Belfast Telegraph

Saturday 20 September 2014

NIE faces critical decision on price

The process of determining the approved costs and revenue for Northern Ireland Electricity (NIE) for the next five years has been a complex and detailed exercise.

The initial draft determination price review proposals (RP5) from the Regulator, followed by a major counter claim from NIE, have now moved to the final stages.

The Regulator has listened to the extensive reactions and published a final determination: final that is, unless NIE invokes arrangements for it to be considered by the Competition Commission. NIE is taking time to consider its position.

From the paperwork of the dialogue, there are claims (both ways) that this dialogue has been fraught and tense.

There is little credit, for any party, in a bid for capital spending (excluding renewables) which was initially stated by NIE as for £606m, and then produced a response of a possible £314m from the Regulator.

Now it has now moved to a final determination of £396m from the Regulator.

The Regulator has published, in support of the final determination, each of the responses which the debate has produced.

The agreed objective for consumers is a reliable, efficient and just adequately profitable NIE.

The most contentious issues between the Regulator and NIE, for the period 2013-2017, involved differing assessments on various issues.

From an NIE perspective, on none of the key points has the Regulator accepted its claim in full.

The outcome, if the Regulator's final determination is accepted, would be a very small reduction in NIE charges for domestic customers.

If the permitted investment in renewables takes place, then the domestic consumer might pay an extra 2.7% each year. Large industrial users would face increases of 8.9%.

If the Regulator and NIE disagree, the impartial expertise of the Competition Commission is the best available recourse.

NIE must now make a critical and difficult decision on the merits of accepting or rejecting the Regulator's determination.

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