OFREG PUBLISHES FORWARD WORK PLAN AND SOCIAL ACTION PLANS

06 March 2001

Douglas McIldoon, the Director General of Electricity Supply for Northern Ireland and the Director General of Gas for Northern Ireland, today published his Forward Work Plan for 2001/2002 and also Electricity and Gas Social Action Plan proposals.

This summary of the Forward Work Plan has been prepared for the press and media. Both documents are available on this site.

Mr McIldoon’s four main objectives, working through the Office for the Regulation of Electricity and Gas (OFREG) are:

To protect the interests of electricity consumers with regard to price and quality of service,
To promote competition in the generation and supply of electricity
To promote the development and maintenance of an efficient economic and co-ordinated gas industry and protecting the interests of gas consumers with regard to price and quality of service
To promote energy efficiency and reducing harmful environmental emissions.
The Forward Work Plan outlines the work which will be carried out to meet these objectives. Some of these work areas are outlined below:

Transmission and Distribution Price Control Review

In the summer of 2001, Douglas McIldoon will submit formal proposals to NIE for the new price control for its Transmission and Distribution business. The new price control will seek to set a revenue stream which will enable NIE to finance its regulated activities while at the same time sharing with customers the efficiency gains achieved since privatisation.

NIE Standards of Performance

Market research has already been conducted as part of a review into NIE’s Guaranteed and Overall Standards of Performance. Formal proposals will be outlined in a consultation paper due for publication in 2001 and the Regulator will publish draft and final proposals for implementation from 1 April 2002.

Generation, Competition and Lower Prices

At privatisation, there were five contracts which provided for Northern Ireland’s electricity supply. Four were with power stations and one was a supply agreement associated with the Scottish Interconnector. Four of the five contracts have now been changed. To date, the changes have brought prices lower than they would otherwise be and if fuel prices had remained at their 1999 level they would have delivered lower electricity prices to all classes of customers.

The one contract which has not been changed is the Kilroot contract. In its present form this contract is not working in the public interest. It must either be changed or challenged. Leaving it in place in its present form until 2010 is not an acceptable option.

Market Opening and Customer Choice

The Internal Market in Electricity (IME) Directive continues to be implemented in Northern Ireland, with the target market opening level of 35 percent being met on 1 April 2001, two years ahead of the schedule determined by the European Commission. There are now around 680 eligible customers which are able to participate in the liberalised electricity market.

OFREG will consider the potential for opening or liberalising the market beyond the limits of the EU Directive, subject to any such developments leading to lower prices and greater competitive choice.

North South Electricity Trades

The energy trades using the North-South interconnector which were made possible in 2000/01 will continue in 2001/02, with further interconnector capacity available. OFREG will keep under review the means of charging for system access and the effect on transmission costs of any such transit flows, and the consultation on the Moyle Interconector will also examine this issue in more depth.

Phoenix Price Controls

A price control on Phoenix’s Supply Business can be put in place after 2001 for customers consuming less than 75,000 therms per annum if the Regulator determines that competition from other fuels is insufficient to protect the interests of these consumers. This matter will be considered during the course of the year and a determination made in early 2002.

Further Gas Licences

Several applications for licences to extend the gas network beyond the Greater Belfast area have been received against the background of uncertainty about the strategy for gas pipelines in the Irish Republic and the threat to gas expansion from the Climate Change Levy. The issues are complex but OFREG will continue to work with the Department of Enterprise,, Trade and Investment to contribute to reducing the uncertainties and to progress to the issuing of licences.

Environmental Matters

The Regulator will work closely with NIE Supply Business to assess progress progress made in environmental improvements through new schemes adopted in the new Supply Price Control which introduced incentives on NIE to play an increasingly pro-active role in environmental matters.

The Regulator also intends to encourage NIE to explore further the opportunities for developing a scheme to promote electric vehicles.

Recommendations will also be made on how best to progress investments in renewable electricity generation in Northern Ireland.

Energy Efficiency and Fuel Poverty

The £2 per customer levy which supports the Energy Efficiency Programme will continue throughout the forthcoming Work Programme and OFREG staff will continue to work closely with the Energy Savings Trust and NIE to ensure implementation of only the best targeted and most cost effective schemes to provide energy efficiency benefits to a wide range of customer groups but most specifically, the elderly, disabled and those on low incomes.

Competition Act 1998

OFREG will continue to subject the Northern Ireland electricity and gas markets to the full rigour of the Competition Act where appropriate and its staff will play a full part in the development of National and European policy in competition matters through its participation in the national Concurrency Working Party.

Climate Change Levy

This is a levy of 0.43p/kWh to be paid from 1 April 2001 by non-domestic customers. Electricity from renewable sources will be exempt. OFREG will be responsible for the accreditation of qualifying renewable generators, issuing Levy Exemption Certificates (LECs), recording the issue of these certificates and reporting to HM Customs and Excise.

Equality Scheme

OFREG has produced a draft Equality Scheme under Section 75 of the Northern Ireland Act 1998 and this will be published for consultation in early 2001 after which it will be submitted to the Equality Commission for Northern Ireland.

Social Action Plans

The Regulator is of the opinion that it will be important for disadvantaged

customers to receive the same levels of service as other customers when they purchase gas and electricity. He also recognises the gas industry is at an early stage in its development and faces a range of challenging technical issues. On the other hand facilities available for electricity customers should become more refined and innovative with the passage of time. The Regulator has identified the needs to reduce prices, protect consumers, and provide guidance on energy efficiency and the environment as having an important part to play in securing the best possible deal for the disadvantaged.

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