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Northern Irish firms at risk of rising energy costs from policy proposals

185 of Northern Ireland's largest energy users could be hit with additional costs up to £31,000 depending on the outcome of a consultation being considered by the Department for the Economy.

185 of Northern Ireland's largest energy users could be hit with additional costs up to £31,000 depending on the outcome of a consultation being considered by the Department for the Economy.

Commercial energy users in Northern Ireland (NI) could see their annual bills increase by thousands of pounds under plans being considered by the nation’s Department for the Economy (DfE).

A consultation was launched on 17 May on plans for an EnergyWise scheme offering grant funding to help cover the cost of installing domestic energy efficiency measures.  The provision of low or interest-free loans to supplement this is also being considered, with the scheme intended to help Northern Ireland contribute towards the UK’s EU-set target of 1.5% year on year energy savings.

In addition to the Energy Company Obligation (ECO) which applies across the UK, the NI Sustainable Energy Programme (NISEP) is currently used to deliver some of these energy savings. However, the present scheme is due to close in March 2017 and the DfE alongside the Utility Regulator (UR) has proposed the new EnergyWise scheme to replace it.

The proposals for how the £8 million scheme is to be funded have drawn heavy criticism as of the three options being considered only one draws the cost solely from homeowners who will benefit from the scheme. The other two scenarios would see commercial businesses stump up some of the cost, with one option resulting in an additional £8,600 on the bills of NI’s largest energy users. 

The three funding options for the EnergyWise scheme include proposals that could see the most energy intensive company’s pay significantly higher energy bills, despite not being eligible for the grant funding to be made available under the initative. Image: ‘EnergyWise Scheme Proposals’ consultation paper, DfE and UR.

The three funding options for the EnergyWise scheme include proposals that could see the most energy intensive company’s pay significantly higher energy bills, despite not being eligible for the grant funding to be made available under the initative. Image: ‘EnergyWise Scheme Proposals’ consultation paper, DfE and UR.

DfE’s consultation also states that the very large energy users may experience a much greater increase than the average displayed in the table above, in the region of £31,000.

By contrast, under the same scenario homeowners able to claim for cash to pay for energy efficiency measures would have £3.78 added to their bills if this option 3 (above) is selected.

Manufacturing NI, which represents 550 manufacturing companies supporting over 214,000 jobs in the sector, has branded the plans “unfair and unwarranted”, claiming DfE has not correctly considered the impact on businesses.

The consultation document states that a Regulatory Impact Assessment (RIA) published alongside the consultation was carried out and despite not publishing its findings, DfE concluded that “overall there should be no negative impact on businesses in Northern Ireland”.

Manufacturing NI argues that depending on the outcome, the plan could increase the gap of energy costs between Northern Ireland and the Republic which would "reduce competitiveness and thwart ambitions to grow the economy". It has called for the RIA to be released as it believes its conclusion to be flawed, adding that the “unworkable and unwelcome proposals” would damage ambitions to grow the economy.

The organisation’s response also claimed that NI businesses already pay some of the highest energy bills in Europe and that the government should be working to lower these rather than add additional costs.

“For the Department to provide an environment which allows business to create wealth and work, for more and better jobs, it must move to reduce energy costs for business rather than add policy costs,” it states.

The response goes on to claim that a “tax on energy” should not be applied to businesses to pay for domestic energy efficiency schemes and that instead "funding for domestic home energy efficiency should come from government sources; through borrowing (repaid through rents from social housing) and/or those who directly benefit from it themselves”.

Manufacturing NI conclude: “It is our view that rather than design a scheme with the genuine aim of promoting energy efficiency to meet a 200GWh saving instead this has been an exercise in trying to find a way to continue to collect money but this time excluding those who pick up the bulk of this bill and without any consultation with them.  It is ill-conceived, illogical and does not meet the tests required to proceed.”

The consultation closed on 10 June and in response to the ciricisms levelled at the proposals, a DfE spokesperson said: "Consultation responses are being considered and will be published in due course."

The article has been amended since its original publication to include a statement from DfE.