NIE pension deficit hits consumers
Electricity consumers in Northern Ireland are paying £5-£6 million a year because of a pension funding deficit, the Utility Regulator has said.
Customers are having to subsidise the scheme, which is up to £50 million short, because of the financial crisis since 2008 which has seen the value of stocks and shares fall. Despite this, household bills are expected to go up by less than 1% a year because of the retirement fund cost.
Regulator chief executive Shane Lynch will be investigating whether NIE has dealt with the matter prudently but warned it could take 15 years for the deficit to be met.
"Electricity consumers are, in this current period of 2007-2012, currently paying £5-6 million a year for the pension deficit," he told Stormont's Enterprise, Trade and Investment Committee.
There are around 6,000 pensioners and 1,000 others affected by the shortfall. The regulator said he would be seeking answers from NIE.
"They must demonstrate to us that they have carefully and prudently managed the fund. We will look to see if the investments have been prudent, have they operated in accordance with good practice," he said.
NIE ended its final pension scheme for new recruits from 1998. But the liability became a possibility from 1992, and the regulator said he would investigate if any avoidable cost was incurred since 1992 by offering new recruits more expensive schemes based on final salaries.
NIE deputy managing director Peter Ewing said the deficit had reduced in recent times. "We have done everything within our powers to try to manage those costs. We view those costs as any other costs. The regulatory allowance for the costs should reflect what is an efficient level," he told the committee.
SDLP committee chairman Alban Maginness said consumers of electricity would not understand why they should be held liable for the deficit.
"Nobody is saying you are reckless, or that the fund was managed in a reckless fashion," he said, but added: "Should that burden not be borne by the company itself?"