The decision follows lengthy and detailed discussions between the Department of Enterprise, Trade and Investment and Her Majesty's Treasury.
The Carbon Price Floor tax has been developed as part of the UK Government’s Electricity Market Reform programme and is designed to stimulate investment to replace aging generating plant in the GB electricity market. It will come into operation elsewhere in the UK from 1 April 2013.
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Arlene Foster said: "This is one of the most important decisions for the future of electricity supply and pricing in Northern Ireland. My Department has been in detailed discussions with Treasury for almost two years on this matter, setting out the consequences for consumers, our generators and our industry if this tax was applied in Northern Ireland."
The Single Electricity Market (SEM) which operates in Northern Ireland and the Republic of Ireland is legally, structurally and operationally distinct from the market elsewhere in the UK. These differences are important to the decision to exempt NI from the tax.
The Minister added: "The Carbon Price Floor is an important aspect of the UK Government’s ambitious climate change policy. However, the Single Electricity Market arrangement brings our generators into competition for market share with those in the Republic of Ireland. If our generators were required to include the carbon tax in their bid price, they would have been at an immediate, and increasing competitive disadvantage as the generators in the Republic of Ireland would not be subject to the tax."
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