New NIE Supply Price Control is an exciting development

A new NIE Supply Price Control agreed by the Electricity Regulator and NIE will remove the company’s incentive to increase electricity sales and will instead encourage it to reduce customers’ electricity bills by selling energy services which are needed to run homes and businesses efficiently and at least cost.

Confirming that he had agreed (subject to normal consultation procedures) the principle for the new Supply Price Control, Douglas McIldoon said that it was an exciting new development for electricity regulation and would come into effect two years early.

“The aim of the Supply Price Control will be to reduce overall energy bills by at least £16m over the period to 2005,” said Mr McIldoon.

“This agreement sets NIE on course for becoming the UK’s first large scale energy services company and I am delighted that they have chosen to accept the challenge of delivering lower energy bills to customers via this route. It is a brave experiment and if it works, then the long run savings to customers should be substantially greater than the basic savings which NIE has guaranteed. It is also good news for the environment and will represent a useful contribution to the UK’s target for C02 reductions.”

Specific measures in the agreement include:

Incentive payments to NIE for reducing average domestic electricity consumption.
Incentive payments for every Economy 7 household to receive cavity wall insulation.
Incentives to NIE for every electric vehicle or bicycle introduced in Northern Ireland and recharged from mains electricity.
From 2002 onwards, the Supply Business’s revenue will reduce by 3 percent per annum in real terms.
In addition, NIE has undertaken to use its own resources to:

Remove the payment surcharge for prepayment customers saving customers £1.8 million per annum. The new price control will include a new prepayment meter system which will save prepayment customers the £18 per year surcharge which they currently pay.
Save customers, through energy efficiency measures, £10 million.
Increase tenfold the amount of renewable electricity sold under the Eco-energy tariff.
Douglas McIldoon said that be believed that this agreement, along with other recent developments in the electricity industry, showed a willingness in the industry to look for “win/win solutions” by which both customers and energy businesses could benefit.