3 May 2012 Last updated at 12:25 ET

Regulator says Phoenix Gas could charge an extra £240m

Shane Lynch revealed the figures while briefing MLAs at Stormont's enterprise committee

Phoenix Gas consumers could be charged an extra £240m over the next 30 years if a modification to the company's licence is not made, the utility regulator has told MLAs.

Shane Lynch instead claimed consumers should only pay an additional £35m until the licence runs out in 2046.

He was briefing Stormont MLAs on his recent referral of Phoenix Gas to the Competition Commission.

He made the referral because the gas company refused to accept new controls.

Unspent allowances

Mr Lynch wants to slash the cost of gas for big business users in Northern Ireland.

His proposed controls would save about 50 of the biggest users around £10,000 per year.

Phoenix Gas has previously argued the proposals would reduce its ability to invest in the network.

Mr Lynch told MLAs at the enterprise committee the company performed "very well" between 1996-2006 and had unspent allowances of £42m.

He added that changes to Phoenix's licence in 2007 introduced a Regulatory Asset Base which "rolled up" this money, and after an added 8% allowed rate of return before inflation, this money rose to £74m.

The utility regulator said if this remaining figure continued for more than 30 years, this would lead to consumers paying £240m through tariffs.

He claimed this would amount to domestic consumers paying an extra £10 per year and large businesses paying thousands more.

"We believe this is materially harmful to consumers and the licence needs to be modified to prevent that happening," Mr Lynch said.

"It is our view that Phoenix Gas should only receive a proportion of the out-performance consistent with good practice."

'Blown away'

The SDLP's Patsy McGlone thanked Mr Lynch for the referral "on behalf of consumers".

He said he was "really blown away" by the figures given.

Paul Givan of the DUP asked why the company was being "punished for being efficient" and asked if the regulator had put further investment in jeopardy with the action taken.

Mr Givan said investors could be "thinking if we do a deal with the regulator, that deal could be ripped up and it's a deal that we are not prepared to take".

Responding to the committee's discussion, a Phoenix Gas spokesman said: "Phoenix did not take part in this morning's committee meeting as we are engaged in a formal statutory process with the Competition Commission".

"However we did provide the committee with detailed written evidence.

"We still strongly disagree with the position of the utility regulator and will be reviewing closely what he said to the assembled elected members".