BODIES representing the north’s construction firms and housing associations have expressed grave concern after NIE Networks was given the go-ahead to increase the cost of connecting new build developments by 123% next year.
NIE Networks charges developers £1,094 per house to connect new build developments with at least 12 dwellings to the electricity grid.
The north’s Utility Regulator has given the grid-owner the green light to increase the standard connection charge to £1,974 from January and again to £2,445 from April 2025.
NIE Networks said the impact of inflationary costs on the construction sector means what it currently charges no longer reflects of the actual cost of the work undertaken.
It said will not impact single house connections and added: “There are a number of providers that can connect to the electricity network enabling developers to have a choice of provider.”
But Seamus Leheny, who heads the Northern Ireland Federation of Housing Associations said it will increase the costs of delivering social and affordable homes.
He said there are now more than 48,000 applications on the north’s social housing waiting list.
“Due to funding cuts this year to the social housing development programme, difficulties with NI Water, and increasing inflationary costs in building new homes - this significant increase from NIE Networks will impact all new social housing delivery, creating ‘the perfect storm’.
“The increase cannot be absorbed by our members, resulting in higher repayment costs per home that impacts rents, which will put additional pressure on some of the most vulnerable people in our society.”
Official government figures show the number of new homes completed in Northern Ireland last year fell to the lowest level for 64 years.
Mark Spence, who heads the Construction Employers Federation, said the north has built only around 50-60% of its annual new build housing need in each of the past 15 years.
“It is unquestionable that we are therefore in the middle of a housing crisis in Northern Ireland.
“Given the extreme challenges that many homebuilders are facing in the context of the decades of underfunding of NI Water leading to the inability to connect many thousands of new homes to the network, any additional cost implication to building new homes given the unprecedented inflation of recent years must be thought through very carefully.”
The CEF boss called on the Utility Regulator and NIE Networks “to urgently rethink the implications of what they are enforcing”.
In a statement, the Utility Regulator said NIE Networks had provided evidence in 2022 showing the costs of carrying out the connection work had increased beyond the level of inflation.
“As a consequence, there was a significant shortfall between the actual costs incurred by NIE Networks and the standard connection charge.
“This meant that the additional cost of the site works were being paid for by all electricity consumers.”
The regulator said decision making process involved engagement with the CEF and a public consultation.
It said NIE Networks had also agreed to a phased two-step increase in the charge.
