Phoenix Natural Gas Welcomes CC's Provisional Ruling
|During the most recent Price Control Review to set Phoenix's operating costs and allowable revenues for the next operating period (for 2012 and 2013), the NIAUR proposed material changes to a regulatory agreement that had been reached between Phoenix and the NIAUR in 2006.
The 2006 agreement, which had been designed with the NIAUR to share value between the company and consumers, was heralded by the NIAUR at the time as offering "a win-win for customers and Phoenix".
Phoenix’s rejection of the NIAUR’s Price Control Determination and the proposed modifications to Phoenix’s licence led to a reference to the Competition Commission to redetermine Phoenix’s price control.
Announcing the Competition Commission's provisional ruling that the NIAUR was not justified in retrospectively altering the regulated asset value that was agreed in 2006/2007 and that only a small revision to Phoenix's regulated asset value should be made, the Chairman of the Phoenix Inquiry Group and Competition Commission Deputy Chairman, Professor Martin Cave stated as follows:
"Our decision has been guided by the long-term interests of customers, who would benefit from further expansion of the gas network in Northern Ireland. By trying to change elements of the price control which PNGL had valid cause to believe had been previously agreed, the Utility Regulator’s proposals risk damaging confidence in the regulatory system, which in turn could inhibit future investment.
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"It could also increase PNGL's costs in the long run due to higher costs it may face in financing its activities; this would in turn be reflected in customer bills.
"Such investment is particularly important to fund any future expansion of the gas network in Northern Ireland, where the majority of customers use oil rather than gas, even though it is far more expensive. A typical household converting from oil to gas can save £1,000 a year.
"Whilst we are very conscious of anything that impacts on household and business bills, we have had to weigh this up against the goal of developing the gas industry in Northern Ireland."
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