CRU Approves Gas Networks Ireland Investment Plans up to 2027

The Price Control 5 documents can be found here.

• CRU approves €2.21 billion for Price Control 5 to support the development and decarbonisation of national gas infrastructure
• Gas Networks Ireland investment plans will support decarbonisation goals and maintain a safe and secure gas network for customers
• Capital investment and operational expenditure is recovered through transmission and distribution network charges.

Wednesday, 20 December 2023: The Commission for Regulation of Utilities (CRU) has today published its decision on the fifth price control (PC5) for Gas Networks Ireland (GNI), which sets out what revenues GNI, as the regulated owner and operator of Ireland's gas network, can collect from its customers up to the end of September 2027.

Under the price control process, GNI submits its investment plans to the CRU, based on its assessment of the required improvement and maintenance of the gas network over the period October 2022 - September 2027.

For Ireland to meet its carbon emissions targets for the energy sector, as set out in the Government Climate Action Plan 2023, it will be necessary for both the gas and electricity system to decarbonise in a secure and sustainable way. 

This is being supported by government policies, such as renewable gas targets, a national hydrogen strategy and an energy security package. GNI’s investment plans will continue to develop at an accelerated pace to support these objectives, to decarbonise and ensure continued security of supply through the gas network.

GNI has an important role in adapting to these national and European policy developments and the PC5 decision provides the necessary funds to ensure that GNI can continue to deliver on these objectives, while maintaining an incentive-based approach for GNI to deliver value and better service for customers.

Network Charges

All of the estimated 720,000 gas customers pay network charges through the bills they receive from their gas suppliers. Network charges form an element of the standing charge on gas customers’ bills. Suppliers determine what level of these charges that they either absorb or pass onto their customers through their billing. 

The PC5 decision will see an initial increase of €10.54 per domestic customer per year, which will be recovered through network charges and reflects an increase of less than 1% in customer bills, when compared to CRU’s November 2023 average estimated annual bill. The additional funding supports the necessary investment for the efficient, safe operation and development of the gas network and to ensure there is sufficient gas supply to Ireland. 

Overall, PC5 provides €2.21 billion in allowed revenues to support the development and decarbonisation of national gas infrastructure.  

• The PC5 transmission decision sets out €1.16 billion of revenues for GNI’s transmission operations, which includes the safe transport of gas to the island through the interconnectors from Great Britain. This enables the connection of new gas-fired generation capacity to support security of electricity supply and facilitate the phase out of coal-fired generation. It includes an opex allowance of €621 million and a net capex allowance of €335 million (€543 million in gross capex).
• The PC5 distribution decision sets out €1.05 billion of revenues for GNI’s distribution business. This will enable the connection of new biomethane injection facilities to the natural gas grid. It will also support the safe transport of gas to customers on the national gas network. It includes a total opex allowance of €494 million and a net capex allowance of €316 million (€346 million in gross capex). 

Regulatory Oversight

PC5 retains core features of the CRU’s stable and predictable regulatory framework. New measures are also being introduced to ensure GNI can adapt to future policy and market developments to deliver on national policy goals. 

These new measures include targeted new incentives and reporting requirements, as well as uncertainty mechanisms, where GNI can request, based on substantial evidence, additional money for prescribed activities.

These new measures will strengthen the onus on GNI to demonstrate that it has acted efficiently and effectively, making reasoned decisions with robust information on what activities best delivery for the gas customers and ensure a safe, secure and sustainable energy supply.

Commenting on the Price Control 5 announcement, Commissioner Aoife MacEvilly said: “The PC5 decision provides sufficient funding for GNI to invest for security of supply and decarbonisation, as well as incentives to ensure that it delivers in a safe and efficient manner for the benefit of customers. As part of PC5, GNI will be incentivised to develop its future plans for decarbonisation, aligned with Government policy and our legally binding carbon ceilings."