NIE Transmission & Distribution price control from 2007
NIAER/Ofreg final proposals (7 pages, PDF) for the price control to apply to Viridian's Northern Ireland electricity transmission and distribution business from 1 April 2007 until 31 March 2012. The main features of the proposals are:
- An automatic pass-through of operating expenditure, with a five-year lag for "controllable" expenditure. The pass-through is subject to RPI indexation with no systematic efficiency improvement assumption, but with a one-off adjustment to allowances for 2007/2008 and 2008/2009.
- An automatic pass-through of actual capital expenditure to the regulatory capital value, with a separate scheme to provide additional remuneration to the company if it can demonstrate to the regulator that it has delivered the programme more efficiencly than assumed in the capital expenditure budget.
- Reliance on Ofgem's work on the cost of capital, including using a lower notional cost of capital for transmission than distribution. There is an arrangement to adjust price limits if Ofgem decide to reduce the allowed cost of capital for distribution in Great Britain at the 2009 review, but not if it decides to increase it.
For further information or advice please contact Franck Latrémolière.
Filed under Electricity, Ofreg, Price controls.
