Ofreg publish proposals for NIE transmission and distribution

The Northern Ireland Electricity Regulator has published his initial proposals for NIE’s Transmission and Distribution (T&D) network for the period 2002-2007.

Mr Douglas McIldoon said: “The cost of transmitting and distributing electricity has fallen across Great Britain throughout the first 15 years following privatisation. There is an understandable and legitimate expectation that this pattern will be followed in Northern Ireland."

Ofreg claim that the proposals will allow NIE £215 million for investment (excluding the Moyle Interconnector) and £225 million for operating costs for the five-year period. This would lead to a reduction of about £36 million in Northern Ireland’s annual electricity bill, which would mean a reduction of about £14 per year in the average household's bill.

Mr McIldoon said that he had refrained from including in this price control most of the recent additional costs which electricity companies in Great Britain have had to meet. However, he said customers expected to see price reductions in line with those in Great Britain.

However, he said, that only the company could decide if it wanted to take a long-term option of leading Northern Ireland into a future where its electricity supply industry would be an "economic asset rather than an expensive inhibition to economic development".

According to Ofreg, in 2001/2002 the average cost of moving one unit of electricity through the T&D networks in GB was1.39 pence and the average for distribution alone was 1.01 pence. In Northern Ireland the cost for T&D in 2001/2 was 1.98 pence and the equivalent to GB distribution was 1.78 pence, based on 90 per cent of T&D costs.

Ofreg say that prices at the end of the third price control in GB will be 44 per cent lower, in real terms, than they were at privatisation. At the end of ten years T&D prices in Northern Ireland were 28 per cent lower than at privatisation. Under Ofreg’s ‘building blocks’ approach they will be 50 per cent lower at the end of year 15 from a higher starting point.

In a statement an NIE spokesperson said that significant parts of the initial proposals were "unacceptable" and could "compromise the ability of the company to provide a satisfactory service to customers".

The spokesperson warned: "Any artificial comparison with GB that fails to take proper account of the real levels of infrastructure investment required runs the risk of perpetuating a history of under-investment in Northern Ireland's vital infrastructure.

"The cost of electricity transmission and distribution in Northern Ireland is similar to that in comparable regions in the UK. NIE has no problem whatsoever being challenged with valid comparisons. Equally it would be perverse to constrain much needed infrastructure investment due to the artificially high cost of generation in Northern Ireland."

Ofreg, www.nics.gov.uk/ofreg

(SP)