Firms get payout from electricity levy

TWO PRIVATE companies backed by multinationals will share a €14 million payout from the €157 million public service charge that the State plans to impose on electricity bills from next October.

The Commission for Energy Regulation (CER) has recommended charging electricity users a public service levy from next October that will add €2.70 a month to the average household bill.

The levy is a result of Government policy and will raise a total of €157 million, which will be used mainly to pay for the financial support given to peat-fired electricity generators and renewable energy.

Two private companies, Tynagh Energy, whose shareholders include GE and Turkish utilities giant Gama, and Aughinish Alumina, owned by Rusal, one of the world’s biggest aluminium producers, will be paid €14 million from the levy.

The payments to Tynagh and Aughinish date back to 2005 when demand for electricity in the Republic was increasing rapidly and there were fears for security of supply.

The Government asked the ESB to agree to buy the electricity generated by Tynagh, which at that stage was from a newly built gas generating plant. At the same time, Aughinish agreed to sell electricity from its own in-house generators into the national grid.

Both businesses were guaranteed minimum prices for the power that they sold to the State, which is why they benefit from the public service levy.

The levy has been set at zero for the last two years as wholesale prices for electricity were enough to cover the minimum guaranteed to wind and peat-fired plants and the private sector operators.

However, those prices have fallen from a peak two years ago as oil and gas prices dropped. As a result, electricity users will have to make up the shortfall through the levy’s reintroduction.

Three peat plants – the ESB-owned Lough Ree and West Offaly facilities, and Bord na Móna’s Edenderry – will receive a total of €78 million from the levy.

Wind generators will share €43.2 million. They benefit because the Government has guaranteed a minimum price for renewable energy in order to encourage its development. The scheme costs over €20 million a year to administer.

News that the levy would be set at €157 million for the 12 months from October 1st prompted warnings from businesses that the cost would damage competitiveness.