Household energy bills to rise
Volatile international fuel prices to pile on the pain, warns commission
Published 30/08/2010 | 05:00
HOUSEHOLDERS should brace themselves for hikes in their energy bills because of the rising cost of oil and gas on international markets.
The Commission for Energy Regulation (CER) has said that as the cost of generating power becomes more expensive, householders can expect to see their bills rise.
Despite the ESB being deregulated next year and the likelihood of a price war, generators will still have to pay more to produce electricity. The commission warned that volatile international fuel prices will have the biggest impact on customers from October.
Bills are already due to rise because of the re-introduction of a controversial public service obligation (PSO) levy.
The PSO levy will add 5pc to household bills, and will be used to offset costs faced by electricity producers who are obliged to buy a proportion of renewable and peat-generated electricity.
"It should be noted that more than half of a typical electricity bill relates to electricity generation costs, which in turn is driven by international fuel prices," the CER said.
"These fuel prices, which have been volatile in recent months, will have the biggest impact on customer bills from this October."
However, a charge levied on all customers to help pay for the upgrading of the national grid and transmit electricity will fall.
Transmission and distribution charges -- called network charges -- typically make up one-third of the total bill.
Transmission charges help pay to upgrade the national grid, while distribution charges pay to provide power to homes and businesses that is transmitted along lower voltage lines.
The CER said €3.76bn would be invested upgrading the network up to 2015, which will be passed on to customers.
"While transmission-related charges will increase by about 3pc from October, related to higher investment levels, this will be more than offset by lower distribution charges," it said. "Distribution charges will fall by an average of 6.5pc, driven by productivity and efficiency improvements.
"This means the average network-related charges will fall by more than 5pc in October."
In a separate development, it emerged that ESB customers are likely to be spared a price hike when new tariffs are announced in the coming weeks.
The semi-state power company must have its tariffs approved by the CER, which takes into account the ESB's costs when approving the rate at which electricity is sold to customers.
Next year, the ESB is expected to be allowed set its own prices when the domestic market is deregulated. This can only happen when it reduces its market share below 60pc, which is expected to happen in the first half of 2011.