With the development of the natural gas industry in Northern Ireland, the role of the regulator was extended to gas in 1996. This includes the organizations involved in the management of the environment and in the development of Northern Ireland's social and customer-oriented policies and structures.
The regulatory environment and the factors that will influence our strategic direction
Introduction to Chapter 3 – challenges and opportunities
The new water regulatory regime is an important part of our context in the coming period. We scan ahead in terms of context in the following sections:- 3.2 (for the upcoming 5 year horizon) and 3.3 (briefly for the longer term horizon scan).
Context factors that will influence our work in the coming 5 year period There are a number of key “context” factors that will influence our work and strategic direction
We will work directly with both governments and our fellow energy regulators in RoI13 to ensure this is the case. In the long term, we will need to consider whether and how we might try to introduce competition into various aspects of the water/wastewater regulated sectors.
Some initial thoughts on other longterm influences
However, there is a real danger that the further development of the natural gas sector in North Korea will not happen as quickly as we would like. Further expansion of the pipeline network beyond those areas already served will be expensive, even if it can be demonstrated that it will be fully beneficial. There is also a need for private sector gas business owners to work closely and collaborate with a range of public and consumer/environmental bodies that can help create an environment where gas deployment can be revived.
This will have implications for how regulated assets are delineated, the implications of associated funding models for incentives, risks to consumers, allowable rates of return, etc. Security of supply issues will have been worked through: gas storage should be in place; the picture of price and long-term supply contracts will become clearer. The experience will be complete and NI will be able to draw on this experience and determine its own policy.
Our first thoughts on potential strategic themes and priorities
- Introduction to Themes and Priorities
- Statutory enforcement
- Regional cooperation
- Delivery of the sustainability and social policy agendas
- Pursuing security of supply in terms of price, diversity and infrastructures investment
- Industry development. Developing our utilities and regulated companies
- Internal governance, risk assessment and management, effective regulation and accountability
- First t The purpos
We believe it is useful to use these three segments to structure thinking about our key regulatory activities and actions over the next 5-year period. Delivering our key regulatory functions in every sector can only be achieved through effective performance in these six areas – they cut across all the work we do at every step of the value chain and in every regulated utility. Many topics cut across many of our work areas and influence our policies, actions and priorities.
Issues such as climate change, the need for the environment. sustainability, fighting fuel poverty arises within and is influenced by many of our policies and actions. This is a key requirement in both energy and water and drives much of our analysis and debate with the regulated industries, particularly in terms of efficiency of operations, investment requirements and business planning etc. We recognize that, as well as controlling monopoly aspects of utilities and ensuring, that customers are protected in terms of price and service quality, a key task is to look at the medium term and work with the industry to identify optimal investments. technologies and strategies that will work in the medium/long term for the benefit of both customers and the industry.
1) Wholesale Markets
In energy, as discussed above, this has been part of the key background to many of our problems over the past few years - it has directly contributed to large increases in gas prices for customers and has also had an impact on electricity prices through higher fuel input costs for generation. For example, we are currently in the process of fully reviewing the operation and future direction of the Energy Efficiency Levy. Reducing our sectoral exposure to high cost peaks – the policy direction here points to initiatives such as looking at gas storage options and the best way forward.
Not only is this a problem for the more efficient operation of the wholesale market itself, but it also has ramifications for the rest of the value chain. Wholesale electricity purchase costs can account for more than half of the total cost base for a supply business and therefore represent a key determinant of the competitiveness of new entrants. We will need to consider and determine the best way forward for the use of the former Belfast West Power Station site, now that the clearance is complete.
2) Networks
The sustainability consultation includes proposals for action and discusses these proposals before a formal action plan is drawn up. During the first part of the planning horizon, it is likely to be a priority to implement and implement the findings of the sustainability consultation. First, the need and ability of the power grid to handle significant additional wind generation in the future will change significantly. A related issue that we would like to note at this point is that of the potential for the development of district heating networks.
We may seek to initiate formal analysis and consultation in the early part of the. Although ownership in itself is not the main concern of regulation, some of its concomitants are. 36 reporting regimes implemented; the use of the "reporter" will still be embedded in NIW; the implications for price control and network investments of political decisions about.
