THE biggest energy users in the Province stand to save as much as £100,000 on electricity charges in the next five years under proposals released yesterday by the Utilities Regulator.
Even smaller firms could be almost £750 better off when set against the bid put forward by Northern Ireland Electricity in the latest price control negotiations between the regulator and the firm which controls the lines and distribution system for supplying power across Northern Ireland.
However, two issues remain outstanding as regulator Shane Lynch opened the three-month consultation process on what is known as RP5 yesterday.
While £306 million has been approved for investment in the system specifically to deal with the demands of increased renewable energy coming onto the grid, the figure for routine maintenance, set at £717 million by NIE, has been limited to just £288m.
The other matter to be squared is an investigation now under way into changes in accounting procedures that became apparent to the regulator’s staff during the preparation of the report.
Depending on the outcome of that further investigation the charges NIE is allowed to make could change.
The price control process is used every five years to ensure that, because NIE is a monopoly business, the prices it charges for use of the network are set by regulation rather than competition.
“We take a view as to the amount of money they need to run the business, both capital and operating expenditure,” said Mr Lynch.
“That in turn determines what they can charge consumers in tariffs. Our proposals are focused on protecting consumers, both now and in the future, while at the same time protecting investors.”
Consumers will be asked to pay £12m towards the deficit in the NIE pension fund but, dismissing the NIE pitch for £717m ongoing capital expenditure, Mr Lynch said his office was not convinced that such a high level of investment – the figure for the previous five-year period was £289m – was justified and said all available evidence suggested the system was in a healthy condition.
Although the potential for savings for domestic consumers is relatively small at £85 over the period, the draft determination was welcomed by Consumer Council chief executive Antoinette McKeown.
However, she said she was shocked at the significant difference of opinion between the regulator and the company.
“As the statutory consumer body for energy provision in NI, the Consumer Council will be asking more questions on consumers’ behalf to help understand how this came about,” she said.
“Consumers want confidence in a reliable and safe electricity network at the right price – this fundamental difference may undermine that confidence.”
The other potential area of contention is on the operating expenditure side of the business where an investigation has begun into the firm’s accounts from 2005/6 onwards and where, according to the draft report, there was the potential for consumers to have “paid twice for certain items”.
“We allowed them a certain amount of money for operating costs in the RP4 period and they did it for significantly less,” said Mr Lynch.
“That is to be welcomed if it resulted from genuine efficiencies which they delivered. The difficulty we have and what we need to be clear about is we have also noted that, in regard to certain cost items, they changed their capitalisation practice.
“Some items that used to be classified as operating cost are now classified as capital costs and we just need to be clear that there’s no element of double counting as a result of that.”
Stressing that NIE was co-operating fully with that investigation, Mr Lynch said the task for his office was transparent.
“Consumers deserve to have a modern high performing electricity network which will accommodate renewables, at a reasonable cost. Our proposals are designed to achieve all of this and we look forward to further discussion with NIE T&D. We also intend to engage extensively with other stakeholders over the period of public consultation.”