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NIE looks over latest regulator plans on investment

By David Elliott

Published 24/10/2012

The Utility Regulator has been against increasing consumers’ bills to pay for new lines and poles
The Utility Regulator has been against increasing consumers’ bills to pay for new lines and poles

The company in charge of Northern Ireland's electricity lines, poles and substations said it will mull over proposals from the Utility Regulator over how it should run its business in the next five years.

The regulator released its final determination over RP5, the next and fifth period of price control where it sets out limits on how Northern Ireland Electricity (NIE) can spend its money and how much it can charge customers yesterday, but the operator wouldn't be immediately drawn on whether it will refer the matter to the Competition Committee.

"NIE's plans for RP5 reflect its focus on delivering an electricity network that is fit for future needs and provides value for money for customers," it said. "We will review the Utility Regulator's final determination and submit our response by the due date."

At the heart of the negotiations is NIE's assertion that it needs to invest heavily in infrastructure to maintain an uninterupted service to customers.

But to pay for new lines and poles it wants to add to consumers' bills, something the regulator has been against.

In the latest proposals the regulator has given some leeway to NIE, most notably when it comes to capital expenditure.

It will allow NIE to spend £396m over the next five years, a 26% increase on its draft determination but still some way off the £700m plus it wants to spend. It will also allow operating expenditure of £271m and has accepted NIE's proposals to cover full pension costs associated with existing employees of £58m.

To pay for these costs, and the investment in renewable and interconnection costs, the regulator will call for network charges for domestic consumers to rise by £4, 2.7%, and for large industrial consumers by £11,000, around 9%. That compares to NIE's proposals which would push prices up by 16% and 15% respectively.

The regulator also wants to wipe off £32m of costs from the previous price control period, RP4, which it claims is double accounting.

NIE has previously said the accounting procedure in question is in accordance with its regulatory licence.

NIE has until November 20 to respond.

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