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Watchdog orders £10 power bills cut

pylons carrying electricity

pylons carrying electricity

Household electricity bills are set to be reduced slightly in Northern Ireland after a competition watchdog’s intervention.

Annual domestic costs will be cut by approximately £10 by September 2017 following a decision by the Competition and Markets Authority (CMA).

The organisation examined plans to raise prices to upgrade the power grid.

Professor Martin Cave, the authority’s deputy chairman, said: “We think we’ve struck the right balance between keeping bills down for customers and allowing for the investment necessary to maintain and improve the network.

“Not only will customer bills fall as a result of our determination but they should also receive a refund as a result of the readjusted charges.”

The issue centres on the small proportion of the electricity bill made up of charges for running the network of overhead lines and other infrastructure which deliver power to homes.

The competition authority’s determination was published a year after it was invited to settle a dispute between Northern Ireland Electricity (NIE), the company which maintains the network, and the Northern Ireland Utility Regulator, which examines price setting, over how much should be spent on the grid over the coming years.

NIE had argued the infrastructure required extensive investment, particularly because the government’s electricity policy involves connecting more wind farms to the grid to meet renewable energy targets.

The CMA determination said aspects of the original plans were insufficient to protect the interests of bill payers.

It said consumers could be exposed to excessively high charges due to missed opportunities for efficiency and innovation during investment in the network.

The estimated effect of the determination will be that a domestic customer’s annual bill will be reduced by approximately £10 (before adjustments for inflation) by September 2017.

The decision also requires NIE to refund customers for any over-charging resulting from the temporary extension of previous pricing arrangements; due to finish in March 2012 but continued following delays in implementing new plans.

Utility Regulator chief executive Jenny Pyper said: “This final determination will deliver over £1 billion of investment by NIE at no additional cost to consumers.”

A spokesman for NIE said: “A key aspect of the commission’s determination is the closer alignment of the regulatory framework and reporting arrangements with those applied by Ofgem (the Great Britain regulator). NIE fully supports this change, which should facilitate future price control reviews.

“We now look forward to working closely with the Utility Regulator in implementing the commission’s decision.”

 

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