Utility Regulator Publishes initial Proposals for NIE Supply and PPB Businesses

The Utility Regulator is today publishing initial proposals for new price controls for the NIE Supply and NIE PPB businesses. The Utility Regulator intends to make final decisions on the price controls following consultation.

NIE SUPPLY PRICE CONTROL

The main elements of the new NIE Supply price control are as follows:

Form and Scope will remain as they are currently;

Duration is set from April 2007 until March 2009;

Operating costs have been adjusted to take account of proposed disallowances on salary costs and bad debt provision; treatment of pensions will be examined separately and the proposed costs have been allowed at this stage;

The X factor has been set at 3 for the current and next years;

The allowed margin is 1.8% of total revenues;

Proposed total Allowed Revenue is adjusted by £0.4million in the current year and by £0.8million next year;

The proportion of Allowed Revenue apportioned to fixed costs changes from 62% to 67%.

The full document can be accessed by clicking HERE or alternatively a paper copy can be obtained by contacting

Michael Campbell
The Utility Regulator
Queens House
14 Queen Street
Belfast
BT1 6ER
Tel: 028 9031 1575 Fax: 028 9031 1740
Email: michael.campbell@niaur.gov.uk

Representations or objections with respect to any of the issues raised in this paper are invited on or before 21 September 07 and in particular on

The duration of the price control of 17 months

The proposed adjustments to operating costs

The X factor

The proposed incentive

It would be preferable if all responses were in electronic format to: michael.campbell@niaur.gov.uk or alternatively in written format to the above address

NIAUR intends and prefers to publish all comments received, but is prepared to facilitate those respondents who wish certain sections of their submission to remain confidential. Accordingly, respondents that so wish should submit these sections in an appendix that is clearly marked “Confidential”.

Copies of these documents will be made available in large print, Braille, audio cassette easy read or on computer disk and a variety of relevant minority languages if required.

NIE PPB PRICE CONTROL

The major change to the NIE PPB price control reflects an amendment to the incentive placed on the company. The existing control incentivised the company to maximise sales at the BST and to the wider competitive market. Under the SEM arrangements all of PPB contracted plant will be bid into the pool. It is therefore no longer necessary to incentivise sales. The new control removes the existing incentive and accordingly realigns the profit making capability of the company to its functions in the new market arrangements. The proposals paper outlines a new incentive to reduce the size of the PSO levy.

The main elements of the PPB proposals are:

Duration is set from November 2007 until March 2009;

Operating costs have been adjusted to take account of proposed disallowances on salary costs;

An X factor has been set at -3 for duration of the price control;

The Utility Regulator does not propose to allow the company an ex-ante profit margin;

Profits for the company should be achieved by a revenue entitlement related to achieving reductions in the PSO.

The full document can be accessed by clicking HERE alternatively a paper copy can be obtained by contacting

Andrea Heaney
The Utility Regulator
Queens House
14 Queen Street
Belfast
BT1 6ER
Tel: 028 9031 1575 Fax: 028 9031 1740
Email: andrea.heaney@niaur.gov.uk

Representations or objections with respect to any of the issues raised in this paper are invited on or before 21 September 07 and in particular on

The principle of extending the current price control for 2 years

The proposed adjustments to operating costs

The X factor

The Margin, and

Allowed revenue

It would be preferable if all responses were in electronic format to: andrea.heaney@niaur.gov.uk or alternatively in written format to the above address

NIAUR intends and prefers to publish all comments received, but is prepared to facilitate those respondents who wish certain sections of their submission to remain confidential. Accordingly, respondents that so wish should submit these sections in an appendix that is clearly marked “Confidential”.

Copies of these documents will be made available in large print, Braille, audio cassette easy read or on computer disk and a variety of relevant minority languages if required.