News

Northern Ireland system operator needs reform, says regulator: close tie to owner Eirgrid leaves customers out of pocket

by  •  • Comments Off

A poor governance structure at Northern Ireland’s electricity system operator (SONI) that leaves it closely managed by owner Eirgrid is potentially detrimental to consumers, with the potential for higher prices, favouring shareholders over consumers and blocking competition. Those fears were raised by Northern Ireland’s Utility Regulator in a consultation over a new governance structure for SONI.

UR said that it had the management and oversight of SONI’s  system operator licence responsibilities “are effectively discharged by EirGrid”. In addition, “the integrated governance structures of the EirGrid group are not designed to enable SONI to act as an equal partner, nor even to be perceived as an equal partner with its own guiding mind”. What is more, it says the rules that govern collaboration between the two companies are “either missing or not working”.

The UR says significant SONI functions are discharged either by the EirGrid Board or within the EirGrid Group integrated management structure, and the SONI Board has no formal role. In particular the SONI board:

  • Does not set the strategic direction of the company;
  • Does not monitor the development of or sign off the SONI business plan for the price control;
  • Does not have a formal role in SONI risk management;
  • Has no role in procurement decisions taken at group level and which incur cost for SONI;
  • Has no role in signing off the Cost Allocation and Recharge Policy;
  • Does not have responsibility for investment decision making for SONI;
  • Has no role in approving commercial transactions with another group company.

The Utility Regulator has proposed structural change intended to ensure that SONI and EirGrid deliver their SEM all-island TSO functions “as equal partners representing their own consumers”, while maintaining efficiencies arising from SONI’s position within Eurgrid that  it admits benefit SONI consumers. It wants SONI to have an independent management team, and potentially a fully independent board to maintain independent SONI decision making and accountability.

Responses are to be made by 11 June.

Read the full consultation here.