NIE Decision Hikes Commercial Energy Costs
The final decision from the Northern Ireland Utility regulator on the next round of NIE price control which covers the next five years could mean major cost increases for the Provinces manufacturers. Although the Regulator has cut the allowances to Northern Ireland Electricity by significant amounts from their original bid, the cost impact of the North-South interconnector and the grid revisions necessary to accommodate growing renewable energy generation may mean increases of as much as 9% on network charges for large users. Since network charges account for some 20% of the overall energy bill, some companies could be looking at increases as high as £11,000 per year.
Business as usual costs will have little impact on bills, however the Regulator has said that NIE may be allowed as much as £223m over the next five years for the cost of renewable connections and the proposed new North-South interconnector. These costs will be allocated on a project by project basis, but if NIE complete all the projects they have planned, the cost for commercial users could be considerable. Manufacturing NI chief Executive Bryan Gray said: “We are very concerned about the cost impact for commercial users over domestic customers. Once again this highlights the fact that network charges are unevenly distributed between these two markets. MNI have already raised this with the Regulator. We badly need more transparency on the allocation of charges.”
Utility Regulator Chief Executive, Shane Lynch said: “We have put a range of measures in place to deal with uncertainty (in particular for capex requirements and pension costs), to protect both consumers and NIE T&D. Additionally, we have also ensured that consumers do not pay twice arising from NIE T&D’s change in capitalisation practice during the RP4 period. “Overall, our final determination is a balanced outcome. We want to make sure that electricity consumers continue to have a high performing and secure network, which accommodates renewables, at the lowest possible cost.”
The Regulator has estimated the tariff impact as follows:- • Network charges presently account for about 20% of the overall electricity bill for a domestic consumer. • Before investment to facilitate renewable and for interconnection, network charges for domestic consumers will remain flat and for most business consumers will slightly decrease, on average and in real terms, over the price control period. • With the investments to facilitate renewable and for interconnection included, network charges for domestic consumers will increase by on average around £4 per year or 2.7%. For large industrial consumers, network charges will increase by around £11,000 per year or 9%. • Under NIE T&D’s proposals, and before investment to facilitate renewables and for interconnection, network charges for domestic consumers would increase by on average £21 per year or 16%. For large industrial consumers, network charges would increase by around £19,000 per year or 15%. Further details of the Regulators decision can be found at: http://www.uregni.gov.uk/uploads/publications/RP5_Executive_Summary_22-10-12.pdf