Power bills may fall in North

The average electricity bill in Northern Ireland could fall by £24 sterling (€37) by 2006, if pricing proposals from the North's energy regulator are accepted by Northern Ireland Electricity (NIE).

In his latest attempt to resolve pricing issues, regulator Mr Douglas McIldoon proposes to offer NIE a range of incentives to cut costs and reduce growth in demand for electricity. These would include the retention for five years of efficiency gains made by cost cuts, and achieving a 1 per cent higher rate of return on capital expenditure on demand-side measures than on traditional network investment. The cost of capital, a key factor in determining electricity prices, would be 6.5 per cent under the system.

The incentive approach is included within Mr McIldoon's "final proposals" in a review of NIE's pricing structures that began in 2000. The final proposals also contain a traditional price-control proposal which would achieve a larger price reduction than the incentive approach. NIE has previously warned that such a model, whereby the firm would make short-term profits by cutting costs and then introduce lower prices in the period following, would hit services, threaten safety and affect jobs.

An NIE statement yesterday greeted Mr McIldoon's suggestions with circumspection, saying they contained "a form of alternative" that the company "will obviously consider".

Meanwhile, Sir George Quigley, the Northern Ireland chairman of the Canadian-owned Bombardier Aerospace Company, has reiterated his proposal to establish a consumer service corporation to take over NIE's transmission and distribution assets.