Company snapshot: Northern Ireland Electricity Ltd.
Regulations see year's profits fall 6%
Northern Ireland Electricity (NIE) is the transmission and distribution (T&D) company with responsibility for carrying electricity from generators to customers within Northern Ireland.
It also has constrained cross-border links which help to facilitate the Single Electricity Market and can receive (and send) electricity from the Moyle Interconnector, linking to Scotland, when the system is available.
Until December 2010, NIE was a wholly owned subsidiary in the Viridian Group. It was sold for a reported £1.2bn to become a wholly owned subsidiary of ESBNI, the Northern Ireland subsidiary of the Irish ESB (Electricity Supply Board).
Part of the arrangement is that ESB will maintain a separate company structure for NIE with a local board of directors, currently chaired by Stephen Kingon.
Through the Utility Regulator, NIE charges are regulated for T&D. The review, which should have been operational on March 31 last, is under challenge through the UK Competition Commission.
The regulatory process can make the interpretation of the financial figures slightly more complicated. A key example is that NIE has an agreed formula to determine permitted revenue and if the out-turn is different, then the over, or under, recovery is carried into the pro forma accounts. In 2010-11, there was an under-recovery of £29.6m. When the revenue figures are adjusted the permitted revenue in 2010-11 increased by about 7% compared to 2009-10. Revenue in 2011-12 includes an over-recovery of £14.4m on the allowed amounts of permitted revenue. When total revenue is adjusted for this feature, permitted revenue in the last year fell by 5%.
The adjustment to regulated entitlement also affects operating profit which, in 2011-12 was £92.6m, down 6%.