NIEH an Report

working for energy consumers Annual Report 2008 Images on the cover top row from left to right: The Moyle Interconnector, Gas Transmission at Knocknagoney, Utility Regulator visit to Knocknagoney. Utility Regulator visit to Belfast Gas Transmission at Knocknagoney. 08 Annual Report and Accounts PTL’s Gas above ground installation (AGI) at Island Magee Northern Ireland Energy Holdings Limited Annual Report and Accounts 2008 contents Chairman’s Statement . 5 Operating and Financial Review . 8 Board of Directors . 21 Corporate Governance Statement . 22 Remuneration Committee Report . 26 Audit Committee Report . 28 Members . 29 Northern Ireland Energy Holdings Ltd (Report and Financial Statements) . 33 Moyle Interconnector (Financing) plc (Report and Financial Statements) . 63 Premier Transmission Financing plc (Report and Financial Statements) . 89 “ A mutual energy company working for consumers ” Northern Ireland Energy Holdings Limited Chairman’s Statement Alasdair Locke Chairman In presenting the third set of accounts for the Northern Ireland Energy Holdings (“NIEH”) Group of companies, I am very pleased to report that the Group has made a significant contribution, to “ we have exceeded reducing the operating costs of energy infrastructure, which is increasingly important at a expectations in both time of rising energy prices. Growing group gas and electricity The acquisition of the Belfast Gas Transmission (“BGTL”) by, Northern Ireland Energy Holdings, this year has consolidated our position at the heart businesses and of energy transmission in Northern Ireland. It was achieved at an all in cost of capital of 2.387%, delivered on our thereby reducing the immediate cost to Northern Ireland Energy consumers by more than 50%. I am particularly pleased that the company’s past promises to reduce achievements have been recognised in the financial markets, allowing us to successfully the cost of launch a bond in such difficult market conditions. The fact that the interest rate of the issue was our lowest to date only confirms my belief in the operation for all robustness of our mutual model. This transaction concluded another successful year, where we have energy consumers exceeded expectations in both gas and electricity businesses and delivered on our promises to reduce the cost of operation for all energy N in Northern Ireland. consumers in Northern Ireland. o r t h Safety & Reliability e r Safety continues to be at the top of the Boards n I r agenda. One of the fundamental requirements of e l ” a our stakeholders is the safe operation of our n assets to very high levels of availability. In this d E respect the continued excellent performance is a n e credit to both the management and staff of our r g companies and those of our key partnership y contractors in SONI, ESBI, Siemens, Bord Gais H o l Eireann and Scotia Gas Networks. All of the gas d i used in Northern Ireland continues to be supplied n g through Premier Transmissions (“PTL’s”) pipeline s which was fully available all year and, for extended periods during the year, security of electricity supply throughout Ireland depended on the availability of the Moyle Interconnector. The Board 5 will continue to strive to maintain these high standards. Northern Ireland Energy Holdings Limited Chairman’s Statement Costs to the customer Northern Ireland for about three months. We are very We continue to measure our success by the savings we pleased to have signed a “Heads of Terms” agreement make for the energy consumers of Northern Ireland. We with Portland Gas NI Limited, to develop these salt fully expect to deliver the cost of capital savings of some caverns created within the thick salt sequence deep £81m (net present value) calculated at the inception of our below Larne Lough. Whilst this project is at a very early three transactions to date. In addition the Group’s stage the prospect of significant benefits for energy users operating companies were again able to make further in Northern Ireland is most encouraging. We look forward contributions to lower energy prices in Northern Ireland by to continuing to work with Portland Gas to advance this lowering operating costs. For the sixth successive year project. Moyle was able to make a further significant contribution to lower electricity prices in Northern Ireland in 2008-09 by Members and Board avoiding any cash call on consumers. This was achieved As a Group dedicated to the long term interests of the by setting aside £3.5m from its accumulated surpluses at energy consumers of Northern Ireland, we remain the end of the year. On the gas side of the group PTL’s committed to the highest standards of corporate cost savings against forecast enabled the company to governance. We believe that the arrangements for the return £1.12m to shippers, thus contributing to lower gas supervision of the conduct of the Group’s business have prices to end consumers. been