RP7 Stakeholder Consultation WEB - Flipbook - Page 55
8.Cost of investment
Introduction and
background to our
network charges
Impact of proposed RP7
investments on network
charges
NIE Networks derives its revenue
principally through charges for use
of the distribution system levied on
electricity suppliers and charges for
use of the transmission system levied
on SONI. Our network charges
represented approximately 18% of
the final electricity bill for a domestic
customer in the 2022/23 tariff year13.
This percentage will vary each year
depending on electricity wholesale
prices and other costs which make
up the final bill. Network charges will
also make up a lower percentage of
the final electricity bill for business
customers.
In the previous chapters of this
consultation, we have described
what amounts to a very ambitious
programme of proposed works for
the RP7 price control. In total, we are
proposing an investment programme
during RP7 which is significantly larger
than in RP6. Our investment proposals
are summarised in the table below; and
we would highlight that is our best view
of the required scale of investment at
this point in time, noting that there may
be further adjustments made before we
finalise our plan.
The scale of our ambition is in our
opinion, necessary if Northern Ireland
is to have a chance of achieving
the challenging targets set out in
the government’s Energy Strategy.
Achieving the renewables target set
for 2030 requires a step change in
the level of investment needed in the
electricity network and our proposals
for RP7 reflect this14.
Significant investment is needed
to enable decarbonisation and the
transition to net zero. We also need
to spend significant sums to keep
our network in good condition, and
to maintain its resilience given that
dependency on electricity is already
high and will increase further with the
electrification of heating and transport.
This is driving investment requirements
higher. It is important to note that the
bulk of our investment is in long-life
assets so, while the overall cost is
significant, the charges levied on
customers to pay for those assets is
spread over a long time period (so the
annual cost will be much smaller.).
Investment during RP6 and RP7
£ in 2021/22 prices
RP61, £m
RP7, £m
Inc, £m
Inc, %
220
455
236
107
89
653
563
632
309
1,108
799
259
Facilitating Net Zero through a flexible and integrated energy system
309
1,108
799
259
Maintaining a safe, reliable and resilient network
679
1,091
412
61
Preparing our business for a digital and environmentally sustainable future
17
65
48
276
Enhancing customers’ experience
12
19
7
57
Other costs
378
327
-51
-13
Total
1,396
2,610
1,214
87
Distribution investment
Facilitating Net Zero through a flexible
and integrated energy system
Transmission investment
2
Total investment to facilitate Net Zero
1
2
Latest best estimate of actual allowances to the end of RP6 (normalised to a 6-year equivalent, to ensure like-for-like comparability to RP7).
NIE Networks has limited influence over investment requirements on the transmission network, as these are determined by SONI.
13
“Conclusion
of the Utility Regulator’s Review of the Power NI Ltd Maximum Average Price”, May 2022. Available at –
https://www.uregni.gov.uk/files/uregni/documents/2022-05/briefing-paper-for-power-ni-tariff-review-july-2022.pdf
14
very significant element of the estimated costs needed to facilitate net zero during RP7 (at c£653 million, or over half of the overall estimated
“A
costs of facilitating net zero) is driven by decisions made by SONI, and not NIE Networks (although SONI may engage with us before finalising
its decisions). Specifically, it is SONI that is responsible for the planning and design of transmission load-related projects needed to ensure the
transmission network remains fit for purpose. Following completion by SONI of the planning and design work, NIE Networks is then responsible
for the detailed design and specification, procurement, construction and commissioning.
RP7 Stakeholder Consultation
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