Business

Energy watchdog scales down curb on gas firms' spending

Gas firms must have their spending plans ratified by the Utility Regulator
Gas firms must have their spending plans ratified by the Utility Regulator

THE Utility Regulator has revised upwards the amount of money it is prepared to allow Northern Ireland's gas firms to invest over the next five years - to the tune of more than £30 million.

But the energy watchdog said it will still ensure significant savings for consumers.

It has published its final determination on the price control for Phoenix Natural Gas, Firmus Energy and SGN Natural Gas.

Known as GD17, it covers six calendar years from 2017 until 2022 and sets the amount consumers must pay via network charges.

The regulator said its final determination will save gas users on networks operated by Firmus, Phoenix and SGN, £6.47, £10.39 and £33.20 a year respectively against what the firms' proposed.

That is averaged across domestic and business customers so industrial users would likely save considerably more.

The Utility Regulator must balance the requirement to improve the gas network with a need for customers to avail of affordable natural gas.

A draft determination earlier this year proposed cuts to each of the companies' spending plans, but the regulator has softened expectations following consultation.

Firmus Energy appear to be the biggest winners after months of negotiation with it allowances for capital and operating expenditure each increasing by 14 per cent.

That means the regulator has agreed to £131.1 million in expenditure, against Firmus' initial £137m submission and signficantly higher than the watchdog's £114m draft determination.

It said the increased capital allowance was included "an increased owner occupier connection target and the addition of a new crossing of the River Foyle to secure supplies in Derry".

In the case of Phoenix - whose spending plans were most out of kilter with the regulator's position - it has seen a 2 per cent improvement in its capital allowance and 5 per cent more allowed on operating spending.

The regulator will allow £178.8m in investment.

But Phoenix - which plans to extend its network into east Down over the price control period - had wanted to spend £221m.

Meanwhile, SGN, which is to operate the new gas network in the west of Northern Ireland saw an additional 2 per cent lopped off its capital spending plans.

The regulator has agreed to £8.7m in operating expenditure (against £13m) and £42.1m (against £45.4m).

The three companies have until next month to respond to the determination with the price control set to commence in January.

Price controls have proven controversial in the past with a spat between Phoenix and the Utility Regulator having to go to arbitration by the then Competition Commission.