Company history

NIE was incorporated in 1991 as a public company and was subsequently listed in 1993.

Viridian Group (Viridian) was originally formed as a new holding company in 1998 following a capital reorganisation under which the Group's unregulated activities were separated from NIE. Viridian was a public limited company until 2006 and was registered in Northern Ireland, listed on both the London and Dublin Stock Exchanges.

Viridian carried on four regulated businesses in Northern Ireland: transmission and distribution through NIE T&D; power procurement through PPB; transmission system operation through SONI; and supply of electricity through NIE Supply.

In December 2006, Viridian was taken over by a Bahrain based investment bank, called Arcapita. On 7 August 2007 Viridian was re-registered as a private company and no longer has shares listed on the stock exchange. The company is now known as Viridian Group Limited.

Over the last four years, the Group has developed a substantial position in the newly competitive electricity supply markets in both Northern Ireland and the RoI, including a significant investment in a new generating plant in the Rol. In conjunction with this development, the Group has disposed of a number of businesses, for example, Nevada (telecommunications joint venture); Moyle Interconnector (electricity interconnector between Northern Ireland and Scotland); and Sx3 (software and IT services). The Group's activities continued to be conducted through two principal divisions.

• NIE – regulated electricity businesses in Northern Ireland; and
• VP&E – generation in the RoI and supply in the competitive electricity markets in both Northern Ireland and the RoI.

In addition, Powerteam Electrical Services, our high voltage electrical contracting business constructs and refurbishes substations and overhead lines throughout Great Britain and Ireland.

However, over the last year, a major focus within the Viridian Group has been the Electricity Directive from the European Union. The EU issued an energy markets liberalisation directive with its aim to legally separate the operation of the Transmission & Distribution system from activities carried out by the Power Procurement and Electricity Supply Businesses. In other words, the Electricity Directive (2003) introduces competition into electricity markets across Europe (to domestic level from 1 November 2007).

The Directive was to address the perceived problem of very large, dominant companies cornering the market, particularly if they were vertically integrated, i.e. they not only owned an electricity network but had supply and generation interests as well.

The EU's concern was that these companies could use the resources and information held by their networks companies to give an unfair competitive advantage to their supply and generation businesses.

The EU decided to include in the Directive a number of rules for "unbundling" vertically integrated companies. Therefore a director of a network company cannot be a director of a supply/generation company. The networks company must be independently managed and its staff cannot be shared with other companies in the Group. The same applies to premises, equipment, systems and information.

Whilst in Viridian, separate business units already existed, these needed to be reinforced and a re-structuring was therefore required to ensure compliance. As a result, a new company, NIE Energy was created which encompasses the Power Procurement and Supply businesses.

Alongside this, a single electricity market was created and commenced on 1 November 2007. This is a gross mandatory pool and will be the single market place for the exchange of electricity at the wholesale level on the island of Ireland. It is run by the Single Electricity Market Operator (SEMO) which is a Contractual Joint Venture between SONI and EirGrid.

Regulation

NIAUR (Northern Ireland Authority for Utility Regulation) and DETI (Department of Enterprise, Trade and Investment) are the principal regulators. Each is given specific powers, duties and functions under the Orders. The functions of NIAUR include licensing (pursuant to a general authority given by DETI) and the general supervision and enforcement of the licensing regime.

DETI's functions include licensing, the giving of consents for new power stations and overhead lines, fuel stocking, the encouragement of renewable generation and the regulation of matters relating to the quality and safety of electricity supply.

The principal objective of NIAUR and DETI in carrying out their respective functions in relation to electricity is to protect the interests of consumers of electricity wherever appropriate by promoting effective competition between those engaged in, or in commercial activities connected with, the generation, transmission or supply of electricity.

Each of NIAUR and DETI has a duty to carry out those functions in the manner which it considers is best calculated to further that principal objective, having regard to a number of factors, including the need to ensure that all reasonable demands for electricity are met and the need to ensure that licensees are able to finance their authorised activities.

In performing that duty they are required to have regard to the interests of individuals whose circumstances include any of the following: being disabled; being chronically sick; being of pensionable age; having low incomes; and residing in rural areas. They must also have regard to the effect of the industry's activities on the environment and their role includes promoting energy efficiency.

The General Consumer Council (GCC) has responsibility for representing electricity consumers and dealing with complaints against electricity suppliers. GCC also has powers to investigate any matter relating to the interests of electricity customers and to acquire information from electricity licence holders. The electricity industry in Northern Ireland is also subject to UK and EU legislation relating to the environment and competition.

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