Tynagh power plant gets 8% rise in subsidy
GE-backed plant made €25 million profit in 2012, and is likely to have bigger surplus last year
Galway-based Tynagh Energy to receive €66.4m over 12 months. Photograph: Reuters
A multinational-backed power company that makes €25 million a year in profit is set to receive more than €66 million from an extra charge levied on the energy bills of consumers and businesses, because it is unable to sell electricity on the open market.
The Commission for Energy Regulation (CER) plans to increase the public service obligation (PSO) 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. The increased charge will hit both domestic consumers and businesses.
Galway-based Tynagh Energy, whose shareholders include US giant General Electric and Turkish group Gama, will be single biggest beneficiary of the move, receiving €66.4 million over the 12 months, an 8 per cent increase on the current period.
Tynagh’s accounts show that it made profits of €25 million in 2011 and 2012, and it is likely that the surplus for last year may exceed that amount.
The PSO payment stems from a 10-year contract that the company has with the Government, due to run out in 2016, under which it was guaranteed payments to meet its running costs. The deal was intended to boost the Republic’s generating capacity when there were fears the State did not have enough to meet rapidly growing demand.
CompensationAccording to CER documents, the extra payment is to compensate Tynagh for the fact that it is receiving less revenue from selling electricity on the open market, because of competition from cheaper rivals. As a result the State is obliged to pay it extra compensation and the cost of that is passed on to consumers and businesses in the PSO.
The increase that will be imposed from October will mean consumers will pay €5.36 extra a month, up from the current level of €3.48 a month, a 54 per cent hike. As many companies invoice domestic customers every two months, the charge will come to €10.72 on every bill.
A Tynagh spokesman said the plant was built in 2005 following a competitive process run by the Government, which feared the Republic could otherwise face power shortages that would affect domestic users and businesses.
The State guaranteed to meet agreed costs while Tynagh would refund the difference if the electricity price hit certain levels.