Final determination for the gas distribution price control, GD23, published

Today, we publish our final determination on the price control for Northern Ireland’s gas distribution networks for 2023-2028 (called GD23). GD23 is the distribution price control for Northern Ireland’s gas distribution network operators - firmus energy (Distribution) Limited, Phoenix Natural Gas Limited and SGN Natural Gas Limited, which covers a six-year period from January 2023 to December 2028.  We are also publishing associated licence modifications for consultation. 

The final determination sets out our decisions on the funding the gas distribution network operators (GDNs) will have to run their businesses and invest in the gas network. The publication of this price control follows a consultation on our draft determination. The draft determination was published following our review and consideration of business plan submissions from each GDN and engagement with various stakeholders within the gas industry.

Additionally, the global economy has changed since we published the draft determination, which has affected our decisions in relation to GD23. Inflation has increased sharply to the highest levels in 40 years, interest rates have risen a number of times and global energy costs continue to stay high. These increases, along with a predicted reduction in gas usage by all consumers, will impact on the costs of GDNs during GD23.

Our key price control decisions include:

• Overall investment in the gas network of £185.5m compared to £226.4m proposed by the GDNs. 
• Overall operational expenditure of £189.2m compared to £212.9m proposed by the GDNs.
• A move from RPI to adopt CPIH as the general measure of inflation.  Moving to CPIH provides a more equitable distribution of cost between today’s consumers and future consumers.
• Due to a combination of increased rates of return, inflation, rise in interest rates, and lower predicted gas consumption, costs have risen overall from the business plan submissions, to around a 10% to 20% increase.
• GD23 supports new connections to the gas network, including free gas connection/installation for customers who are able to connect.
• GD23 supports the Northern Ireland Energy Strategy’s transition to net zero, ensuring the future of the gas network by working with industry to reduce the reliance on natural gas.  We have provided funding for gas companies to also support consumers in reducing their carbon footprints.
• By the end of the GD23 price control period in 2028, around two-thirds of Northern Ireland will have access to the natural gas network.

The publication of the final determination follows a period of public consultation on draft determination proposals published on 9 March 2022.  Nine consultation responses were received and are published in Annex R of the final determination, which has also been published

The GDNs submitted consultation responses that have been treated as confidential and have provided redacted responses to protect commercially sensitive information.  

Along with the GD23 main document, the following annexes are also published:

A paper copy of the determination and the accompanying document can be obtained from:

Paul Harland, Utility Regulator, Queens House, 14 Queen Street, Belfast BT1 6ED
Email: paul.harland@uregni.gov.uk
Tel: 028 9031 1575

Additionally, a consultation is also launched today on proposed licence modifications to bring into effect the GD23 final determination.  The closing date for the consultation responses is 25 November 2022.

Copies of the determination paper and any accompanying documents will also be made available in large print, Braille, audio cassette and a variety of relevant minority languages if required.