Belfast Telegraph

Mutual Energy has a total turnover of £57.3million

Company Report

By Staff Reporter

Mutual Energy Ltd owns three key parts of the Northern Ireland energy infrastructure - the Moyle electricity inter-connector from Islandmagee to Scotland, the natural gas pipeline from Scotland to Ballylumford, and the natural gas transmission pipelines to the Belfast area from Ballylumford.

Currently the Moyle inter-connector is only working at half of the expected capacity and a major repair to restore full capacity has been launched.

Of the total turnover of £57.3m, £24.7m was the revenue earned by the Moyle inter-connector, £25.7m was attributed to the natural gas pipeline to Scotland and £7m to the Belfast area gas pipelines.

The operating and pre-tax profits of these three main subsidiary businesses were seriously affected by the financial impact of extra costs of £13.8m caused by the cable faults on the Moyle inter-connector. These costs meant that the operating profit converted to a pre-tax loss for the group.

Operating profits in the year to March 2015 were £30m lower than in the preceding year. And £25m can be attributed to one-off adjustments, to an insurance claim related to the inter-connector in 2014 and exceptional repair costs.

Mutual Energy is a non-profit distributing private company controlled by a selected small group of members who attract no payment for their membership. The appointed non-executive directors earn an annual fee £34,000.

Because of the nature of the contracts and licences to operate the extensive physical assets, giving assurance on the continuing flow of revenue and, in part, with certain guarantees of funding to meet any losses by passing on possible extra costs to electricity customers, the subsidiary companies are able to borrow at modest interest rates.

The largest expenditure is the cost of interest on borrowed capital. In the year to March 2015, interest costs were £15.9m.

The company is in the unusual position of showing a negative value of its equity every year - in 2015, £4.5m and in 2014, £2.1m. This is explained in the annual report as a consequence of particular accounting conventions that create an apparent loss on derivative financing.

Mutual Energy has more recently been awarded licences for the Gas to the West (of Northern Ireland) project which will be reflected in later annual reports.

Belfast Telegraph