Decision on Repair of Moyle CableBenefits and Potential
The benefits of mutualisation of Moyle, Premier Transmission and Belfast Gas Transmission have been substantial and have kept energy prices lower than they would otherwise have been.
The savings associated with the reduced cost of capital provided by mutualisation are locked in and provided to customers as a reduction in costs compared to what they would otherwise be. In deciding to mutualise the assets the regulatory authority assessed the net present benefits for consumers to be £19 million for Moyle, £42 million for Premier Transmission and £20 million for Belfast Gas Transmission. These benefits are being delivered year on year.
For example Premier Transmission tariffs were reduced by some 30% upon mutualisation in 2005, saving £6m to gas and electricity customers.
Ongoing operational savings are also for the benefit of Northern Ireland customers and the gas businesses annually rebate any savings made.
Moyle sells its capacity in the market and any surplus income earned beyond what is required to pay its costs is also for the benefit of Northern Ireland consumers. Economic theory suggests that the surplus arises from a reduction in supply company profits because the price at which they can sell power is somewhat independent from their activity on Moyle. This surplus is returned to consumers via a reduction in electricity tariffs.
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