Draft Determination for the RP7 price control for NIE Networks

Closes 22 Mar 2024

Opened 28 Nov 2023

Overview

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Why your views matter

We have published a consultation on our Draft Determination for the RP7 price control for NIE Networks.

NIE Networks is responsible for building and maintaining electricity transmission and distribution networks, which allows consumers to access a secure supply of electricity. As a natural monopoly, NIE Networks is subject to economic regulation which provides protection for all electricity consumers in terms of quality and cost. 

The amount of revenue which NIE Networks collects via supplier tariffs is determined by the Utility Regulator through periodic price control reviews following scrutiny and challenge of the company’s business plans. 

RP7 is our seventh regulatory price control for NIE Networks, which will run from April 2025 to March 2031.

John French, Utility Regulator Chief Executive explains further: 

“RP7 is creating the foundation for Northern Ireland’s journey towards net zero and will facilitate a more efficient use of the electricity system. 

“Our decisions within this draft determination will ensure NIE Networks is fully able to support the energy transition in Northern Ireland. Whilst this additional investment will increase the network cost for electricity consumers, we will ensure that the transition is affordable, fair and inclusive for all.” 

Our proposals within the Draft Determination include: 

  • Overall total expenditure of £2.21 billion, which is a 16% reduction on NIE Networks’ request of £2.55 billion. Major transmission investment (D5 projects) is not included in the comparison. 
  • A total of £1.349 billion for capital expenditure, which includes investment in the distribution and transmission networks and metering work. 
  • Bills for typical domestic consumers who don’t change their usage or adapt to green technologies, will be £13 lower under our proposals than NIE Networks’ RP7 Business Plan. 
  • Domestic consumers who do increase their electricity usage and install heat pumps or use a home charger for an electric vehicle, will see their electricity costs increase. However, this additional electricity cost will be offset by a reduction to their home heating and transport costs. 
  • Dependent on usage and based on our estimates, small businesses could see a 3%-9% increase to the network element of their bill, whilst large energy users could see an 11%-19% increase on the network element of their bill.
  • We have updated our measure of inflation to CPIH (Consumer Prices Index including owner occupiers' housing costs) as we consider this is a better reflection of actual impact on consumers.
  • A rate of return of 4.79% including gearing of 55%. The proposed gearing addresses the potential imbalance between equity and debt returns.

Stakeholder engagement plays an important part in our price control process. We encourage you to become part of this process to ensure we are provided with a range of responses that will help us deliver the most robust and informed decisions when we finalise the price control. Your view will help shape a fair and just transition to net zero for all electricity consumers. 

Comments on the draft determination should be made before the close of the consultation on 22 March 2024, with a decision on licence modifications likely to be published in January 2025.

If you would like to respond, please see the draft determination for further information.

This draft determination is complemented by 25 annexes which can be seen on this page of the Utility Regulator website

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