Moyle interconnector: Repairs cost £31m

Repairs are being carried out by the North Sea Giant

Repairs to an underwater electricity interconnector between Northern Ireland and Scotland cost £31m last winter.

The repairs were carried out on Moyle Interconnector, owned by Mutual Energy.

But electricity customers are being asked to pay towards the impact of the damage to the underwater cable by covering the cost of lost sales.

The 10-year-old Moyle electricity interconnector ensures cheaper electricity and security of supply between NI and Great Britain.

The cost of the repair, revealed in Mutual Energy's accounts, is still being examined by the insurers.

The utility regulator said electricity customers were being charged £14.5m in costs associated with the interconnector.

A proportion of that has gone towards covering the cost of lost sales because of the breakdown.

Customers are currently paying this in their electricity bills.

The economist, John Simpson, said the extra charges imposed on electricity customers stemmed from an agreement that was made when Mutual Energy was set up over a decade ago.

He said under the terms of the deal, customers pay extra to support the company's finances if it does not make enough commercial income from the interconnector.

"We have an obligation to Mutual Energy as electricity consumers indirectly to make up any shortfall in their revenue, otherwise they won't be able to pay the cost of their borrowing - which we have guaranteed from the day they undertook that borrowing," Mr Simpson explained.

The energy regulator said: "Historically, Moyle has been able to cover its operating costs from interconnector capacity sales.

"However, a loss of sales due to outages, increased bond payments due to indexation and the introduction of a second interconnector (which will have the effect of reducing capacity sales on Moyle) has lead to a forecast cash flow shortfall. "

Since the initial repairs were carried out last winter, another fault has developed in one of the cables on the seabed about seven kilometres from the Scottish coast.

That means the interconnector can only operate at half its capability.

When both cables are operational, the interconnector can carry 450 MW of power which is the equivalent generation of a small power station.

With only one cable working that capacity has currently fallen to 250 MW.

According to its annual report, Mutual Energy said that it was awaiting specialist reports before deciding what action to take, either to repair the cables, or convert them to a lower operating capacity, or look at other options.

Traditionally, sales have covered the interconnector's operating costs, but that has changed since the cable started to malfunction.

A spokesman for the utility regulator said £14.5m was included in customer electricity tariffs for 2012/13 to cover costs from the Moyle Interconnector.

"The £14.5m is the amount of additional income the Moyle Interconnector needed from consumers during 2012/13 to finance its business.

"Significant factors for this have been reduced capacity on the Moyle Interconnector and increased capacity within the SEM (Single Electricity Market) due to the commissioning of the East-West Interconnector." This equates to about 1.2% of final tariffs, the spoksesman said.

The interconnector has been running at only half capacity since its most recent break down.

The regulator said the cost of the current outage in the Moyle interconnector is not included in the 2012/13 tariffs.

"It is too early to say whether there will be an impact on 2013/14 tariffs," he said.