Belfast Telegraph

Customers won't count cost of NIE downgrade

By David Elliot

Electricity consumers will not carry the cost of any downgrade to NIE's credit rating if the utility regulator goes ahead with plans to cut investment in infrastructure, according to ratings agency Fitch.

Fitch director Oliver Schuh said shareholders of the transmission and distribution company would instead shoulder the cost.

He spoke as a battle rumbled on between NIE and the Northern Ireland Utility Regulator over the need for upgrades to the ageing electricity distribution network.

NIE wants to pass on the cost of the wide-ranging improvements to the grid to customers but the utility regulator is looking to avoid additional costs to consumers and has put forward a set of proposals which slash the level of planned investment by the firm.

NIE said that it needed to invest £607m over the next five years, however, the Regulator suggested approval of just £293m.

Fitch published a note in May saying it would cut NIE's credit rating if the regulator's proposals are imposed. Ratings agency Standard and Poor's, which also monitors NIE, is expected to follow suit.

NIE is currently rated A- but if downgraded to BBB+ would have to pay more to borrow money, a charge which would be shouldered by the firm's shareholders through parent company ESB.

Economist John Simpson said a compromise between the regulator and NIE was unlikely and that the argument was likely to continue.

"Although there remains a (faint) possibility that the Regulator will modify the draft proposals to appease a reluctant NIE, the prospect is that this dispute will be referred to the Competition Commission for review, further delaying a settlement, increasing the risks of a disrupted capital investment programme and adding to the costs incurred by the stakeholders," he said.

"This has been an unacceptable regulatory process."