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Lo 08

NIE's electric bill

Published on 07/08/2016
NIE has announced it wants to invest around half a billion pounds in its network. The proposed expenditure, if approved by the Energy Regulator, would take place from 2017 onwards. 

Over half the money is earmarked for a renewal of assets. NIE makes the case for an upgrade by reference to equipment which it says is in poor condition, obsolete or at the end of its life. 

The last time however that NIE asked for approval for massive asset replacement programme, the proposed spending plan was rejected as excessive by the then Regulator. The matter went to the Competition Commission which broadly ruled in the Regulator’s favour. This time round the spending plan, though substantial, is more modest in scope. 

By way of comparison, in the previous RP5 programme lasting five and half years, capital expenditure of £459 million was eventually sanctioned, which is not way out of line with the £508 million capex being sought by NIE for an RP6 period lasting six and a half years. 

Among the projects envisaged for RP6 is a £60 million scheme to replace old meters. Instead of using this opportunity to introduce smart meters, it appears that conventional equipment will be installed. This is no fault of NIE. Stormont has not yet followed the lead taken in Great Britain and approved the rollout of smart meters which households could use to modify their energy usage. 

By 2023/24 when RP6 is complete, it will have added £10 to the average household electricity bill unless the Regulator insists on a more slimline expenditure plan.

Across the water the reform of the retail energy market announced by the GB regulator Ofgem left a number of commentators distinctly underwhelmed. 

Its most striking proposal is the announcement of price cap for customers using prepayment or keypad meters. Ofgem reckons when the cap is introduced next April it will save the four million households affected an average of £75 a year. Vulnerable customers here already have a broader safeguard in that they can rely on the regulatory regime to offer protection against the risk of exploitation in both the credit and prepay markets.

Significantly the Ofgem reform will expire in 2020 because it clearly believes the roll out of smart meters will help to make the cap redundant. 

Of course as has been noted earlier, there’s been no decision to introduce smart meters here. Delay allows us to learn whatever lessons the GB rollout offers but masterful inaction also denies homes here the benefits an immediate introduction would bring. 

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