Utility Regulator publishes draft determination on NIE T&D’s capitalisation practice

The Utility Regulator today publishes a draft determination following an audit investigation into changes in NIE T&D capitalisation practice by external consultants. The report of the external consultants is also published.

Our draft determination contains information on the regulatory rules that applied during the previous price control period (RP4).  The results of an investigation into the change in capitalisation practice by our consultant auditors are also presented. Finally, we outline the actions we propose to take to protect consumer interests, by making sure that they do not pay twice, as a result of this change in capitalisation practice.

In summary, the consultant auditors’ report indicates that a significant amount of reported opex (operating expediture) outperformance, for the last two years of RP3 and for all of RP4, resulted from a change to capitalisation practice.  In total we propose to make £35.32 million worth of adjustments.  This reflects £34.44 million relating to the change in capitalisation practice plus £0.88 million in respect of asset disposals.

We previously consulted on the draft RP5 price control determination for 13 weeks and are consulting for a further four-week period on the specific issue of the change in capitalisation practice. We therefore welcome comments on this draft determination. The document does not pose specific consultation questions. Instead, we invite comments on any aspect of the document or related matter.

Our preference is for responses to be submitted by email, although hard copy responses are also acceptable.