3) Retail
- How we will deliver
- Questions and consultation details
- Annex 1: Our Statutory Duties
- Annex 2: Current work areas with the three regulated sectors
These are all important issues that will play out in the coming years, mostly in the context of regulated business plans and the various steps and consultation stages of the price control process. 37 With regard to the potential for retail competition in the water sector, this is something we are aware of in the English and Scottish context. The Utilities Regulatory Authority has set up an internal working group led by the Director and with representatives from each of the three internal utility teams to examine measurement issues in the round and share ideas and thinking across the three directorates.
This review and consultation will take place in the context of an already planned review of our social action plans and the ongoing review of the functioning of the energy efficiency tax. Consultation Question 8: The utility regulator has limited resources, both as a whole and within each operational directorate, to deliver on the priorities over the next 5 year period. While every effort has been made in the preparation of this document to follow best practice in relation to Section 75, the Utilities Regulator would appreciate input from its stakeholders and the communities with which it seeks to participate set.
The Authority shall perform the functions in the manner it deems best calculated. (a) protect the interests of consumers with regard to the supply of water by water utilities and the provision of sewerage services by sewage companies, where appropriate by facilitating effective competition between persons engaged in or commercial activities related to water supply and the provision of sewage services;. The Authority performs the said functions in the way it deems best calculated. a) promoting economy and efficiency on the part of companies appointed under Chapter I of Part III in the performance of the functions of a relevant undertaker;.
1)Water and Sewerage
At the time of writing, there is a significant degree of uncertainty around some of the key policy backgrounds for water and sewerage regulation as we await the full outcome of the Independent Water Assessment Panel and subsequent NI Executive policy decisions on key factors such as rates and regulatory approaches. The current SBP was established prior to the establishment of NIAUR's formal role in water. We will therefore carry out a review to establish an acceptable baseline and we will then put in place a monitoring plan to track the delivery of outputs.
A key role of the supply authority is to monitor the service provided to the customer and to benchmark with other companies in the sector, e.g. English and Welsh water companies. A current focus for the Water Directorate's team is to establish a healthy baseline for both OPEX23 and CAPEX24. Codes of Practice – We have endorsed several codes of practice from NIW (eg in relation to domestic sewage and water supply).
2) Electricity
This included finalizing a Trade and Settlement Code (TSC - the rules of the market) and completing the licensing and contract arrangements for the new market. While there is no doubt that aspects of the operation of the SEM are difficult, the changes have the potential to bring benefits to energy consumers on the island of Ireland. The first meeting of the SEM Committee took place on 13 November, and four further meetings took place during 2007-08.
26 A Cost Benefit Study of the Single Electricity Market – A Final Report for NIAER and CER, by NERA Economic Consulting , 2006. The new control is based on a set of incentives that measure the efficiency of the operation of the PPB contracts and PPB interact with the SEM and is for the period from 07 November to 09 March. The uniqueness of the Utility Regulator also allows us to address the issue on an inter-utility basis.
3) Gas
This should enable a transparent flow of information and the achievement of the timetable for price controls in 2008. The price controls cover customers who consume less than 25,000 thermometers, as competition from alternative fuels is not enough to protect the interests of this part of the gas market. An important element in the joint vision is to ensure that customers get benefits from the joint arrangements.
The Single Transmission Tariff Methodology, which focuses on the best approach to harmonize the structure of tariffs charged to network users in Northern Ireland and the Republic of Ireland, is currently under development. Therefore, in February 2008, both organizations held a joint industry workshop to inform key stakeholders about the introduction and predicted implementation of the CAG. The signing of the Memorandum of Understanding took place in October 2007 and should lead to more effective, consistent and coordinated regulatory decisions and processes.
4) Sustainability, Alleviating Fuel Poverty, and Social Action
The transmission companies in the NW region outlined detailed plans in December 2007 to improve transparency for some key areas identified by stakeholders. The utility regulator has worked with the transmission companies in Northern Ireland to set out common information matrices to provide transparent and consistent information to suppliers. After a period of consultation, these matrices have now been approved and appear on the various transmission company websites for the benefit of all suppliers.
