Electricity prices to rise after grid works
Published 27/12/2010 | 05:00
HOUSEHOLDS are facing a hike in their electricity bills over each of the next five years after a major plan to invest in green energy connections was approved.
The Commission for Energy Regulation (CER) has agreed a five-year investment plan to increase grid connections to renewable sources of energy such as windmills.
The cost of maintaining and upgrading the semi-state ESB's electricity grid accounts for around 30pc of a family's electricity bill.
It means ESB Networks, as the sole electricity distribution system operator, will be allowed to recover more money from its customers to cover its costs -- up from €682.6m next year to €842.9m in 2015.
The new plan comes after a 5pc Public Service Obligation levy was applied to bills last October. This levy is to support peat stations, electricity generating plants, wind energy schemes and hydropower schemes. It resulted in the average customer's bill increasing by €2.73 per month.
A CER spokesman confirmed from next October until 2015 this would mean a 1.7pc additional tariff on the final household bill which averages at €1,000 a year.
However, he cautioned that this did not take into account the many other costs that directly influence the tariff -- including the price of fuel to generate the electricity.
The CER spokesman also said investment in renewable energy schemes can help lower the cost of generating electricity in the long term and push down prices.
A spokesman for the ESB said: "The network charges are only one element of electricity prices, the generation costs are also directly related to fuel costs."
He pointed out fuel costs and supply costs can both increase or decrease, which would also have an upward or downward impact on the tariff.
The prices have been fixed by the regulator for domestic ESB customers until the end of September 2011. However, the ESB hopes it will be open to competition by the end of the first quarter if their market share drops to 60pc -- which means the prices it charges will be no longer be set by the CER.
The spokesman said he could not comment on whether this would mean a price drop as an energy price war gets under way.