The Northern Ireland Authority for Energy Regulation (NIAER) comments on NIE price increase

27 February 2004

Commenting on the tariff announcement, NIAER Chairman, Douglas McIldoon, said –

“I deeply regret NIE’s decision to increase domestic tariffs by 2.8%. While this is a lower price increase than that imposed on customers elsewhere in the UK, this increase must be viewed against a background of higher prices in Northern Ireland to start with. However, the doubling of the cost of coal used in Kilroot power station is a cost, which is outside the control of anyone in Northern Ireland. The cost of fuel feeds into the price of electricity. If fuel prices fall in the future customers will benefit from that.

“Otherwise there is good news and bad news for electricity customers. The good news is that we are making substantial progress in producing a less polluting electricity industry - with a rapid expansion of renewables while holding down costs and prices. In doing so, we are also making progress on narrowing the price gap between Northern Ireland and our neighbours in Great Britain and the Irish Republic.

“The bad news is that we face formidable cost risks over the next twelve months if we do not get a fair outcome on emissions trading and a sensible renewable development strategy or indeed if the Government’s commitment to take out some of the excess costs of privatisation are frustrated. Ofreg will work closely with the Department of Enterprise, Trade and Investment and Northern Ireland Electricity (NIE) to ensure that we successfully avoid these risks. “

For further information please contact Carleen O’Neill at Weber Shandwick

Tel 02890 761007 or Mobile 07770 886911

Notes to 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.

2. NIE’s announcement of a domestic tariff increase is the first such increase since April 2001. The increase reflects the movement in world fuel prices, which have increased costs to Northern Ireland power stations by around 12% in the last year.

3. This price rise is in the context of decreasing locally controllable costs for networks, brought about by the NIE Transmission and Distribution price control.

4. NIE Business tariffs will remain unchanged for three months, in the expectation of financial support from DETI for this sector.

5. From April 2004 the NI electricity sector will liberalise further, with the eligibility limit for participation in the competitive market reducing from 0.79 gigawatt hours per annum to 0.5 gigawatt hours. By January 2005 the competitive sector will expand to include all non-domestic customers. Further details of this process will be made available in the coming weeks via the Ofreg webpage (http://www.nics.gov.uk/ofreg). Full domestic competition must be established from 2007, as per the recent EU Energy Directive.

For further information please contact Carleen O’Neill at Weber Shandwick

Tel 02890 761007 or Mobile 07770 886911