NIAER Proposes Modifications to Premier Transmission’s Gas Conveyance Licence

05 March 2004

GAS NOTICE

Notice under Article 14(3) of
the Gas (Northern Ireland) Order 1996

The Northern Ireland Authority for Energy Regulation (hereinafter referred to as “the Authority”) pursuant to Article 14(3) of the Gas (Northern Ireland) Order 1996 (hereinafter referred to as “the Order”) hereby gives notice as follows:

1. The Authority proposes to make modifications to condition 2.1 of the Licence which was granted under Article 8(1) of the Order to Premier Transmission Ltd (hereinafter referred to as the “Licensee”). It is proposed that the modifications will become effective on 12 April 2004.

2. The reasons and effects of the modifications are as follows:

Reason
Ofreg’s consultation document of Sept 2002 (“Paying for Interconnectors”), explained the costs savings from transferring the ownership of the electricity and gas Scottish Interconnectors from private companies to not-for-profit vehicles which are entirely financed by debt. In June 2003 the Moyle electricity interconnector was successfully transferred, resulting in (significant) savings (of over £1m p.a.) for electricity customers. On 13 Feb 2004, the Licensee’s shareholders and the prospective purchasers signed a Head of Terms, thereby outlining the basis on which the sale will proceed.

To proceed with this transaction, there needs to be clarity and resolution on how transaction costs incurred by both the purchaser and seller during the development of the transfer transaction are to be recovered in the event that the transaction fails. Since the potential customer savings from a successful transfer are significant, the Authority believes it is in customers’ interests for the licence to be modified to allow such costs to be recovered from gas suppliers. This modification will enable the parties to proceed with developing the transaction.

Effect
If the transaction fails to be completed, then the costs incurred by both parties are allowed to be recovered through the licensee transportation charges. The Authority will only allow costs that have been reasonably and properly incurred during the transaction. The main risk of the transaction failing is that interest rates rise to such an extent that the consumer savings from the transfer become too small.

3. A copy of the proposed modification can be viewed on this site by clicking HERE or a paper copy can be obtained free of charge from Mr Eamon Corrigan at OFREG, Brookmount Buildings, 42 Fountain Street, Belfast, BT1 5EE. (eamon.corrigan@ofregni.gov.uk / telephone (028) 9031 1575)

4. Representations or objections with respect to the proposed modification may be made before 5 April 2004 to the Authority’s Chairman, Douglas McIldoon, at Brookmount Buildings, 42 Fountain Street, Belfast, BT1 5EE.

5. Pursuant to Article 14(4) of the Order the Authority has served a copy of the notice on the Licensee and has received the Licensee’s consent to the proposed modifications.

6. Pursuant to Article 14(4) of the Order, the Authority has sent a copy of this notice to the Department of Enterprise, Trade and Investment.

Notes for Editors

1.OFREG (the Office for the Regulation of Electricity and Gas) supports the Northern Ireland Authority for Energy Regulation (NIAER) the regulator of the Electrcity and Gas industries in Northern Ireland. NIAER’s powers are derived from the Electricity (Northern Ireland) Order 1992, the Gas (Northern Ireland) Order 1996 both as amended by the Energy (Northern Ireland) Order 2003.

For further information please contact Brenda Boal at Weber Shandwick

Tel 02890 761007 or Mobile 07770 886910