OFREG consults on the proposed acquisition of Viridian group by Arcapita

Ofreg’s Chief Executive, Iain Osborne, commented: “Ofreg is neutral as to who owns NIE, and we have no statutory power to approve the take-over, or to block it. That said we are determined to ensure Northern Ireland consumers are protected by a regulatory framework that meets UK best practice. This consultation outlines how we can make sure regulatory protections are not weakened by changes in ownership or financial structure. If this deal goes through we will expect NIE’s new owners to run the company just as efficiently as it has been to date and we will not allow them to increase regulated prices to reflect any new and more risky financing structures. ..”

The paper can be viewed here or alternatively a paper copy can be obtained from Tadhg O’briain by contacting him either in writing at Ofreg, Queens House, 14 Queen Street, Belfast, BT1 6ER, or by telephone on 028 9031 6324 or by Fax. on 028 9031 1740 or email tadhg.o’briain@ofregni.gov.uk

Responses are required on or before 22 December 2006 preferably by electronic mail to tadhg.obriain@ofregni.gov.uk

Please indicate if your reply is confidential and therefore cannot be published.

Please include a one page summary with your response

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

Notes for Editors

OFREG is the day-to-day name of the Northern Ireland Authority for Energy Regulation (NIAER), the regulator of the electricity and gas industries in Northern Ireland. NIAER’s powers are derived from the Electricity (Northern Ireland) Order 1992 and the Gas (Northern Ireland) Order 1996, both as amended by the Energy (Northern Ireland) Order 2003.

Ofreg is consulting on the implications of the proposed acquisition of the Viridian Group PLC by Arcapita through its acquisition vehicle ElectricInvest. Viridian owns NIE PLC, the licensed Public Electricity Supplier and owner and operator of Northern Ireland’s electricity transmission and distribution networks, as well as a number of other regulated or unregulated businesses.

Ofreg’s principal objective as regards the electricity sector is to protect the interests of consumers of electricity. It is important to ensure that risks run by owners of regulated businesses cannot be passed on to the regulated entity, and consequently Northern Ireland consumers. Ring-fencing arrangements have already been brought into line with those prevailing in Great Britain and this should diminish these risks greatly. In this consultation we ask if there is a case for further strengthening the ring-fencing provisions of NIE’s licence.

We also ask whether the ring-fence would be strengthened by requiring NIE to have a number of independent directors on its board, or by boosting information requirements.

GB regulators impose similar ring-fences, but also have legal provisions in place in case the ring-fence fails. In that case customers would be protected by the appointment of a special administrator or a supplier of last resort. Creating similar provisions in NI would require legislation. Ofreg suggest that a special administration regime should be created and consults on whether a supplier of last resort regime is needed.

For further information contact:-

Conall McDevitt, Weber Shandwick Tel: 028 90764911, 07770 886933 or Chris Brown, Weber Shandwick Tel: 028 9076 4924