EirGrid plc Annual Report 2011

The Control Room at SONI, Belfast
A price control for the EirGrid TSO business for the
2011 to 2015 tariff period was finalised with the CER
in November 2010. A price control for the SEMO
business covering the period from 2011 to 2013
was finalised in December 2010. A price control
determination for SONI’s TSO business covering a
period from 2010 to 2015 was issued by URegNI in
May 2011.
In advance of each tariff period the Group submits
to the relevant regulatory authority forecasts of
customer demand, operating costs and other
revenue requirements. Following a detailed review
process the regulatory authority will issue a formal
determination of the allowable revenue to be
recovered by the business. As with any forecast there
can be variations between the projections and the
actual revenue recovery, or cost outturn, resulting
in regulatory under or over recoveries. Any such
under or over recoveries are adjusted for in the price
determinations for subsequent periods. This can give
rise to volatility in the reported statutory earnings
of the Group, as current accounting regulations
do not permit results to be smoothed through the
anticipation of under or over recoveries.
Financing
In the current difficult financial environment a
priority for the Group has been to maintain strong
banking relationships. In the year to September 2011
this has enabled the Group to continue to invest
very substantially in EWIC and also to manage the
variable liquidity requirements associated with
constraint costs in the SEM.
The EWIC project has a total budget of €601m and
is supported by a €300m loan facility from the
European Investment Bank, together with funding
from a number of international commercial banks,
and a €110m grant under the European Energy
Programme for Recovery (EEPR). Cumulative
expenditure on the project to September 2011 was
€280m (2010: €99m) and consequently year end
borrowings were €261.3m (2010: €147.7m). During
the year €33m was received under the EEPR grant.
Looking ahead the Group expects to invest a further
€321m in the EWIC construction project, most of
which will be incurred in the year to September
2012. There will also be significant investment in
the systems and processes required to support the
operation of the Interconnector and in enhanced
trading arrangements in the SEM.
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