NIE fury as utility watchdog eyes £35m clawback
Northern Ireland Electricity (NIE) has reacted angrily to proposals put forward by the Utility Regulator which would knock 1% from electricity bills each year for the next 40 years.
The energy watchdog, which is tasked with ensuring NIE is delivering a fair deal for customers, said in a report released yesterday it wants to effectively reclaim £35m it believes the company has overcharged since 2007 because of an accounting procedure.
NIE operates lines, poles and other substation infrastructure which help it transmit and distribute electricity throughout Northern Ireland.
Its costs account for around 30% of an electricity bill which means that consumers would save around £150 a year based on an average £500 bill, plus inflation, under the regulator's proposals.
But NIE said the accounting procedure in question, which involves counting such activities as tree-cutting under capital costs rather than operating costs, is in accordance with its regulatory licence.
"NIE strongly disagrees with the findings and conclusions of the report which seek to make retrospective adjustments to NIE's regulatory accounts and will be submitting a comprehensive rebuttal to the proposals," a spokesperson said. "NIE's accounts have, at all times, been prepared and independently audited in accordance with the conditions of its licence."
The energy company is particularly concerned about the fact it is being penalised for its accounts dating back to 2007.
"The retrospective nature of the proposals is contrary to essential principles of good regulatory practice."
However, the Utility Regulator Shane Lynch said the proposals aren't retrospective.
"We're not changing a rule after its been agreed, we're adopting the rule," he told the Belfast Telegraph.
He referred to RP4, the name given to the price control document drawn up for the five-year price-control period which ended in March, where NIE stated that it wouldn't recover expenses both through operating expenditure accounting and regulatory asset base, or capital accounting. It's by this method that the Utility Operator believes NIE has been charging customers twice for transmission and distribution of electricity.
NIE has until September 27 to reply to the Regulator on its proposals.