ESB-OWNED Northern Ireland Electricity wants to raise electricity prices in the North to plug a potential £50 million shortfall in an NIE pension fund.
The North’s utility regulator has revealed that since 2007 electricity consumers have been paying £5 million to £6 million a year for the pension deficit and will continue to do so until 2012.
The chief executive of the regulatory body yesterday told an influential Northern Ireland Assembly committee that he intends to investigate how NIE has managed its pension fund.
Shane Lynch informed the Committee for Enterprise Trade and Investment that NIE would have to demonstrate that it had “carefully and prudently” managed the fund. But Mr Lynch also warned that the shortfall could take 15 years to rectify.
According to the latest set of accounts filed by NIE, the pension liability in the group’s defined-benefit scheme (under IAS 19 Employee Benefits) decreased from £136.2 million at March 31st, 2010, to £40.6 million at March 31st, 2011.
NIE was previously owned by the Viridian Group before it was acquired by ESB last December. The results for the 12 months to end of March of this year show a profit after tax of £26.1 million.
According to its latest set of accounts, most of NIE’s employees are members of NIEPS, previously the Viridian Group. The pension scheme has two sections: “Options”, which is a money purchase arrangement, and “Focus”, which is a defined-benefit arrangement which closed to new entrants in 1998.
NIE has warned there is “a risk that the cost of funding the Focus section could increase if investment returns are lower than expected, mortality rates improve or salary or benefit increases are higher than expected”.
It says during the year a “deficit repair plan, including the separation of assets and liabilities from the Viridian Group following the acquisition of the company by ESB, was agreed with the NIEPS trustees”. NIE is required to apply to the North’s Utility Regulator for permission to increase its prices.
The company’s managing director Peter Ewing told the Committee for Enterprise, Trade and Investment yesterday that NIE had successfully brought the pension deficit down and had done all in its powers to manage costs.
But the chairman of the committee, SDLP MLA Alban Maginness MLA, said it was “understandably concerned” about NIE’s plans to pass on costs for the gap in its pension fund to consumers.
