Regulator boosts Northern Ireland Water's allowances for power costs and inflation

Businesses in Northern Ireland face a 4.6% hike in water bills fuelled by a regulatory increase in the allowance for power costs at Northern Ireland Water. The Utility Regulator is consulting until 27 June on its draft determination in its Mid-Term Review of Northern Ireland Water’s price control.

The Utility Regulator issued its PC21 final determination for the period 2021-27 in May 2021 with a provision for a review after three years to update for material changes. The regulator has allowed an operating cost uplift of £54m to cover unexpectedly high power costs. This will be passed through to non-domestic customers in the form of an average tariff increase of 4.6% in each of the last two years of the price control period. All other types of operating costs “largely balanced out” so are unchanged.

The regulator also allowed an increase in NI Water’s capital allowance for the full price control period, taking this from £2.1bn to £2.4bn to cover inflation. It disallowed NI Water’s application for £0.28bn to cover cost pressures above inflation on grounds of insufficient evidence. This accounts for the bulk of the difference between the company’s capital allowance submission of £2.75bn and the regulator’s £2.4bn allowance.

Elsewhere, the Mid-Term Review proposed limited adjustments to output targets.