Belfast Telegraph

Friday 25 April 2014

Clash over electricity pricing could leave Northern Ireland customers in the dark

It could be ‘lights out’ for electricity customers if a clash between the energy regulator and NI Electricity over pricing is not resolved, it’s been claimed.

Earlier this year NIE, which owns and operates the ageing electricity infrastructure, said it needed to add £128 to customers’ bills over five years to maintain and improve the network.

But the Utility Regulator disagreed — and proposed a £72 reduction in the average household bill over the same period of time.

Despite talks, no compromise was reached.

Now the energy company seems to be out of patience and referred the regulator’s plans to the Competition Commission — a direct challenge to the authority of chief executive Shane Lynch.

While prices will be frozen until the wrangle is resolved, leading economist John Simpson said he believed the worst case scenario would see up to £40 added to annual electricity bills for five years.

The Confederation of British Industry (CBINI) and the Consumer Council both said while rising bills are a concern, consumers need a reliable network.

NIE said it requires £1.1bn to update infrastructure. The regulator says £667m is needed.

Mr Simpson said he believed the Competition Commission may side with NIE, although no decision is due for up to four months.

This case echoes a pricing dispute this year between Phoenix Gas and the regulator, after which the Utility Regulator was criticised by the Competition Commission for preventing the natural gas company from charging more.

CBI NI said the latest row raised concerns over the regulatory environment in Northern Ireland.

Its director Nigel Smyth said: “Northern Ireland cannot afford to have a regulatory system out of line with the rest of the UK and where there is more uncertainty.”

Consumer Council chief Antoinette McKeown said the failure to agree means uncertainty.

“Our research has shown that the key issues for consumers are the cost of their electricity and the reliability of that supply,” she said. “The Consumer Council accepts that cost is a vital component for consumers — but needs to be balanced with investment in the electricity network to ensure the reliability of the supply to keep the lights on.”

Profile

Shane Lynch became chief executive at the Utility Regulator in January 2011. Before that he was Director of Electricity since September 2009, and had worked in the electricity industry for 27 years. This included engineering positions with NIE from 1983 until 1992. He later worked for AES Corporation as Managing Director for both Belfast West and Kilroot power plants and as development director for Ireland. He was educated at Queen’s and Ulster universities.

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