North set for 14.5% hike in gas prices

Gas users in the North were today hit with another substantial price hike, as Phoenix Natural Gas announced that it was putting up prices by 14.5% from Sunday.

Gas users in the North were today hit with another substantial price hike, as Phoenix Natural Gas announced that it was putting up prices by 14.5% from Sunday.

The company blamed the continuing volatility of wholesale energy prices for the rise which follows a 17% rise last January and a 30% increase four months before.

The Energy Regulator said the news was clearly another blow to consumers – but said that but for intervention by him and the Consumer Council the rise would have been bigger.

Peter Dixon, chief executive of Phoenix insisted the price rise followed a “transparent consultation process” involving the regulator and Consumer Council.

Mr Dixon said: “Phoenix recognises the impact higher energy costs have on our customers and it is important to clarify to our customers today why the tariff price has changed – it is the continuing volatility of wholesale energy prices that is driving the cost increase.”

He said it had been widely reported wholesale energy prices for the coming winter had fallen from the record highs earlier in the year.

The company was buying gas for customers this winter at the lower price, he said, but it was still higher than those of last winter.

Mr Dixon added: “If prices fall further, Phoenix is committed to reflecting any reduced cost we pay for our gas in the end price to our customers.”

The regulator announced today that it was his intention to put in place from next year a formal control on Phoenix’s supply price.

It would mean that in future the regulator would not simply be consulted on price rises and was likely to include a formal obligation on Phoenix to buy gas efficiently on the wholesale markets.

Iain Osborne, chief executive of Ofreg said the new prise rise was “clearly another blow to gas consumers, and particularly those who struggle to pay their bills”.

He added: “Ofreg has been working with Phoenix and the consumer council in recent weeks to understand what is driving this tariff increase, and as a result this rise is around a quarter lower than Phoenix’s initial proposal.”

Mr Osborne said he was satisfied the price increase announced represented a reasonable adjustment.

He added: “Some commentators are suggesting that the commissioning of additional supply infrastructure in Britain will lead to lower wholesale gas costs over the coming year.

“If so, Ofreg and Phoenix have agreed that the reductions will be passed on to consumers.”

In addition a formal supply price control would ensure that only reasonably incurred costs can be passed on to customers, he added.

Mr Osborne said Ofreg was also committed to developing supply competition which would provide consumers with a choice of supplier and help to reduce their gas bills.

The price rise was condemned by Northern Ireland politicians, with former Stormont Finance Minister Sean Farren, of the SDLP, demanding a total review of domestic energy policy.

The North Antrim Assembly member said: “People are reeling from rates increases and the threat of water charges, but the latest gas price hike is a particularly bitter blow coming on top of the absolutely massive rises over the last year.

“While it may be down to rising world energy prices, the regulator must ensure that Phoenix’s pricing system is not a one-way ratchet.

“Latest signs are that the wholesale gas price is coming down in line with oil and any reductions must be passed on to consumers at once.

“But we can’t just be victims of world trends. We need government action to protect consumers from huge price fluctuations, starting with improving the thermal efficiency of homes.

“We need a simple, effective scheme for radically improving home insulation, maximising thermal efficiency in new houses and certifying energy use for second-hand houses for sale.”

Sinn Féin poverty spokeswoman Cathy Stanton said the price rise was unsustainable and would hit those most at risk from fuel poverty hardest.

But she also voiced concerns at the Energy Regulator’s handling of the controversial rise.

“These price increases are unsustainable and many people will be forced to make difficult choices about what bills they can afford to pay,” the North Belfast MLA said.

“Considering that one in three households suffer from fuel poverty and that hundreds of older people die from the cold every year, these price increases should be seen for what they are.

“They will lead to immense hardship and mean that people will die.

“I am also deeply concerned that the regulatory framework appears to have failed to protect people.

“There is a commitment to reduce the cost of gas when wholesale prices come down further. The Regulator must ensure that Phoenix do not wriggle out of this and heap more misery on people who are least able to afford it.”

Alliance MLA Sean Neeson called for an independent audit into prices to try to prevent the increase.

“Over the past two years, price rises have been phenomenal, and this latest hike is totally unacceptable,” the East Antrim MLA said.

“The Housing Executive now installs gas heating systems as standard in its new homes.

“I call on independent auditors to also review this practice because the price rises mean that many people will find it extremely difficult to heat their homes properly.”

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