Utility Week

UTILITY WEEK | MAY 2022 | 23 Talking Points… "We were the very fi rst company in the world to sell green electricity and in that time everything's changed. I think there's a limit to the diff erence I can make by carrying on running a small green energy company." Ecotricity founder Dale Vince announces he is selling the company "The public mood in the middle of a cost of living crisis is not favourable on the behaviour of utilities and let's not fuel that. Let's act responsibly as a public service provider should." Jonson Cox, outgoing chair of Ofwat "A world-leading off shore wind target is an exciting challenge that the industry can rise to, but the vital work to unlock this potential now lies in setting out a clear plan to remove roadblocks to unlocking investment. It must not take over six years to secure project consents with risk placed fully with developers, and vital issues like grid access need resolving quickly." Danielle Lane, UK country manager, Vattenfall, responding to the government's Energy Security Strategy. Quote, unquote ary and will increase another 15% in early May. Northern Ireland's experience of the energy crisis indicates the level of support consumers in Great Britain will require if the price cap increases as predicted in October. Not only was the demand for the Consumer Coun- cil advice and complaints handling service 70% higher in February 2022 than pre-pandemic (February 2020) but the magnitude of individual need and distress has also risen markedly. Consumers contact us for con† rma- tion that they're being billed correctly as they † nd the prices hard to fathom, for advice on energy eˆ ciency and switching, and for guidance on where to turn for debt support and † nan- cial assistance. Suppliers should be prepared for a signi† cant upliŠ in all these types of requests and, ideally, government will have signi† cant † nancial support in place to address the hardship so many households will experience. The latest Utility Regulator estimate for fuel poverty is a staggering one in two households. If fuel poverty in Great Britain reaches anywhere near this level, suppliers should plan for engage- ment with a whole new cohort of newly vulnerable households who have never required help before and another cohort of angry customers who, while not in major hardship, are being faced with cutting back at Christmas or forgo- ing the family holiday to pay their bills. Peter McClenaghan, director of infrastructure and sustainability for the Consumer Council for Northern Ireland Read the full piece here https://utility- week.co.uk/lessons-from-the-northern- ireland-energy-price-crisis/ Lessons from the Northern Ireland energy price crisis N orthern Ireland's experiences over the past few months provide an interesting counterfactual to the Ofgem price cap. The Northern Ireland gas supply market does not have a price cap. Rather, the largest supplier in each network area is subject to a price control and tari' review process during which they must open their books to scrutiny by the Utility Regulator, the Consumer Council and the Northern Ireland Department for the Economy. Their tari' then acts as a price to beat for other suppliers. The tari' review process, routinely undertaken bi-annually or if tari' input costs change by more than 5%, is used to determine the maximum average tari' price and assess any permitted retrospective adjustments, including to the wholesale cost of gas. In one of Northern Ireland's three network areas, the increase in the wholesale cost of gas has led to † ve tari' review processes in the past 13 months. The Northern Ireland regime has distinct bene† ts, which include clar- ity for consumers as to the 2% pro† t margin suppliers are permitted, a lack of market disruption resulting from suppliers exiting the market, and the ability to ensure consumers are the † rst to bene† t if, and when, price reduc- tions come. However, the hedging strategies and liquidity of the respective suppliers under review has led to large variations in tari' s across network areas, some- thing consumers have found diˆ cult to understand. In the network area where tari' s are highest, consumers' dual fuel bills have been nearly £2,000 since Febru- Comment: If the experience of Northern Ireland holds for the rest of the UK, suppliers should prepare for a deluge of customer contacts.

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