Homes to subsidise big firms' ESB bills
Fury as household bills to go up a further 3% on top of 5% green levy
Published 22/08/2010 | 05:00
Householders are effectively facing yet another increase in the price of electricity -- estimated at 3 per cent -- as part of a government move to subsidise energy costs for large business, the Sunday Independent can reveal.
Domestic users will be asked to pay even more for electricity from October so that big businesses and multinationals pay less, in what is being called a "rebalancing of tariffs".
The latest hike comes on top of a controversial 5 per cent levy to subsidise 'green' energy producers.
International companies such as Intel and Lufthansa Technik warned last month that Ireland's electricity costs were threatening jobs and investment here.
Energy Minister Eamon Ryan told the regulator to "rebalance" tariffs in favour of big businesses, an initiative which will result in domestic customers being charged more for electricity.
Yesterday the energy regulator estimated the impact of the rebalancing on household bills at 3 per cent.
A complicated pricing review has been agreed that will see householders facing this further cost on top of the recently announced controversial 5 per cent green levy
Lufthansa Technik warned recently that the levy would be "viewed very poorly by our superiors in Germany".
The revelation is bound to anger householders, who have been asked to shoulder the burden for some of the world's biggest corporations at a time when 900 customers a month are being disconnected by the ESB because they cannot afford to pay their bills.
The rebalancing of tariffs -- coupled with the 5 per cent levy -- means that householders will be effectively burdened with an estimated 8 per cent in extra charges which will be worked into their monthly bills from October.
Yesterday the energy regulator said the 3 per cent tariff would be cancelled out by falling costs of producing electricity and lower network charges.
But the regulator's statement means that householders will, therefore, not benefit from such falling electricity production prices to the extent that they should, which effectively renders the rebalancing exercise a price increase for householders.
Several international companies warned the regulator last month that increases in electricity prices were "incomprehensible" and "galling" and were putting jobs at risk.
In a statement to the Sunday Independent last week, the energy regulator said: "On foot of a Government decision we have recently proposed to rebalance network charges from domestic customers to large energy users, so that large energy user network charges will be lower from October 1 than they otherwise would be.
"The Government's intention here is to assist in reducing costs for large energy users, who often face significant foreign competition, in order to help support jobs in this country."
Electricity prices will be finalised in October, after the ESB, the biggest electricity supplier in the country, submits its proposed prices for domestic and business customers to the energy regulator for approval.
A statement issued to the Sunday Independent on behalf of the minister said that "rebalancing tariffs" was "part of a package of measures agreed by government to support the enterprise sector and employment". But it said that there was "no indication at this stage of a 3 per cent increase in electricity tariffs".
However, the statement continued that it "is possible that any reductions in fossil fuel prices or further efficiencies could, in fact, offset any potential increase for householders arising from rebalancing".
Mr Ryan's statement added: "Ultimately, the best way to ease energy affordability pressures for householders is to support high-quality employment in the economy.
"It is also important to remember that, for the past 18 months, household customers have had the choice of availing of significant savings of 10 to 14 per cent, simply by shopping around and switching supplier."
Prices for commercial electricity customers are due to fall this year, with networking costs being reduced by up to 40 per cent in some cases.
However, business customers in Ireland continue to be unhappy with energy costs, according to submissions to the energy regulator last month.
The most trenchant criticism of the levy came from Lufthansa Technik which said: "At a time when we are struggling to maintain our international competitiveness it is incomprehensible that Irish state bodies seek to increase our cost base."
Shannon Aerospace, which employs 780 staff, said it "simply cannot understand or accept the justification for this proposed increase which we consider exorbitant in the current recessionary climate".
Intel Ireland said electricity rates were a key concern to the corporation and called on the energy regulator to conduct a "thorough evaluation" of the implications for customers, the economy and businesses to "avoid any unintended consequences".
Roche Ireland, a Swiss pharmaceutical multinational, warned that the levy would hike its electricity costs by about €120,000 next year.
Deepak Fasteners, an engineering firm in Clare, claimed additional costs of €45,000 a year -- a 16 per cent increase in its total bill. "There is no way a firm like ours... can absorb body blows on the scale of what is proposed."