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Energy bills could soar as ESB and EirGrid ask for billions more


 Pylons: EirGrid plans extension

Pylons: EirGrid plans extension

Pylons: EirGrid plans extension

Consumers face the prospect of soaring energy bills, after the energy regulator gave initial approval to huge spending increases for ESB and EirGrid.

The regulator for the two organisations, which respectively own and operate Ireland's electricity grid, is proposing that they get an extra €1.8bn in spending increases between 2016 and 2020.

The two semi-state companies asked for even more - over €2bn in extra money.

The spending hikes will impact consumers who pay for many of the costs associated with running the ESB and EirGrid through their energy bills.

Economist Stephen Kinsella estimated the spending hikes would push up the average family electricity bill by 5pc.

The spending increase is proposed by industry regulator the Commission for Energy Regulation in a new consultation paper.

A final decision has not been made, however.

The commission is jointly led by three people: commissioners Garrett Blaney, Paul McGowan and Aoife McEvilly.

ESB and EirGrid needed the spending increase partly because of the rise in the use of renewable energy sources, the regulator said.

"The scale of change the electricity system will undergo between now and 2020 will require investment and innovation. This increase in revenue is required in order to achieve this by further developing and reinforcing the electricity network, which is increasingly important as the system transitions to one with a high penetration of renewables," said the regulator.

The spending hikes are part of a new five-year revenue plan proposed for the ESB and EirGrid. Its old revenue plan comes to an end in December of this year.

The proposals were published alongside a report prepared by consulting group Jacobs, which criticised bonuses paid to staff at EirGrid.

The report found that EirGrid's staff costs had spiked by more than €16m in the past five years to more than €134m, compared with an allowance of €118.6m. Performance targets at EirGrid do not appear to be linked to business cost reductions, meaning that between €6m and €7m in staff costs "may have been incurred inefficiently", Jacobs found.

EirGrid previously told this newspaper that it reduced spending on contractors and professional fees during the period, which it said resulted in overall cost reductions.

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