Gas to the West Pipeline – Northern Ireland

The Northern Ireland Authority for Utility Regulation (NIAUR) had to develop a methodology for assessing bids by energy firms for operating the proposed Gas to the West Pipeline in Northern Ireland.

A key issue is that energy firms regulated under a ‘revenue cap’ model bear opex volatility risk, whereas those regulated under a ‘cost pass through’ model do not.

Consequently, in order to compare bids on a ‘like-for-like’ basis, it is necessary to adjust the weighted average cost of capital (WACC) under the alternative regulatory models. Mutual Energy hired Economic Insight to provide an expert report on this matter, which was submitted to the regulator.