The Chairman of the Authority, Douglas McIldoon, welcomed today’s announcement of the acquisition of the regulated gas transmission utility, Premier Transmission Limited and the transfer of the business to a not-for-profit 100% debt financed structure.
“By replacing shareholder equity with low cost debt, the refinancing of the Scotland to Northern Ireland pipeline delivers an estimated net present value savings of over £41.5m to consumers which results in an annual saving of between £6m to £4m real up to 2021. These savings will go some way to protect Northern Ireland customers from the other energy costs increases”.
Re-financing involves buying out the current owners and moving the asset into a new company structure. That structure will be not-for–profit and instead of shareholders the company will be owned by a set of independent members whose job will be to monitor the company’s obligations to gas customers. The SNIP structure is similar to the Moyle electricity interconnector structure put in place after its re-financing in April 2003 and the Chairman was keen not to exclude the possibility of extending this structure to other assets.
“While not appropriate with all infrastructure assets refinancing can in certain clearly defined conditions reduce costs for customers without any material increase in risk. The success of this transaction through attracting a very low financing rate plus the Moyle refinancing in 2003 shows a strong appetite for bond investors in these mutualised companies and it is important that we explore the possibility of applying this financial model where appropriate to other energy assets in Northern Ireland”.
The Authority’s role now is to monitor the new structure to ensure that it does not prejudice the efficient and economic operation of the gas pipeline. Also there is the possibility that additional benefits to consumers on top of the £41.5m emerge from the operational expenditure savings, especially now that as part of the re-financing the business has been re-located to Belfast.
Mr. McIldoon concluded “Finally on behalf of gas and electricity customers in Northern Ireland I would like to express thanks to British Gas and Keyspan who by constructing and successfully operating the pipeline since 1996 brought Northern Ireland energy into the modern age and made possible all the subsequent developments in the gas and electricity markets of Northern Ireland and in particular the enormous reduction in CO2 emissions which Northern Ireland is now achieving”.