18 September 2008 Edition
Electricity and gas suppliers in North raise prices
Tackling fuel poverty is our urgent priority
BY EMMA CLANCY
ELECTRICITY supplier NIE and Phoenix Natural Gas announced on 10 September that they would be raising their prices by 33.3 per cent and 19.2 per cent respectively, to take effect on 1 October. This news has been met with deep anxiety by many across the North about their ability to heat their homes this winter, with half the population estimated to be already experiencing fuel poverty.
Fuel poverty is when 10 per cent or more of a household’s income needs to be spent on energy bills to maintain a reasonable temperature in the home. The latest round in price hikes follows large rises earlier this year when NIE raised its prices by 14 per cent and Phoenix by 28 per cent. The new costs will take the average household’s annual electricity bill from £439 to £585 (up 100 per cent from last winter) and the average gas bill from £577 to £689 (up 113 per cent).
NIE and Phoenix have claimed that the price hikes are necessary due to the increase in global wholesale energy costs, driven by the high price of oil. The utility regulator has defended the rises and the ‘global prices’ claim – despite the fact that, in the past year alone, NIE’s rate of increase has almost doubled that of British electricity providers.
Although the British Exchequer has raised £40 million in VAT from the recent energy price hikes in the North of Ireland, when British Prime Minister Gordon Brown announced an emergency £1 billion package to deal with fuel poverty last week he made it clear that it would not reach Irish households.
On Monday, 15 September, deputy First Minister Martin McGuinness outlined a series of proposals on tackling fuel poverty to First Minister Peter Robinson in the lead-up to Gordon Brown’s visit to Belfast.
• The indefinite deferral of domestic water rates;
• An emergency fund and Special Relief Scheme;
• A ministerial sub-group on anti-poverty;
• Completing the Warm Homes Scheme;
• A bulk-buying scheme for oil.
Other proposals in the package include the redirection of unspent funds across all departments in the autumn budget monitoring round and a benefits entitlement uptake campaign.
Speaking ahead of the meeting with Brown, Sinn Féin West Belfast MLA Jennifer McCann said: “The political parties must unite in demanding that a hardship fund be established, in part financed by the energy providers, and that the British Treasury releases to the Executive the £40 million it has collected here in energy tax.”
The negative impact on ordinary people of the rocketing global oil prices is compounded here due to the fact that energy provision is in the hand of private companies. ‘Stringent’ regulation is supposed to protect the interests of the public but it is clearly failing to do so.
Defending the price rises, utility regulator in the Six Counties Iain Osborne wrote:
“People often ask, why don’t shareholders’ profits take the pain? My answer is – what profits?”
NIE is owned by private company Viridian, which posted profits of more than £150 million last year on a turnover of more than £1 billion. Phoenix posted profits of almost £20 million on a turnover of £99 million.
Jennifer McCann said:
“The utility regulator gave no reasonable justification as to why consumers have to pick up the running costs of energy companies.
“Trade Minister Arlene Foster has met with the energy regulator and effectively agreed to sign off on these price increases. She has serious questions to answer in relation to how agreement to these increases was reached.
“There needs to be a level of corporate social responsibility to ensure that a percentage of that profit is put into a relief fund to help alleviate the financial difficulties people are facing this winter.”
Globally, the big oil giants have made record profits in the past year due to the soaring price of oil. In the first quarter of this year, Shell made £3.9 billion in profits; BP made £3.3 billion. The oil companies have spent much of these profits buying back their own stock to raise the value of their share price instead of investing in renewable energy sources or contributing to social well-being in any way.
“The political parties here must also unite in supporting the growing demand for Gordon Brown to introduce a windfall tax on the obscene profits of energy companies.”
The Department of Social Development (DSD) currently provides pensioners over 60 with a winter fuel payment – but this payment rate has not risen since the winter of 2000-2001 to match spiralling energy costs.
Foyle MLA Martina Anderson said she has called for the Fuel Poverty Task Force, established in May by the DSD, to consider the benefits of community heating schemes which function by creating a network that distributes heat from a central location to homes in a given district.
“A community heating scheme in the Hutchestown area of Glasgow led to a massive drop in each home’s annual heating bill, which fell from an average of £700 a year to around £182 a year.
“I was extremely disappointed at Social Development Minister Margaret Ritchie’s response, which stated that the task force would only be pursuing short-term measures and community heating would not be considered as it is a longer-term solution.”
OIL FROM VENEZUELA
Another option Sinn Féin has proposed is to source discounted heating oil from oil-rich Venezuela.
“This is not a far-fetched idea but a very positive and realistic option.”
Venezuela’s left-wing president, Hugo Chávez, launched discounted heating oil programmes to benefit poor US communities in the Bronx and Boston in 2005; by 2006, this programme was providing heating oil at up to a 40 per cent discount for 400,000 people in 16 states across the US.
Last year, former London mayor Ken Livingstone struck a deal with Venezuela for discounted oil to be provided to the London authorities in exchange for assistance with environmental and city management in Caracas.
“Chávez has made a standing offer to other European countries for similar schemes,” Martina Anderson said, “and there is no good reason why the Executive should not take it up.”
Jennifer McCann added:
“We need to act now to prepare for a future powered by renewable energy at the same time as improving household energy efficiency and taking immediate steps to ensure that the vulnerable – particularly elderly people and families with young children on low incomes – are protected from the elements this winter.
“But Sinn Féin recognises that the Executive faces major restrictions on its ability to deal with the fuel poverty crisis as a direct result of the limited fiscal autonomy it has from the British Government.
“Tackling fuel poverty – and poverty in general – is our urgent priority. The effective functioning of the Executive on the basis of partnership, and its increased independence from Britain through the devolution of real power – economic powers and policing and justice – will be crucial to our ability to solve the serious problems faced by local communities.”