Plan to abolish price control for small business electricity market

Plan to abolish price control for small business electricity market

The Energy Regulator is proposing to remove the price control which covers the supply of electricity to small businesses. Currently Power NI’s tariff for companies using up to 50 MWh a year has to be approved by the Regulator. The supplier has argued that switching is now frequent enough in this sector, which has around 50,000 customers, to justify the removal of the price control. 

The Regulator is now consulting on whether to allow Power NI to set its own charges free from interference just like its competitors. The oversight body had considered retaining a price control for the very smallest companies which use up to10 MWh a year but in the end decided against it, saying it wan’t justified. It noted that in this segment of the market each year Power NI was losing six customers in every hundred to its competitors. However it also pointed out that despite this attrition Power NI’s customer base in this sector was actually growing as it attracts the lion’s share of new connections. 

If the measure is approved, the price control would come into effect in Spring of next year.

One facet of the existing system is that it allows small firms to see at a glance at least one business tariff because as a price controlled body Power NI has to publish its charges. None of its competitors does. The removal of price controls could in theory mean that no business tariff is readily visible to provide at the very least a public reference point for those interested in switching. 

With the current weather, it’s not too hard to see a rosy future for solar farms here. When I visited the new Lightsource project outside Antrim, the 18,000 panels were producing double the electricity needed by its sole customer Belfast International Airport. The rest was being spilled on to the grid. 

The economics of the Crookedstone solar farm rest on several factors. The private wire connecting the farm to the airport means the supply does not attract the levies that apply to electricity transmitted through the grid. So no network charges, no Public Service Obligation levy or bill to cover the shortfall in income being suffered by the Moyle Interconector. As a renewable electricity generator, the solar farm’s output attracts a subsidy of about six pence a kWh, paid for by a levy on each unit of power transmitted through the NI grid. This mix allows Lightsource to sell its power to Belfast International Airport below the market rate and still make a profit.

From next Spring however when subsidies for new solar farms are abolished, Lightsource will have to make future projects work on lower income. Despite that, the company says with falling costs for solar panels, it expects to be able to expand its portfolio of plants here in Northern Ireland.

The latest figures on electricity supply from the Regulator show that domestic switching in the first quarter of this year running at close to four per cent which is well above the rate experienced in recent years. There’s nothing like low prices and new entrants to stimulate a market. One of those new entrants however is struggling to win business. Open Electric which opened for business last Autumn has managed to attract only 557 domestic customers by the end of March. That’s less than a tenth of what Click Energy has secured despite both companies setting up at roughly the same time.

In the Industrial and Commercial sector Go Power continues to be the lead supplier providing around 30% of total consumption and close to 50% of demand from the very largest users.

Other news:

NIE now faces rivals for connections. From May 31 companies other than the network owner can make connections of 5 MWs and above. 

Offshore wind projects, of which we have none here so far, have received a boost from a new EU initiative. Brussels has facilitated an agreement between the so called North Seas Countries: Belgium, Denmark, France, Germany, Ireland, the Netherlands, Luxembourg, Sweden, the United Kingdom and Norway. The aim is reduce costs for off shore wind farms through regional co-operation. There’s a belief that the new understanding could be a driver for growth of wind farms on this island. The new agreement is due to be signed on June 6.

Published on 05/06/2016

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