ENERGY: The war of words between Viridian, the Northern Ireland electricity company, and the energy regulator is set to intensify today, with the group warning that proposed price reductions would hit services, threaten safety and cut jobs.
A previous attempt by Mr Douglas McIldoon, head of Northern Ireland's Office for the Regulation of Gas (Ofreg), to impose big price cuts was defeated in 1997 after the plans were reviewed by the Monopolies and Mergers Commission (MMC) and by the Court of Appeal.
Mr Harry McCracken, managing director of Northern Ireland Electricity (NIE), Viridian's principal business, said yesterday that if the present proposals were unchanged it would be difficult to see how another referral to the Competition Commission, the successor to the MMC, could be avoided. "Hopefully this won't be the case."
Mr McIldoon proposes cutting NIE's transmission and distribution charges by the equivalent of £28 on an average household bill. The five-year price controls would bring transmission charges in line with Britain.
Viridian, which publishes its formal response to the regulator today, said: "If these proposals were implemented, they could materially impact the company's ability to continue to provide a satisfactory service to customers."
The company's shares have fallen by 30 per cent since last June. The decline has been exacerbated by a recent profit warning, following a disappointing performance from some of its non-energy businesses.
Viridian, which has debts of about £500 million sterling (€803 million), indicated that underlying profits for the year to March 31st would be about 10 per cent lower than analysts' consensus forecasts of about £75 million.
The company last month sold Open + Direct, its financial services business, for £111.4 million sterling.
Viridian said the regulator's plans to cut NIE's operating costs by more than 40 per cent were "unjustifiable", out of line with the previous MMC findings, and a "long way short of the basic amount needed to sustain a satisfactory level of network performance and customer service".
