19 June 2002

Ofreg submit proposals for electricity price changes

Electricity regulator, Ofreg has offered Northern Ireland Electricity (NIE) an alternative option in its original five yearly review which would cut average electricity bills by £6 a year.

Ofreg regulator Douglas McIldoon made his final proposal following NIE objections to his last report in March after claiming initial proposals to reduce bills by £27 on average would lead to job losses and blackouts.

NIE originally said his proposals would not allow them to continue to refurbish their rural network and would result in not enough lines to deal with storms and emergencies. However, Mr McIldoon said his new report would alleviate any difficulties that NIE originally had.

He said: "The paper which I am publishing includes a traditional Price Control proposal. But it also proposes an alternative which, although it will not immediately achieve as large a price reduction as my initial proposals, would provide the basis for a longer-term change in the way in which NIE’s price controls are set.

"It sets smaller and more gradual price reductions and offers NIE a raft of incentives which would reward the company in a predictable, consistent and fair way for the steps which it takes to reduce its costs or improve the environment, thus aligning the interests of the company and customers.”

In terms of the impact on NIE prices Mr McIldoon said his alternative proposal would provide for a 5% reduction in the cost of one unit of electricity in 2003 - a reduction of approximately £6 in the average electricity bill next year - and in each of the following three years - based on NIE’s assumption of demand growth.

NIE confirmed that they had received Ofreg's proposals and would consider the changes made. They are expected to respond to the offer by July 8.

(MB)