North energy firm to cut prices

The North's hard-pressed householders were given an early Christmas present of reduced electricity and gas prices today.

It was confirmed Phoenix Gas is reducing its prices by over 22% and NIE Energy is dropping the price of electricity by more than 10%.

The announcement came as North Finance Minister Nigel Dodds is poised to announce a package of measures aimed at softening the effects of the credit crunch and economic downturn.

While the reductions will be welcomed, they only go some way towards countering the massive increases in prices earlier in the year.

NIE put up its tariffs by 33.3% from October 1 on top of a 14% rise in July. Phoenix increased its prices by 19.2% in October after a 28% jump in May.

The reductions came after the Energy Regulator instigated a review of prices charged for gas and electricity as a result of the recent significant falls in wholesale fuel costs.

He said earlier in the month he wanted an announcement before Christmas so people would benefit from reduced bills for the depth of the winter.

Energy Minister Arlene Foster welcomed the reductions. She said: “The announcement of a 22.1% decrease in gas prices is excellent news for Phoenix Supply customers.

“This should help encourage consumers to consider the benefits of natural gas as a fuel and help build on the existing investment by Phoenix in gas infrastructure.”

She added: “A 10.8% reduction in NIE Energy tariffs is also good news for hard pressed electricity consumers and a welcome move by the company.”

The minister also welcomed the decision of Firmus Energy to extend its current price cap which has been in place since January 2006 through January into February.

Commending the energy companies for working through the tariff review process speedily, Mrs Foster said: “As we approach what are usually the coldest months of the year, reductions in energy costs will benefit all consumers, but particularly those who are most vulnerable.”

The Consumer Council welcomed the move by Phoenix and NIE Energy to quickly pass on reductions as a result of falling wholesale energy costs, but said people in the North were still paying too much.

But they expressed disappointment NIEE’s cut was so small and said customers would have expected a bigger reduction given the slump in wholesale energy costs.

They said the cuts were needed to help consumers struggling to pay an extra £27 (€30) a week to heat and light their homes, put food on the table and keep a roof over their heads compared to a year ago.

The council said prices in the North were still higher on average than in Britain and it would be keeping up the pressure to ensure that all changes which could be made to the regulatory system to drive down bills further and faster were made as a matter of urgency.

Even with the price reductions there would still be 225,000 homes in fuel poverty and the council said it hoped to see devolution working for consumers later today when the Executive makes its announcement on measures to help households cope with the cost of living crisis.

Eleanor Gill, chief executive of the council said: “The announcement of £153 (€170) off the average bill wipes out their October price increase and more which is good news for their customers.”

She said the electricity price cut would lop £63 (€70) off the average bill.

But she said: “NIEE’s 10.8% decrease is a long way off their 33.3% increase in October.

“Customers would rightly have expected to see a bigger drop in their bills today as a result of the slump in wholesale energy costs.

“Electricity customers now have to come to terms with the sad reality that they will have to accept a low reduction because of the regulatory purchasing rules.”

The council would expect the Utility Regulator to take action to ensure prices are reduced further should wholesale costs remain at low levels, said Ms Gill.

“Times have changed and it is necessary that the regulatory system changes too if it is to protect consumers’ interests and offer better value for money.”

The Utility Regulator Iain Osborne welcomed the reductions which he said delivered on his promise to see bills reduce as quickly as possible should underlying costs come down.

He said although some costs were locked in by forward contracts, they had used the remaining flexibility to pass through falls in the wholesale costs of gas and coal.

Phoenix said the reduced price would mean an average of £10 (€11) a week off the average bill and reduce the annual bill to £534 (€595).

David Strahan, General Manager of Phoenix Supply, said: “The announcement is testament to our commitment to deliver the lowest possible price to our customers, and further demonstrates that natural gas remains excellent value for money compared to other fuels.”