Companies face major hike in electricity prices
KEY INDUSTRIES such as pharmaceutical manufacturers and food processors are facing six-figure electricity bill increases as a result of changes in the energy market.
The Government is shortly set to end a special rebate on electricity bills paid to large energy users, mainly big manufacturers and organisations such as hospitals. The move, combined with extra network and public service charges introduced by the State’s energy regulator, could add between 7 per cent and 8 per cent to electricity bills, according to some calculations, threatening competitiveness.
Independent supplier Vayu, whose customers include a number of large organisations, estimates that the average increases will run to more than €100,000 a year.
Large hospitals, which are currently paying in the region of €1.5 million a year for electricity, face increases of €120,000 a year.
The company’s head of regulation, Bryan Hennessy, pointed out yesterday that big employers such as pharma manufacturers, food processors, technology companies and data centres face price hikes on a similar scale. He pointed out that most of the affected industries focus on exports.
Erik O’Donovan, head of business body Ibec’s large energy users division, agreed that industries are facing increases. “It is not good news for industrial consumers,” he said.
He added that any increase in energy costs threatens competitiveness. However, he acknowledged that, relative to the rest of Europe, prices have improved since 2008.
Along with the end of the rebate, businesses face increases stemming from extra network charges which the Commission for Energy Regulation has approved, and a rise in the public service obligation (PSO) imposed on all electricity users.
In October, the total PSO will rise to €131.2 million from €92 million during the previous 12 months. Industry’s share of that will be just over €60 million, up from €57 million last year.
Consumers will pay €2.32 a month on their bills, up from €1.61, while small businesses will pay €7.14 a month, compared with €4.77. The payment covers the cost of price supports given to wind farms, peat-fired plants and to Tynagh Energy and Aughinish Alumina, which supply power under a deal agreed with the State in 2005.
Wind farms will receive €47.45 million of the total, Aughinish and Tynagh will be paid €25.45 million.
The large energy users’ rebate payment was based on a windfall tax imposed on electricity generators by the last government to compensate for the fact that they did not have to pay for their carbon emissions.
Most of the tax collected was returned to large energy users. In 2010, it was estimated that this would amount to €175 million over the three years to 2012. From this year, electricity generators will have to buy carbon credits instead.
The Department of Communications, Energy and Natural Resources confirmed that large energy users will no longer receive the rebate from this year.