Hi °C | Lo °C The Competition Commission has ruled the utility regulator was wrong in attempting to impose a price control on Phoenix Gas.
Northern Ireland householders can expect annual gas bills to rise marginally after the ruling.
The regulator referred an appeal by Phoenix Natural Gas Ltd (PNGL) to the Competition Commission in March following the firm’s rejection of a two-year price control determination covering 2012 and 2013.
But the commission has ruled the utility regulator was not justified in attempting to place a new price control on Phoenix Gas, which owns and operates the natural gas distribution network in the Greater Belfast area and Larne.
The company objected on the basis that the price controls had already been agreed during previous negotiations in 2007.
The matter was then referred to the commission for adjudication.
It said while some adjustment was reasonable, the regulator was not justified in acting the way it did. It also said its decision was guided by the long-term interests of customers.
Consumer Council chief Antoinette McKeown has blamed the Phoenix Gas outcome on past “weak” regulatory decisions.
“Consumers in Northern Ireland must never see a repeat of the weakness in regulation that occurred in 2007 that resulted in a lack of certainty regarding decisions that would affect the price they would pay for gas into the future,” she said.
Phoenix Gas said it welcomed the commission's ruling. “We were unable to accept the utility regulator's proposal, which proposed to reduce the regulated asset value of Phoenix Natural Gas by more than £80m,” a statement said.
The utility regulator's original proposed changes would have cut household bills by £10.
Economist John Simpson (left) said that despite the small yearly hike in cost, the ruling was in the best interest of consumers.
“The adjustment will put up the average domestic bill by £2 a year, “ Mr Simpson said. “But this ruling is good news for consumers because we now get more certainty about the operation of the gas network, and Phoenix will now still be able to borrow with a good credit rating.”
Background
In February, Phoenix Natural Gas rejected the utility regulator’s proposed controls which would have slashed the amount of money Phoenix was allowed to invest and spend on running its network.
Phoenix said the regulator was re-writing the rules unfairly, arguing the changes could ultimately cost customers more because it may have to pay more for its debt on international markets.
