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The Utility Regulator (UR) has launched a consultation on its proposed approach to assessing the need for a regulated operating revenue regime, specifically a Cap and Floor model for the planned 700MW LirIC electricity interconnector between Northern Ireland and Scotland. This marks the first time such a request has been made for a Northern Ireland interconnector and the outcome could set a precedent for future cross-jurisdictional energy infrastructure.
Background and context
Interconnectors play a critical role in energy markets by enabling electricity flows between different jurisdictions, supporting market efficiency, security of supply and the transition to low-carbon energy. The LirIC project, led by TI LirIC Limited, aims to deliver a new high-voltage direct current (HVDC) link between Northern Ireland and Scotland, with a targeted operational date of 2032.
While Ofgem in Great Britain and the Commission for Regulation of Utilities (CRU) in Ireland have established Cap and Floor regimes for interconnectors, Northern Ireland currently lacks a comparable framework. The Cap and Floor model sets a maximum (cap) and minimum (floor) on the revenue an interconnector can earn, balancing risk between developers and consumers and aiming to incentivize investment while protecting end users.
Assessment approach and criteria
The UR’s assessment will focus on whether a regulated revenue regime is appropriate for the LirIC project, with the broader goal of ensuring consumer benefit. The process is structured as a two-step approach: the first step, already completed, involved granting a transmission licence to TI LirIC Limited without revenue regime conditions. The current, second step involves a detailed needs case assessment for a regulated regime.
Key assessment criteria include:
Stakeholder engagement and timeline
The UR is seeking input from a broad range of stakeholders, including electricity licensees, government departments, consumer groups and other transmission operators. The consultation is open until 15 January 2026.
The indicative timeline for the assessment is as follows:
Should the assessment support the introduction of a regulated regime, further consultation and licence modifications would follow, with a decision on licence changes expected by June 2027.
Parallel preliminary work
In anticipation of a potential positive determination, the UR plans to undertake preliminary work in parallel with the main assessment. This includes preparing for a detailed cost assessment and developing a framework for a regulated revenue regime, aligned with Ofgem’s processes. The progression of this work is contingent on the outcome of the needs case assessment.
Consumer impact and business considerations
For businesses and investors, the introduction of a Cap and Floor regime could provide greater revenue certainty and risk mitigation for interconnector projects, potentially unlocking investment and accelerating delivery. For consumers, the regime is designed to ensure value for money by capping excess returns and providing a safety net if revenues fall short, with the ultimate aim of supporting lower energy costs, improved security of supply and progress toward decarbonization targets.
Next steps
Stakeholders are encouraged to respond to the consultation questions outlined in the approach paper. The UR will consider all feedback before publishing its Draft Determination in Q3 2026, followed by a Final Determination in Q4 2026.
The outcome of this process will shape the regulatory landscape for interconnection in Northern Ireland and could have significant implications for future cross-border energy projects and the region’s energy transition.
For more information, please contact Mark Stockdale, Partner, John Palmer, Partner or your usual ALG Energy, Infrastructure & Natural Resources Team contact.
Date published: 4 December 2025
