Utility Regulator hails reduction of PSO tariffs
BUSINESSES and householders across the province can look forward to lower power bills come October after the Utility Regulator announced yesterday that one component of the overall tariff is to fall by 10 per cent.
The Public Service Obligation (PSO) makes up around 20-30 per cent of the domestic tariff and a much larger part in the commercial rates paid in industry.
The charge is part made up of the costs of the wires and transmission but by far the most contentious part has been the legacy charge arising from a deal made with some generators at the time of electricity privatisation in the province,
The deals locked NIE in to buying power from, in this instance, Kilroot and Ballylumford, which is also up for review at the end of the contract period in 2012.
Shane Lynch, director of electricity at the Utility Regulator, said the ending of the Kilroot contract marked another positive phase in the modernisation of the industry and the continued development of the single electricity market SEM across the island of Ireland.
Stating that the decision would free the market up further, Mr Lynch said the move represented particularly good news to commercial users who, through the way they pay for their power, end up covering a considerably larger percentage of the PSO.
“It is important to note that these tariffs only make up around 20-30 per cent of the final electricity bill, nonetheless, the 10 per cent reduction is very welcome.
“Rigorous scrutiny by the Utility Regulator, together with a reduction in NIE’s allowed rate of return on investment, and the cancellation of the Kilroot power station generating contracts, have all contributed to these reductions.”
The legacy contracts were designed to guarantee an income for Kilroot and Ballylumford and have been widely criticised in the intervening years as having created an artificial step to costs as NIE was required to buy less efficiently produced power while the market as a whole has been becoming increasingly more efficient.
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Weather for Belfast
Thursday 24 May 2012
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