successful in providing good corporate governance. We are grateful to our members for their support and for The Group continues to take a long term view in respect of their challenge to the board and the executive. I look the use of reserves to minimise costs to the consumer, forward to continuing to work closely with the members aiming to do so as evenly as possible over the years. A key into the future in furthering the interests of the energy component of this strategy is the European Renewable consumers of Northern Ireland. and Sustainable Energy Fund which we were happy to see launched in September this year. By first closing in Non-Executive Directors, David Montgomery and Nuala December 2007 the fund had already attracted Sheeran resigned as board members this year. I would commitments of €74m, including €15m committed by like thank them for their valuable contribution during their NIEH. With a steady pipeline of projects we expect this tenure and to especially mention David who was fund to attract up to €250m and provide a good return to instrumental in conceiving and setting up our mutual NIEH and allow the Group to continue providing its company. I also intend to “step down” during 2009. We services to customers at a lower cost than any other utility are seeking replacements for myself and the Non in Northern Ireland. Executive Directors and hope to report further at the AGM in September. Future prospects The major changes in the energy markets of Northern I would like to thank my colleagues on the board and the Ireland and the Republic of Ireland have continued. Managing Directors and staff of our subsidiary companies During the year, the regulatory authorities implemented for their significant contribution to the ongoing business N o the Single Electricity Market or SEM, and although it has of our Group. I look forward to working with all of them r t provided good revenues for Moyle, in the short term, the in meeting our goals for the future and continuing to h e r outlook is at best uncertain under present arrangements. deliver value to all our stakeholders. n I We will continue to press for the full SEM capacity r e l payment to be paid to the Interconnector supply chain in a n a similar way that it is paid to generators. The detrimental d treatment of the Interconnector under the SEM greatly E n increases the likelihood of cash calls on consumers. e r g y Work has begun on a joint regulatory initiative, the H Common arrangements for gas or CAG. We support this o l d initiative and will work to ensure that any benefit which i n might accrue will be captured for Northern Ireland g s consumers. Another exciting development for our group is the potential for a gas storage facility under Larne Lough. 7 Initial studies indicate that the storage facility could store up to 500 million cubic meters of gas, enough to supply Northern Ireland Energy Holdings Board visit to Auchencrosh Site. Northern Ireland Energy Holdings Limited Operating and Financial Review About NIEH History The concept of Mutualisation is not new, and has taken many forms over the years. Building societies, insurance companies and retailers such as the COOP and the John Lewis Partnership, are best known to the public and have existed for many years, in this model the employee’s and customers effectively own the company. Mutualisation has re emerged in a different form in the utilities, as a “Company Limited by Guarantee”, The most notable example being Gas Cymru, set up in Nov 2000, Northern Ireland Energy Holdings Senior Executives, Bill Cargo and for the sole purpose of owning the assets of Welsh Water. Paddy Larkin. NIEH is a company limited by guarantee, with a similar business model, focused on energy infrastructure, with a On the 31 March 2008, NIEH again extended its asset mission “To address the high cost of energy in Northern base, with the acquisition of the Natural Gas Ireland and to bring ownership of key energy Transmission assets of Phoenix Natural Gas Limited, infrastructure assets into local hands.” which we have, renamed Belfast Gas Transmission. This transaction has reduced the initial cost of operation of We are willing to purchase assets where it is clear that we this asset by more than 50%. can make long term cost savings. This usually means mature, low risk capital intensive, energy infrastructures Business Description with a secure regulated revenue stream. We can then The objective of NIEH is to own and operate energy work with regulators and financiers to raise low cost infrastructure in the island of Ireland in the long-term capital, for the long term benefit of consumers. interest of the energy consumers of Northern Ireland, the Group’s principal subsidiaries are the Moyle, Premier This mutual model was first applied by ourselves on the Transmission and Belfast Gas Transmission groups of purchase of the Moyle Interconnector, from Viridian/NIE.

Load more