Utility Regulator consults on PPB Licence Modification

NOTICE UNDER ARTICLE 14(2)
OF THE ELECTRICITY (NORTHERN IRELAND) ORDER 1992

MODIFICATION OF NIE ENERGY LIMITED’S
ELECTRICITY SUPPLY LICENCE

In pursuance of its powers under Article 14(1) of the Electricity (Northern Ireland) Order 1992 (as amended) (hereafter referred to as the “Order”) and having obtained the consent of the NIE Energy Limited (the “Licensee”), the Northern Ireland Authority for Utility Regulation (hereafter referred to as the “Authority”) hereby gives notice under Article 14(2) as follows:

1 It proposes to modify the electricity supply licence (the “Licence”) held by the Licensee.

2 The effects of the proposed modifications will be to change the Power Procurement Business’s price control incentive mechanism from one based on bi-lateral sales to one that is based on a range of incentives relating to the operational performance of the business (as included in new Schedule 3). The proposed modifications also include a specific depreciation and rate of return on the business’s regulatory asset base as derived from the original asset base value depreciated on a straight line basis over a 25 year period and uplifted for capital additions. The form of the proposed changes can be viewed by clicking on the following link: Replacement Annex 3 & new Schedule 3.

3 The reason for the proposals is to provide a return to the capital employed in the business whilst continuing to facilitate the financing of its activities. The incentive mechanism is to incentivise performance with respect to the Power Procurement Business’s new role in the All Island Single Electricity Market which officially commenced on 1st November 2007. The proposed price control modifications if implemented will be effective from that date.

4 Representations or objections with respect to the proposed modifications may be made on or before Friday 7th November 2008 to:

Simon Scott
The Northern Ireland Authority for Utility Regulation
Queens House
14 Queen Street
Belfast
BT1 6ER
Tel: 028 9031 1575
Fax: 028 9031 1740
Email: simon.scott@niaur.gov.uk

5 The Authority has, pursuant to Articles 14(3) and 14(4) of the Order respectively, served a copy of this notice on the Licensee and sent a copy to the Department of Enterprise Trade and Investment.

Dated this 10th day of October 2008

Dermot MacCann
For and on behalf of the Northern Ireland Authority for Utility Regulation