Today we are publishing the final determination for our gas transmission price control (GT22). GT22 is the price control review for the high pressure gas network in Northern Ireland for the five year period from 1 October 2022 to 30 September 2027.
The high pressure gas network comprises five gas transmission pipelines operated by four conveyance licence holders, which we refer to as Transmission System Operators (TSOs):
- GNI (UK)
- Premier Transmission Limited (PTL)
- Belfast Gas Transmission Limited (BGTL)
- West Transmission Limited (WTL)
PTL, BGTL and WTL are part of Mutual Energy Limited (MEL).
This price control also includes the Gas Market Operator for Northern Ireland (GMO NI), which is a Contractual Joint Venture between the TSOs to deliver a single system operator service.
The gas transmission pipelines transport gas from Scotland to the gas distribution networks (Phoenix Natural Gas, firmus energy Distribution and SGN Natural Gas) and to the gas-fired power stations, Ballylumford Power Station and Coolkeeragh Power Station.
Following our review of the TSOs’ business plans, we published the draft determination in December 2021 for consultation.
We received four responses to the draft determination, three from the companies involved (GNI (UK), MEL and GMO NI)) and one from the Consumer Council for Northern Ireland (CCNI). We considered the additional justification provided by the companies and have increased their allowances. We have also welcomed the positive engagement from all respondents and concluded:
- We have increased allowances in some cost lines as a result of further evidence and justification;
- While forecast costs were generally well justified, we have disallowed some insufficiently justified cost lines;
- We will continue to liaise with the TSOs on development in areas relevant to the NI Energy Strategy; and
- A weighted average cost of capital (WACC) for GNI (UK) of 2.66% has been unchanged from the draft determination.
Overall, we are allowing 90% of MEL’s submitted amount, 92% of GNI (UK)’s and 86% of GMO NI’s.
As with GT17 (the current price control) we also propose a category of items (Relevant Items) for which the companies may seek an allowance once the need and cost justification is better developed.
We will continue to monitor progress on costs and outputs through the Regulatory Instructions and Guidance (RIGs) and have added additional areas for review, including progress on asset management systems, tracking of TSOs’ stakeholder engagement activities, progress on joint working between the TSOs and the development of an Environmental Action Plan.
In the midst of increasing gas tariffs as a result of wholesale gas prices, we are confident that the outcome of GT22 will not make any noticeable change to the postalised tariff.
Annexes
Annex 1: Replacement expenditure
Annex 2: Operational expenditure
Annex 3: Cost of Capital report
Annex 4: Consultation responses
Annex 5: Post efficiency allowances