NIE challenged to answer price control review

Electricity regulator Douglas McIldoon has said that the current review of NIE's Transmission and Distribution (T&D) Price Control must address the problem of the continuing divergence of Northern Ireland's electricity prices from those in Great Britain, the Irish Republic and the rest of the European Union.

Commenting after publishing a further consultation paper which sets out the issues which he believes need to be addressed, Mr Mclldoon said: "The problems caused by high generation costs, which I am addressing separately, must not be allowed to distract our attention from the fact that T&D prices In Northern Ireland are higher compared to everywhere else."

Since privatisation, the cost of moving a unit of electricity through NIE’s wires has increased from 17 percent above the GB average to 44 percent above it.

Mr Mcldoon stressed that the current price control presented NIE with the opportunity to be creative and innovative in meeting the needs of shareholders and customers: "Incentive regulation will only work If companies are given opportunities to make and retain profits by being Innovative in the way that they deliver services. However customers want and expect the problems which arise from high relative prices to be solved. In solving that problem NIE has opportunities to explore ways of delivering its services, planning its networks and financing its investments which will align the interests of customers and shareholders more effectively than they have been up to now."

A spokesperson for NIE said: “The paper covers the very wide range of issues we expected. While we still have to go through in detail what is a lengthy document, we will be looking for consistency with previous Monopoly and Mergers Commission decisions and regulatory precedent in the rest of the UK, and also recognition of the particular investment needs in Northern Ireland.”

NIE claimed that the price divergence between GB and NI was not unique, with generation costs, for which NIE were not responsible being the main factor in the disparity of electricity costs between Northern Ireland and GB.

Responses and views should be sent to OFREG by December 28 2001. (SP)