NIE's investment programme since privatisation comes under scrutiny

Published: 14 November 2000

Consultation opened on 14 November 2000. Consultation closed 15 December 2000.

Summary

OFREG today published a consultation paper which follows a detailed examination of NIE’s investment programme since privatisation.

OFREG today published a consultation paper which follows a detailed examination of NIE’s investment programme since privatisation.

The paper examines NIE’s investment in transmission and distribution over the first ten years since privatisation and compares its performance with that of companies in Great Britain.

Commenting, OFREG’s Director of Price Control, William McIlhatton said:

“Not surprisingly we found that even before privatisation, Northern Ireland, with its more rural population, had more investment per unit of electricity than Great Britain. Our research has indicated that the divergence, even with the most conservative interpretation of the figures, has doubled over ten years.

“We have also found that the much higher level of investment in Northern Ireland has resulted in limited catching up with Great Britain in quality of supply. We intend to publish a separate paper on this later.

“If our findings turn out to be true, all Northern Ireland customers will face long-term higher prices as a result of divergence in transmission and distribution charges. NIE must find innovative and off-setting ways of reducing the effect of this divergence in capital investment.”

14 November 2000

A new Transmission and Distribution (T&D) price control comes into effect in 2002.

This is the second consultation paper which has been published on NIE’s T&D Price Control.

NIE’s Transmission and Distribution system accounts for 29% of the electricity bill .

At privatisation the value of the assets required to move one unit (a kilowatt hour) of electricity through the NIE system was 6.53p. After 10 years it will be 8.08p. During the same period in England and Wales it fell from 5.54p to 5.45p and in Scotland from 12.02p to 9.84p (1997/98 prices) .

The capital stock differential which was 18% at privatisation will be 48% after 10 years (2002)

The capital stock divergence will become worse after 2005 when companies in England and Wales will have fully depreciated their privatisation assets but NIE’s will have 30 years to run.

For further information or to arrange an interview with Douglas McIldoon, please contact Nick Carson on 028 9127 5965 or 07711 482807

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