Commission to deal with NIE row
Published 30/04/2013 | 16:43
The Competition Commission has been called in to settle a year-long battle over electricity prices, it has been revealed.
The decision to refer Northern Ireland Electricity (NIE) to the commission - an independent body which ensures healthy competition - was taken after the company rejected a cap on its spending for the next five years.
"Towards the end of last year, Northern Ireland Electricity (NIE) rejected our price control determination for the next five-year period (known as RP5). Consequently, we have today referred this matter to the Competition Commission for its determination within six months. This determination will be final and binding," said a Utility Regulator spokeswoman.
NIE owns the electricity network in Northern Ireland. The ESB-owned firm has a monopoly on the poles, overhead wires and substations that take power to homes and businesses across Northern Ireland.
Charges for the use of the network typically account for around 20% of household electricity bills.
In his final determination, published last April, Utility Regulator chief executive Shane Lynch proposed that NIE could invest about £400 million to upgrade their network.
NIE said it needed almost double that figure which would push prices up. In a statement NIE said it would have preferred the issue to have been resolved without intervention from the Competition Commission but would work with the body to achieve appropriate price controls.
"The allowances proposed by the Utility Regulator fall substantially short of the amounts required to enable NIE to meet its statutory and licence obligations and to carry out the necessary programme of work for RP5 to deliver the level of service customers expect.
"Moreover, the Utility Regulator's proposals rely on regulatory arrangements which depart from the well-established system of regulation for network utilities that applies in the rest of the UK, notably in respect of their emphasis on ex post assessments and retrospective adjustments," a spokeswoman said.
This is the second major showdown for the Utility Regulator. Last year Mr Lynch referred Pheonix Gas - the largest distributor of gas in Northern Ireland - to the Competition Commission after he refused permission to raise prices.