Menu
19/12/2012
Average Gas Bills To Increase By £11 Next Year
The final determination of the Competition Commission (CC) on the price control and licence conditions for Phoenix Natural Gas Ltd (PNGL) has been published today.
The CC submitted its report on 28 November to the Northern Ireland Authority for Utility Regulation (Utility Regulator). This means that PNGL's regulatory asset base will not be reduced by as much as the Utility Regulator had planned in its determination published in January 2012.
The CC has largely maintained its conclusions from its provisional determination, published in August. It has concluded that some proposals by the Utility Regulator to reduce PNGL's regulatory asset base, which would have reduced the cost of gas to customers, should not be accepted because the current arrangements are in the public interest. These conclusions take account of the interests of current and future consumers, appropriate incentives and returns to regulated companies and the need to encourage further investment and development in the gas network in Northern Ireland.
The main impact of the CC determination will be that instead of PNGL's regulatory asset base being reduced by £74 million as proposed in the Utility Regulator’s January 2012 determination, it will be reduced by £13.6 million. The CC has concluded that some elements of the regulatory asset base, relating to deferred capital expenditure and the funding of business rates expenses, should be removed. The CC has also agreed with the Utility Regulator that other aspects of the price controls need to be updated (such as operational and capital expenditure allowances).
The CC's price limits set in its final determination would increase average household gas bills by around £11 a year. The Utility Regulator’s proposals would have seen a small fall of around £1 a year.
Chairman of the Phoenix Inquiry Group and CC Deputy Chairman, Professor Martin Cave, said: "We have been very conscious of the effect of our determination on current household and business bills, but we believe that it is in the public interest to take account of the incentives and rewards required for companies to make investments and take risks, as well as providing incentives for future network investment and expansion—thus meeting the needs of future customers.
"Our determination recognises the importance of including such incentives in the price control and licence conditions. We think it is appropriate for PNGL to be able to earn the agreed rate of return on its investments. We also think that removing elements of PNGL’s regulatory asset base, which it had earned under the rules applying at the time, could damage investor confidence. This is important when the gas network in Northern Ireland needs to be developed and significant areas of the country still remain unconnected to the grid.
"We have, however, agreed with the Utility Regulator about some of the proposed revisions, where we have concluded that it is not appropriate to require customers to pay a return on certain items in the regulatory asset base."
(CD)
The CC submitted its report on 28 November to the Northern Ireland Authority for Utility Regulation (Utility Regulator). This means that PNGL's regulatory asset base will not be reduced by as much as the Utility Regulator had planned in its determination published in January 2012.
The CC has largely maintained its conclusions from its provisional determination, published in August. It has concluded that some proposals by the Utility Regulator to reduce PNGL's regulatory asset base, which would have reduced the cost of gas to customers, should not be accepted because the current arrangements are in the public interest. These conclusions take account of the interests of current and future consumers, appropriate incentives and returns to regulated companies and the need to encourage further investment and development in the gas network in Northern Ireland.
The main impact of the CC determination will be that instead of PNGL's regulatory asset base being reduced by £74 million as proposed in the Utility Regulator’s January 2012 determination, it will be reduced by £13.6 million. The CC has concluded that some elements of the regulatory asset base, relating to deferred capital expenditure and the funding of business rates expenses, should be removed. The CC has also agreed with the Utility Regulator that other aspects of the price controls need to be updated (such as operational and capital expenditure allowances).
The CC's price limits set in its final determination would increase average household gas bills by around £11 a year. The Utility Regulator’s proposals would have seen a small fall of around £1 a year.
Chairman of the Phoenix Inquiry Group and CC Deputy Chairman, Professor Martin Cave, said: "We have been very conscious of the effect of our determination on current household and business bills, but we believe that it is in the public interest to take account of the incentives and rewards required for companies to make investments and take risks, as well as providing incentives for future network investment and expansion—thus meeting the needs of future customers.
"Our determination recognises the importance of including such incentives in the price control and licence conditions. We think it is appropriate for PNGL to be able to earn the agreed rate of return on its investments. We also think that removing elements of PNGL’s regulatory asset base, which it had earned under the rules applying at the time, could damage investor confidence. This is important when the gas network in Northern Ireland needs to be developed and significant areas of the country still remain unconnected to the grid.
"We have, however, agreed with the Utility Regulator about some of the proposed revisions, where we have concluded that it is not appropriate to require customers to pay a return on certain items in the regulatory asset base."
(CD)
Related Northern Ireland News Stories
Click here for the latest headlines.
29 March 2012
Price Control Of Phoenix Gas Referred To CC
Following the rejection of the Utility Regulator’s price control determination and proposed licence modifications by Phoenix Natural Gas Ltd (PNGL) on 6 February, the Utility Regulator have referred the PNGL price control licence conditions to the Competition Commission.
Price Control Of Phoenix Gas Referred To CC
Following the rejection of the Utility Regulator’s price control determination and proposed licence modifications by Phoenix Natural Gas Ltd (PNGL) on 6 February, the Utility Regulator have referred the PNGL price control licence conditions to the Competition Commission.
08 November 2013
NIE Must Change Price Control Conditions - CC
The Competition Commission (CC) has provisionally determined that significant changes should be made to Northern Ireland Electricity (NIE) price control conditions. It has done so in a way which is designed to keep price increases to customers down while maintaining the reliability of supply.
NIE Must Change Price Control Conditions - CC
The Competition Commission (CC) has provisionally determined that significant changes should be made to Northern Ireland Electricity (NIE) price control conditions. It has done so in a way which is designed to keep price increases to customers down while maintaining the reliability of supply.
03 February 2010
NI Water Funding 'Tap Turned Off'
NI Water has been told it must make dramatic spending cuts over the next three years.
NI Water Funding 'Tap Turned Off'
NI Water has been told it must make dramatic spending cuts over the next three years.
02 June 2023
Energy Firms Announce Price Reductions
Following a review of Northern Ireland's regulated energy prices, Power NI will lower its household electricity rate by 7.1%, while SSE Airtricity Gas Supply will lower its domestic and small business rate by 12.2%.
Energy Firms Announce Price Reductions
Following a review of Northern Ireland's regulated energy prices, Power NI will lower its household electricity rate by 7.1%, while SSE Airtricity Gas Supply will lower its domestic and small business rate by 12.2%.
06 September 2019
Firmus Energy Slash Gas Prices
Gas supplier Firms Energy will slash its prices by almost 9% from October. The company will drop the natural gas tariffs for its 95,000 customers across the province by 8.77%. The move reflects a fall in wholesale gas prices in Europe and will bring the typical household bill for those in the Greater Belfast area down by £54.
Firmus Energy Slash Gas Prices
Gas supplier Firms Energy will slash its prices by almost 9% from October. The company will drop the natural gas tariffs for its 95,000 customers across the province by 8.77%. The move reflects a fall in wholesale gas prices in Europe and will bring the typical household bill for those in the Greater Belfast area down by £54.
-
Northern Ireland WeatherToday:A chilly start with a widespread frost and some freezing fog, any freezing fog slow to clear. Otherwise bright with sunny spells and coastal showers. Light winds. Maximum temperature 6 °C.Tonight:Coastal showers dying out with a widespread frost developing along with freezing fog, which could become extensive. Winds remaining light. Minimum temperature -3 °C.
