NIE claim competition is key to lower electricity prices

Lower electricity prices in Northern Ireland will only become a reality in the long run if competition is allowed to grow.

This is according to Northern Ireland Electricity (NIE) in response to Ofreg's recent paper on the Regulatory Review of the company's network and assets.

NIE also repeated its commitment to maintaining the drive for greater efficiency in its operations to keep the downward pressure on prices. But the company warned that it was becoming increasingly hard to make cuts that would not compromise customer service.

NIE Managing Director Harry McCracken said: "It takes significant levels of investment to deliver continuous improvement in customer service and to ensure Northern Ireland has the infrastructure necessary to support economic growth.

"NIE welcomes the opportunity provided by Ofreg's initial views paper to address a number of issues which are crucial to a satisfactory outcome of this review. We expect to work constructively with Ofreg in order to arrive quickly at a result that meets overall customer needs and allows us to get back to a focus on how to create a long term competitive industry."

However, rejecting suggestions that NIE’s costs were out of line with the rest of the UK, Mr McCracken added: "Much has been made of apparent divergence between electricity costs in Northern Ireland and Great Britain. The reality is that the main divergence is in generation costs, and Northern Ireland Electricity's operational costs are similar to those of comparable companies operating in Scotland.

"Where we have competition, in the top end of the industrial market, customers are obtaining prices comparable with the rest of the UK, primarily because of NIE's investment in the NIE Interconnector to make competitive generation sources available to industry here.

“Unfortunately the continuing high cost of the generation contracts means that we can not obtain the same savings for domestic customers."

NIE expects to receive Ofreg's first draft proposals by the end of January 2002. (MB)