Big firms face €70m rise in electricity levy

Regulator to increase public service levy by total of €125 million over 12 months

The regulator plans to increase the public service obligation to support wind power, peat-fired plants and a number of other generators. Photo: David Sleator

The regulator plans to increase the public service obligation to support wind power, peat-fired plants and a number of other generators. Photo: David Sleator

Mon, Aug 4, 2014, 01:01

The Republic’s biggest businesses and employers will share an extra €70 million burden on their electricity bills from next October when the Commission for Energy Regulation (CER) boosts its public service charge.

The regulator plans to increase the public service obligation levied on all electricity users in the State to support wind power, peat-fired plants and a number of other generators by €125 million to €335.4 million over 12 months from next October.

A breakdown of the charges show that so-called “large energy users”, comprising big employers and organisations such as pharmaceutical manufacturers, food processors and IT businesses will collectively carry the bulk of this increase. The group includes many of the Republic’s biggest employers, most of which are focused on exporting their products.

Two-thirds increase

Their share of the increased charge will rise to €166.8 million from a current level of €98.6 million, a two-thirds increase in the public service levy that they are now paying.

The CER does not break down what large energy users will pay on a monthly basis, as the increase is applied to each unit of electricity the users consume. All other electricity customers will have a flat charge applied to their bills.

Households will pay €64.37 a year, or €5.36 a month, from October, up from the €3.48 a month extra they now pay. They will contribute €130.26 million of the €335 million total.

Smaller and medium-sized businesses will pay €221.66 a year, or €18.47 a month, over the same period. They will pay €38.3 million of the total.

While the CER sets and collects the public service obligation, it is Government policy to apply it in the first place.

The cash collected from consumers and businesses bridges the gap between the wholesale market price of electricity and rates guaranteed to a number of electricity generators.

Renewable energy sector

These include the renewable sector – which largely is made up of wind farms and which will receive €92 million – peat plants and a number of privately owned generators, Tynagh Energy and Aughinish Alumina, who have long-standing energy-supply agreements with the State.

The beneficiaries include the ESB-owned peat-burning generating plants Lough Ree – which will receive €39.6 million – and West Offaly, which gets €42 million.

The ESB placed both on the market last year to help pay a €400 million special dividend to the exchequer but a week ago announced it would instead borrow €200 million to pay the State; and repay that debt using the cash flow from the two plants.

Tynagh Energy will receive €66 million, while the multinational-owned Aughinish Alumina will receive €8 million from the public service charge.

Consumer groups and organisations such as St Vincent de Paul criticised the decision to hike the charge when it was announced.