RP7 Price Control Draft Determination published for consultation

Published:

Consultation opened on . Closing date at 12:04.

Summary

The RP7 draft determination sets out new limits on the revenue that NIE Networks can recover from customers in order to operate their business for the six-year period from 1 April 2025 to 31 March 2031. This is an open consultation and we invite stakeholder views on any particular aspect of proposals.

Today we have published a consultation on our Draft Determination for the RP7 price control for NIE Networks.

NIE Networks is responsible for building and maintaining electricity transmission and distribution networks, which allows consumers to access a secure supply of electricity. As a natural monopoly, NIE Networks is subject to economic regulation which provides protection for all electricity consumers in terms of quality and cost. 

The amount of revenue which NIE Networks collects via supplier tariffs is determined by the Utility Regulator through periodic price control reviews following scrutiny and challenge of the company’s business plans. 

RP7 is our seventh regulatory price control for NIE Networks, which will run from April 2025 to March 2031.

John French, Utility Regulator Chief Executive explains further: 

“RP7 is creating the foundation for Northern Ireland’s journey towards net zero and will facilitate a more efficient use of the electricity system. 

“Our decisions within this draft determination will ensure NIE Networks is fully able to support the energy transition in Northern Ireland. Whilst this additional investment will increase the network cost for electricity consumers, we will ensure that the transition is affordable, fair and inclusive for all.” 

Our proposals within the Draft Determination include: 

 

  • Overall total expenditure of £2.21 billion, which is a 16% reduction on NIE Networks’ request of £2.55 billion. Major transmission investment (D5 projects) is not included in the comparison. 

  • A total of £1.349 billion for capital expenditure, which includes investment in the distribution and transmission networks and metering work. 

  • Bills for typical domestic consumers who don’t change their usage or adapt to green technologies, will be £13 lower under our proposals than NIE Networks’ RP7 Business Plan. 

  • Domestic consumers who do increase their electricity usage and install heat pumps or use a home charger for an electric vehicle, will see their electricity costs increase. However, this additional electricity cost will be offset by a reduction to their home heating and transport costs. 

  • Dependent on usage and based on our estimates, small businesses could see a 3%-9% increase to the network element of their bill, whilst large energy users could see an 11%-19% increase on the network element of their bill.

  • We have updated our measure of inflation to CPIH (Consumer Prices Index including owner occupiers' housing costs) as we consider this is a better reflection of actual impact on consumers.

  • A rate of return of 4.79% including gearing of 55%. The proposed gearing addresses the potential imbalance between equity and debt returns.

Stakeholder engagement plays an important part in our price control process. We encourage you to become part of this process to ensure we are provided with a range of responses that will help us deliver the most robust and informed decisions when we finalise the price control. Your view will help shape a fair and just transition to net zero for all electricity consumers. 

Comments on the draft determination should be made before the close of the consultation on 22 March 2024, with a decision on licence modifications likely to be published in January 2025.

If you would like to respond, please see the draft determination for further information.

This draft determination is complemented by 25 annexes which are outlined below and may be accessed at the respective link. 

Annex

Annex Title

Annex A

Review of NIE Networks RP6 Performance

Annex B

CEPA - Efficiency Modelling and Regional Wage Adjustment

Annex C

Frontier Shift (RPE's and productivity)

Annex D

Modelled and Non Modelled Costs

Annex E

RP7 expenditure summary

Annex F

Pensions

Annex G

GAD Report on Pensions

Annex H

RP7 Rate of Return Adjustment Mechanism

Annex I

RP7 Rate of Return Adjustment Mechanism Model (Excel)

Annex J

Rate of Return (First Economics)

Annex K

RP6 Financial Model (excel)

Annex L

RP7 Financial Model (excel)

Annex M

Incentives

Annex N

Innovation

Annex O

Metering

Annex P

Assessment of RP7 Network Investment Direct Allowances

Annex Q

Planned Network Investment Volumes and allowances

Annex R

RP7 Price Control Engineering Support & Asset Management Advice (GHD)

Annex S

Price Control Design

Annex T

NIE Networks RP7 Business Plan Assessment

Annex U

Stakeholder Engagement and Consumer Measures

Annex V

Evaluative Performance Framework Guidance & Principles

Annex W

RP7 Information Technology

Annex X

Gemserv - RP7 IT Projects

Annex Y

Glossary

Submission of Consultation Responses

This is an open consultation paper. We invite stakeholders to express a view on any particular aspect of the paper or any related matter.  Responses should be received on or before 12 noon on 22 March 2024 and should be addressed to:

Alan Craig

Finance and Network Assets

Queens House

14 Queen Street 

Belfast 

BT1 6ED

Tel: 028 9031 6327

Email: Electricity_Networks_Responses@uregni.gov.uk with cc to Alan.Craig@uregni.gov.uk

Our preference would be for responses to be submitted by e-mail.

Responses to this consultation can also be made via Citizen Space.

Your response may be made public by us.  If you do not want all or part of your response or name made public, please state this clearly in the response by marking your response as ‘CONFIDENTIAL.’

If you want other information that you provide to be treated as confidential, please be aware that, under the FOIA, there is a statutory Code of Practice with which public authorities must comply and which deals, amongst other things, with obligations of confidence. In view of this, it would be helpful if you could explain to us why you regard the information you have provided as confidential.

Information provided in response to this consultation, including personal information, may be subject to publication or disclosure in accordance with the access to information regimes (these are primarily the Freedom of Information Act 2000 (FOIA) and the Data Protection Act 2018 (DPA)).

As stated in the GDPR Privacy Statement for consumers and stakeholders, any personal data contained within your response will be deleted once the matter being consulted on has been concluded though the substance of the response may be retained.

This document is available in other accessible formats, such as large print, Braille, audio cassette and a variety of relevant minority languages if required.  Please contact Alan Craig on either 028 9031 6327 or email: Electricity_Networks_Responses@uregni.gov.uk with cc to Alan.Craig@uregni.gov.uk

If appropriate, we can have individual discussions with interested parties.  Please contact us if you consider this to be more suitable.

 

Ways to respond

Postal address
Alan Craig
Finance and Network Assets
Queens House
14 Queens Street
Belfast
BT1 6ED