Belfast Telegraph

Thursday 18 September 2014

Regulator acts on electricity costs

The Utility Regulator has intervened to protect electricity consumers from paying twice for some costs.

Chief executive Shane Lynch proposed bills for the transmission and distribution of electricity to domestic consumers over the next five years should remain largely flat before inflation.

He was making the regulator's final determination on what NIE can charge consumers for the service, which can be referred to the competition commission if it is not accepted. It does not include fluctuations in the price of raw fuels or other power station costs.

Electricity network owner NIE has not broken any accounting law but the regulator reduced by £32 million the amount the company could allocate to capital spend on matters associated with its equipment.

Mr Lynch said: "We have put a range of measures in place to deal with uncertainty (particularly for capital expenditure requirements and pension costs) to protect both consumers and NIE transmission and distribution.

"Additionally, we have also ensured that consumers do not pay twice arising from NIE transmission and distribution's change in capitalisation practice during the Regulatory Period 4."

He added: "Overall, our final determination is a balanced outcome. We want to make sure that electricity consumers continue to have a high performing and secure network, which accommodates renewables at the lowest possible cost."

NIE said it would review the decision and submit a response next month.

Costs for NIE's Regulated Asset Base (RAB), equipment like pylons and sub-stations, must be recovered either from the value of the assets or through a special allowance for operating costs like wages, but not both. The regulator ordered a £32 million reduction in the RAB.

NIE has a monopoly over the infrastructure like power lines because it would not be efficient to have competition. Instead the regulator works on behalf of consumers and forces prices down like competition would.

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