Northern Ireland Electricity to seek judical review on price-cutting order

Northern Ireland Electricity (NIE) is to seek a judicial review of the decision by the industry regulator, Ofreg, to make the company cut its transmission and distribution prices by 29 per cent.

According to NIE, Ofreg should accept a recommendation for a 25 per cent cut made by the Monopolies and Mergers Commission (MMC). NIE says it has made its decision with "regret" and recognises "that prolonging the period of uncertainty over its terms of business will be unwelcome both to shareholders and customers". An application for a judicial review has been lodged in Belfast and is expected to come to court in about six to eight weeks.

NIE added that the MMC is the recognised "court of appeal" for resolving differences between companies and their regulators and Ofreg's current position was "very damaging to the prospects of an orderly system of regulation".

It is estimated that a 29 per cent cut in transmission and distribution prices would reduce the average household bill by about 16 per cent or £54, and there would be a 6 per cent reduction for larger users.

Under the MMC proposal, backed by NIE, electricity bills would fall initially by an average of £48 per year, with a drop of 5 per cent for larger users. A spokesman for NIE said proposals from the MMC "were quite specific, addressing both public interest issues and the needs of the company going forward".

Previously, Dr Patrick Haren, chief executive of NIE, has said the cuts proposed would make forward planning for the company very difficult.

Mr Charles Coulthard, Ofreg's deputy director general said, "in our opinion what we are doing is legal and proper, this is about the right of electricity customers".

In May, NIE announced a sharp drop in pre-tax profits from £107.4 million sterling to £59.8 million for the year ended March 31st, 1997. This is despite electricity prices remaining relatively high in Northern Ireland compared to the rest of Britain.

The decision to seek a judicial review comes against the background of a hostile relationship between NIE and Ofreg.

When the regulator issued its original 29 per cent proposal, Dr Haren described it as "garbage" and "quite disgraceful".

In response, Mr Charles Coulthard said, "I expected NIE would be working with me to tackle the problem of Northern Ireland's high electricity costs, but instead they have chosen to deliberately seek an increase in the price which customers must pay for electricity".