bill for these interventions.”

DUP MP Sammy Wilson welcomed Ms Truss’s announcement, insisting that Northern Ireland householders would not miss out.

“The size of the package announced demonstrates for anyone in doubt, that our place within the United Kingdom delivers benefits that simply could not be replicated were our nation to be torn apart,” he said.

“The scale of action also highlights that it is only Westminster which has the capacity to make a meaningful difference in the face of the crisis all households are facing.

“I was glad the Prime Minister was able to very clearly state that all parts of the United Kingdom, and specifically Northern Ireland would benefit. This is a problem which we are all facing together and it is right that measures to help must be delivered equally.

“The Prime Minister also rightly recognised that the crisis not only requires short-term intervention and assistance, but also action to secure the long-term energy supply needs of the United Kingdom and to ensure we can become an exporter of energy in the future.

“Whilst we welcome this decisive action, it is disappointing that none of the funding that will be necessary will come from the energy companies who are set to make significant additional profits, driven largely due to Russia’s invasion of Ukraine.

“We have previously called on the Chancellor and the Government to look to a windfall tax on energy companies and believe this would have been a suitable way for such UK-wide assistance to have been funded.”

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WHAT DOES THE ENERGY PRICE GUARANTEE MEAN FOR ME?

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Prime Minister Liz Truss has announced that the typical UK household will pay no more than £2,500 a year for energy for the next two years from October 1 as the Government responds to soaring gas and electricity prices.

Without intervention, the average household energy bill would have jumped 80% from October 1, from the current £1,971 to £3,549 a year under Ofgem’s latest price cap.

Ms Truss has announced that a new Energy Price Guarantee will supersede the existing price cap until 2024, the year the next general election is expected.

It will apply to all households in Great Britain, with the same level of support made available to those in Northern Ireland.

– What is the price cap?

The energy price cap was introduced in January 2019 and is set by regulator Ofgem to determine the amount energy suppliers can charge customers on their standard variable tariffs.

Now set quarterly, Ofgem dictates the price that households pay for every unit of gas and electricity they use, based on wholesale prices. It also includes allowances for tax, charges paid to the energy networks, green levies and social payments.

The cap is quoted in the form of the average annual household bill. Currently, it is £1,971, and was set to rise to £3,549 in October.

Instead, Ms Truss is to effectively freeze the cap at £2,500 – saving households more than £1,000.

– Does this mean I will not pay more than £2,500 for my energy?

As the new guarantee, like the former price cap, is a limit on unit prices – despite it being quoted in the form of the average bill – customers can pay far more or much less depending on how much they use.

Households are also billed for standing charges, which are set at a daily rate regardless of energy use.

– Will I still get the £400 rebate?

Yes, although the £2,500 figure named by Ms Truss takes this rebate into account, hence why it is higher than the current price cap of £1,971.

Every household in the UK will still receive the non-repayable £400 payment from the Government as part of the cost-of-living support package, which Rishi Sunak announced while chancellor.

It will be applied directly to households’ energy bills, divided in to monthly instalments between October and March.

The Government has also confirmed that all other support payments promised for this winter will remain in place.

– I’ve recently locked into a fixed deal, will I miss out?

Up to 15% of households are on fixed tariffs, many locked in at higher prices than the current cap amid previous dire predictions that it could rise to as high as £7,263 next year.

Many of these customers will now find themselves paying a far higher rate for their energy than if they had remained on a standard variable tariff.

Questions remain as to whether these customers will be allowed to switch to the new guarantee, and if early exit fees – which can exceed £300 – will remain in force.

For those who have fixed recently, it is worth immediately checking when the “cooling-off” period ends to allow for a possible penalty-free exit.

– Will this mean I have to pay higher energy bills further down the line?

Under proposals made by certain energy providers, households would have paid inflated energy bills over the next decade, as a means of spreading the cost of freezing the cap at its current levels.

But the Government has instead opted to borrow billions from global markets to fund its guarantee. It did not immediately reveal how much it expected the deal to cost.

– Does this mean my direct debit will fall?

No. As the new price guarantee is slightly higher than the current cap, direct debits are unlikely to fall. Although the freeze has prevented the whopping 80% increase threatened by Ofgem, it will still mean an average rise of around 6.5%.

Most households pay for their energy via direct debit. The payments are set by suppliers and based on your estimated energy use over the course of a year.

Your supplier must notify you before making any changes to your payments.

– I am on a pre-payment meter, does this apply to me?

Yes, it does – which will be a particular relief as those on pre-payment meters are more likely to be in vulnerable circumstances than those paying by other means.

The rates at which prepayment meter customers are charged are slightly higher than for those paying via direct debit, and should they run out of credit they are not able to use any gas or electricity.

– What about households who do not pay direct for mains gas and electricity, such as those living in park homes or on heat networks?

Ms Truss has assured these households that they will be “no worse off” and will receive support through a fund.