11 June 2002

Electricity prices stifling NI business growth

Northern Ireland businesses have given a clear message to government and energy regulators that current electricity prices are stifling future growth.

A MORI poll published today revealed that 95% of local businesses are "concerned" at the disparity in electricity pricing in the north compared to the rest of UK. More worrying is the 64% of respondents who believe that overpricing is leaving local businesses at a competitive disadvantage to their mainland counterparts.

While the majority of those polled agreed that a skilled workforce was the single most important factor in a growing economy, they also pointed to low-energy costs as the next most important element behind a successful business.

Only one-in-four believed that energy savings post-privatisation have filtered through to Northern Ireland. Some respondents were less than optimistic over the quality of the service they were receiving, with one respondent writing: "The electricity companies have no interest in or contact with their end user. If we as an organisation adopted this attitude, we would not survive very long."

Another said: "On the basis of personal experience, Northern Irish consumers are being ripped off. Every now and then they throw us a few pennies, especially when the situation is highlighted in the local media."

As for the reason as to why cost here were so high, the UK government was the leading culprit at 43%, with Northern Ireland Electricity at 26% and 16% of respondent believing the electricity generators were most responsible for overcharging. Only 3% said that the industry regulator was responsible for the status quo.

NIE for their part have defended current billing levels, saying that the majority of the bill was derived from the huge generation costs. A spokesman for Viridian, NIE's parent company, said: "We've openly acknowledged for years that there is a pricing problem stemming back to long-term generation contracts put in place before privatisation."

One of the conclusions that can be drawn from the poll is if prices are to be reduced, there must be greater competition in the energy market. The availability of renewable energy sources may also provide a cost-effective alternative route for the industry.

The poll was carried out on behalf of the Royal Bank of Canada and surveyed directors from 100 companies with 50 or more employees.

(GMcG)