Belfast Telegraph

Company Shapshot: Northern Ireland Electricity Ltd

By John Simpson

NIE permitted revenue rises by 7%

Northern Ireland Electricity (NIE) is the transmission and distribution (T&D) company with responsibility for the carrying of electricity from generators to customers within Northern Ireland. It also has cross-border links which help to facilitate the Single Electricity Market and receives (and sends) electricity from the Moyle Interconnector, linking to Scotland.

Until December 2010, NIE was a wholly owned subsidiary in the Viridian Group. It was sold for a reported £1.2bn to become a wholly owned subsidiary of ESBNI, the Northern Ireland part of the Irish ESB .

The change in ownership of NIE further contracted the original Viridian group, leaving what is now called Power NI as the largest local electricity supply company which is still in the Viridian Group.

NIE is a regulated monopoly for T&D. The regulatory process can make the interpretation of the financial figures complicated. NIE has an agreed formula to determine permitted revenue and if the out-turn is different, then the over, or under, recovery is carried into the pro forma accounts.

In 2010-11, there was an under-recovery of £29.6m, compared to an over recovery of £6.8m in the previous year. The permitted revenue in 2010-11 increased by 7%.

The adjustment to regulated entitlement also affects the accounting estimate of operating profit which, after adjustment is 10% lower than the previous year.

A regulatory review is in progress which should set the framework for the period after April 1 2012. Critical to the review is the tension between the need for a major upgrade of the T&D assets, including the proposed cross-border connector, Tyrone to Monaghan, which has been delayed by the procedures in inter-related statutory agencies and is costing electricity consumers perhaps £25m every year in Northern Ireland.