Business World

Tuesday 12 December 2017

ESB has second highest electricity prices in EU

Thomas Molloy

Thomas Molloy

EVERY company knows electricity prices are expensive here in Ireland.

Recent changes in the energy market have added hundreds of thousands of euro to heavy users such as pharmaceutical manufacturers and food processors.

The abolition of a special rebate on electricity bills paid to large energy users and new network charges are also increasing bills by around 7pc for other businesses such as manufacturers.

The picture is bleak, but what is happening elsewhere in Europe?

Electricity prices are difficult to compare across national borders.

The price structure used by utilities in some countries can be very different to those used in other countries. VAT rates vary from place to place and there are many other variables, such as connection fees.

Luckily for those interested in electricity prices, the Luxembourg-based statistics office Eurostat has done all the hard work and drawn-up a list of expensive and cheap countries.

It will come as little surprise to anybody living here that we almost top the list when it comes to expensive power. In fact, we are more than 40pc above the European Union average.

Only Cyprus, which is 78pc above the EU average, is worse. The list of expensive countries suggests that living on an island is bad news.

Most expensive

The four most expensive countries in the EU are all islands; Cyprus, Ireland, Malta and Britain.

Living in a former Soviet satellite state is good news when it comes to electricity prices; Romania, Bulgaria and Estonia are all more than 39pc cheaper than average, helped in part at least by their proximity and historic links to Russia which is Europe's largest oil and gas exporter.

Other factors also play a large role in determining electricity prices. Competition is one important factor while wage costs are another.

Here in Ireland, the ESB has managed to keep a much stronger grasp over the transmission network compared to most other countries.

Ireland has even secured a derogation from EU rules which seek to ensure that the owner of the national grid is completely separate from the dominant supplier.

The ESB is coy about staff salaries but they are high by international standards and twice as high as salaries north of the Border.

A report by Deloitte published in 2006 said high labour costs and inefficiencies at ESB power stations adds €100m to costs compared to its EU peers.

Recent reports say average payroll costs per employee are around €104,000.

Things are slowly changing inside the ESB and staff face the prospect of job losses and pay cuts after the company failed to reach a target of 700 redundancies under a voluntary severance scheme.

While that seems like good news as far as prices go, it seems there are further price hikes coming our way.

The Commission for Energy Regulation is now consulting with power plant operators about changes to the way costs are calculated that could push up prices again.

Independent supplier Vayu says the changes being considered could add up to 9pc to the cost of electricity during the peak demand and about 1pc in the summer.

It never rains but it pours.

Irish Independent

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