Householders unknowingly subsidised big businesses' electricity bills for more than disclosed €600m

Householders unwittingly subsidised big businesses’ electricity bills for 12 years at a cost even higher than the €600m previously disclosed, the energy regulator has said.

The ‘large energy user (LEU) rebalancing subvention’ was devised to take €50m in annual network charges off large companies, adding it to domestic customers’ bills instead.

This arrangement ran from 2010 to 2022, but a lookback by the Commission for the Regulation of Utilities (CRU) has found an “implementation issue”.

The way the arrangement was implemented meant that “more than the amount approved in the CRU decision was passed to LEU customers”.

The admission came in response to queries from Sinn Féin senator Lynn Boylan following the Irish Independent’s reporting on the little-known subvention late last year.

Last year the CRU said discontinuing the subvention would save domestic customers €40 a year, but it is now unclear how much extra cost they actually shouldered for 12 years.

The CRU says it will determine the full amount when it completes its annual review of network revenues, but that will not begin until April.

Ms Boylan said greater urgency was needed in providing clarity.

“It’s not good enough for them to say they’re looking at it and when it’s all wound up, they’ll give a final figure. If they’re the regulator, surely they should have been keeping track of this,” she said.

Correspondence on the subvention was released to Ms Boylan under a Freedom of Information request.

Documents show it was intended to be permanent, although it was introduced in response to cost competitiveness concerns specific to the recession at the time.

It was described as “the permanent rebalancing from 1st October 2010 of network tariffs towards LEUs to be paid for by higher prices to domestic consumers”.

The Department of Enterprise was annoyed when the CRU sought to discontinue it last year, complaining the move was “not helpful”, was “punitive” and was proposed without assessment of the implications or consultation with business.

Tensions are also evident over attempts to explain the subvention after the Irish Independent questioned it last year.

Emails between officials in the Department of Environment show they felt the CRU “lay the blame clearly at government’s feet”.

“We can of course say it was up to the CRU to remove it,” an official said.

Correspondence from the time the subvention was agreed is redacted, hiding observations made by then Communications, Energy and Natural Resources Minister Eamon Ryan.

Documents show Cabinet wanted ways to reduce costs for around 1,500 of the largest energy users because their electricity costs were higher than the European average and existing subsidies were coming to an end.

Mr Ryan’s department came up with the rebalancing arrangement as one possible approach.

Mr Ryan holds the energy brief again now as Environment Minister.

In response to queries, his department said: “Network tariffs were rebalanced in favour of large energy users
as a means by which to help safeguard employment in some of Ireland’s most-critical and export-orientated industries at a crucial time for the State.”

It said the CRU’s decision to discontinue the arrangement was prompted by a government request.

Ms Boylan said there were many unanswered questions. “We want CRU to be more transparent about the way these network charges are designed but equally there are questions for the Government about the unfairness of it.”