Electricity Tariff Briefing Predicts Little Change This Autumn
The Electricity Regulators latest tariff briefing, which predicts the level of pass through charges for electricity bills from this autumn for the year 2012-13 reveals little change this year due to a number of factors. While some elements of the charges have increased, others have fallen, with the situation compounded by falling demand which means that the new charges will be applied to an ever smaller universe of users. NIE’s charges for Transmission and Distribution are set to rise by 0.7% while DUOS rates for providing operating and maintaining the distribution service are likely to increase by some 5.5%, although final figures will be published on NIE’s website in August.
Transmission Use of Service charges have increased by a whopping 29% on the face of it from £26.4m to £32.7m, but much of the increase is due to the loss of a rebate of some £4m which was applied last year because of over recovery of charges in the year 2010/11. For the first time also this year, consumers are being asked to fund losses on the Moyle Interconnector which has suffered major losses in revenue to cable faults and competition from the introduction of the second interconnector which has now come on stream. These losses are likely to amount to some £14.5m for the tariff year 2012/13. MNI have serious concerns over future costs for Moyle as we understand that the system is down once again due to a cable fault which may mean the replacement of one of the two cables at a cost of as much as £50m. Despite the increases above there is some good news, with major reductions in some of the other charges. Public Service Obligation shows a major reduction for the coming year, down from £33m to an estimated £21.5m, while market charges are also down some 36% in Northern Ireland. As these charges are applied in euros, the falling euro rate has for once helped NI consumers with reductions some 7% more than will be seen south of the border.
Demand is predicted to fall a further 4% in 2012/13, but many of the reduced charges are offset by the fact that demand in 2011/12 fell further than predicted, leading to under recovery of charges in the current year. This under recovery will have to be charged back into the market for 2012/13. Overall, the total regulated cost of pass through charges has remained much the same with charges falling from £459.3m to £459.2m for the coming year. Lower consumption of electricity , estimated to be down some 4% for the coming year, will however mean that the level of charges is likely to increase slightly for commercial users. This may well be offset by a predicted 5-10% reduction in wholesale gas prices (leading to lower generation costs), which is likely to mean that commercial electricity costs will to remain fairly static for contracts relating to 2012/13. Final figures will be published in August. Full details of the Regulators briefing can be found at: