Treacy Hogan: Unfair green charges feel more like taxes by stealth
Tuesday August 10 2010
LIKE it or not, we are among the greenest in Europe. Take a bow. But saving the planet will soon cost us more than €500m a year in so-called green levies on electricity, petrol, diesel, home heating oil, bins and domestic water charges.
While Green Party ministers John Gormley and Eamon Ryan might be back-slapping and high-fiving each other about getting their policies across the line, others might wonder whether they are on the receiving end of stealth taxes instead of green charges.
Few now doubt the need to try and save the planet for future generations. However, at a time when the country is on its knees, increasing the cost of electricity is being viewed as madness that could push many more small and medium-sized companies to the brink -- not to mention heaping even more hardship on the most vulnerable in society.
We are all too aware of the increasing number of large companies that crash with the loss of hundreds of jobs. What the headlines do not reflect is the truly frightening number of small companies collapsing every week up and down the country, with the consequent loss of thousands of jobs.
At a time when interest rates are rising again, and when banks are still refusing to extend credit to struggling companies, there is simply no capacity to absorb a 5pc hike in electricity charges.
For many this may be the proverbial straw that will break the camel's back.
ISME, the organisation representing small and medium businesses, has its ear to the ground and predicts that the electricity increase will cost jobs and undermine competitiveness.
The organisation also points out that Ireland has gone from being almost the cheapest in Europe for electricity to being the second or third most expensive.
At the other end of the social spectrum is the elderly pensioner living alone, surviving on a paltry state pension and being forced to pay higher charges for their bins, electricity, coal, petrol or diesel if they drive, home heating oil, not to mention the soon-to-be introduced water charges.
Increasing numbers of families and individuals living alone are also finding it difficult to make ends meet as the Government imposes its own version of death by a thousand cuts.
Last December the first tranche of the carbon tax was introduced in the Budget which saw motorists hit with a hike in fuel prices as petrol rose by four cents per litre and diesel by five cents.
It has been estimated that people living in the countryside could face bills of up to €275 a year.
In May the price of kerosene home heating oil rose by 8.4pc, meaning a typical 1,000 litre delivery of kerosene rose from €620 to €670.
There has also been speculation that flat-rate domestic water charges could be introduced in the next Budget in December when the Government will slash another €3bn in spending, despite previous promises to first install a system of metering. The Department of Finance has already mooted a water charge of €175 per home per year.
The green charges don't end there. Since February, landfill levies have risen by €5 to €30 per tonne of waste being disposed of at dumps.
There is little doubt that this will filter into household bin charges eventually.
The timing of the announcement is also most peculiar given that ESB revenues for 2009 amounted to €3.1bn with profits of €580m -- an increase of €307m on the previous year.
Labour's Liz McManus must have smelled a rat. She was nosing around the Dail last month trying to find out what plans were in train to impose a public service obligation on electricity and the cost of these on domestic and business customers.
A public service obligation (PSO) is a charge imposed on customers to achieve national energy policy objectives, such as security of supply or supporting green energy.
PSOs have already been imposed to support power generation from peat as an indigenous fuel supply; for security of supply purposes; to support renewable generation capacity; to reduce emissions; and to reduce dependence on imported fossil fuels.
They were also used to support the development of additional generation capacity when it was needed in advance of the introduction of the single electricity market.
Each year, the Commission for Energy Regulation (CER) calculates the estimated costs associated with implementing the various obligations and forecasts of electricity market revenues for the energy companies involved.
Where market revenues are not sufficient to cover the cost of implementing the obligations, additional supports in the form of "top-up" payments are necessary and are funded by electricity consumers through the PSO Levy.
Energy Minister Eamon Ryan told Ms McManus on July 8 last in the Dail that for the past few years electricity market prices and, accordingly, electricity market revenues, have been sufficiently high that additional "top-up" payments to support the obligations have not been required. Therefore the level of the PSO levy has been zero.
He argued that this year electricity market prices were significantly lower than in recent years and the commission calculated that additional supports totalling some €194.5m will be required to cover the full cost of implementing the obligations over the 12-month period, starting this coming October.
A public consultation on this proposed PSO levy was carried out by the commission and Mr Ryan told Ms McManus that a final decision is likely to be published in the coming weeks.
On Friday July 30 last, the start of the August bank holiday weekend, the CER put up its decision to introduce the electricity levy on its website.
This means that from October the average electricity bill will rise by €32.76 a year, while small and medium-sized businesses will be hit with a charge of €99.03.
In their report posted on July 30, which appears not to have been picked up on for some time, the commission argues that the PSO levy amounting to €156.63m for 2010/2011 is needed to recoup the extra costs incurred by the ESB and other suppliers in having to source a proportion of their electricity from green providers.
Tell that to the company about to go to the wall or the OAP who cannot afford to buy a bale of briquettes or a bag of coal, forced to stare into an empty grate on a freezing winter night.
thogan@independent.ie
- Treacy Hogan
Irish Independent
