Ulster watchdog rejects MMC electricity curbs

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The Independent Online
The electricity watchdog for Northern Ireland yesterday rejected new price controls recommended by the Monopolies and Mergers Commission in a move which could have serious repercussions for utility regulation throughout the UK.

Douglas McIldoon, the director-general of electricity supply, said he was not minded to accept some of the price controls for Northern Ireland Electricity called for by the MMC.

The regulator and the MMC are at loggerheads over NIE's depreciation policy and acceptable levels of capital and operating expenditure.

The dispute is unprecedented and could have ramifications for the way in which Clare Spottiswoode of Ofgas reacts when the Government publishes the MMC's long-awaited report into price controls for British Gas's transportation arm, now known as BG.

NIE had proposed a cut of 22 per cent in certain of its charges while the regulator wanted a reduction of 33 per cent. The MMC has proposed a reduction of 28 per cent which will mean a cut in electricity bills in real terms of 14 per cent.

Patrick Haren, chief executive of NIE, warned that Mr McIldoon's refusal to accept the MMC's ruling threatened to bring the whole regulatory framweork into disrepute, adding: "It is not now open to the director-general to reject the MMC's conclusions and we shall resist any attempt on his part to do so."

Although regulators are technically at liberty to disregard the MMC findings, since it is effectively acting as a court of appeal, the convention is for the MMC's recommendations to be accepted.