Viridian, the parent company of Northern Ireland Electricity, may take legal action if the electricity regulator introduces "infeasible" price controls for the five-year period from April 2002.

The quoted utility is already preparing a challenge in advance of a recommendation from the North's electricity regulator, which is due later this year, according to industry sources. Mr Douglas McIldoon, the electricity regulator in Northern Ireland, has already warned that he considers the price of electricity in the North to be too high relative to Britain. The regulator believes high electricity prices could contribute to firms being uncompetitive compared to counterparts in Britain and the Republic. In a consultation paper published as part of the process of reviewing the price controls for NIE's transmission and distribution business, the regulator has said he expects the company to try to increase electricity prices next year.

Mr William McIlhatton, director of the price control review team, said initial figures submitted by NIE to the regulator would support this. "`It is estimated that NIE's capital and operating expenditure proposals would increase charges for the use of its network by 8.3 per cent. These charges account for 40 per cent of the final electricity bill to domestic customers and 30 per cent of the average NI bill," he added. "Our objectives are to improve the quality of supply and to reduce prices to customers. It is therefore important that the price control sets challenging targets for NIE. As the review progresses it is necessary to take an independent view as to the appropriate level of operating costs and capital expenditure," Mr McIlhatton said.