Regulators’ plan to curb electricity demand by hitting big businesses with €70 million in extra charges will damage the Republic’s ability to lure job-creating investment, multinationals warn.
The Commission for the Regulation of Utilities (CRU) proposes charging data centres and big manufacturers €70 million extra for using the electricity grid at peak times from next month in a plan to tackle the Republic’s energy crisis.
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American Chamber of Commerce Ireland, which represents 900 US companies employing 190,000 people, warns that penalising these businesses for energy use “has the potential to damage Ireland’s reputation as a location of choice for inward investment”.
In a response to the CRU’s call for consultation on the proposals, the chamber says that some of the proposed extra charges will only be levied on so-called “extra-large energy users”, a group of 22 mainly multinational employers.
“On this basis, such tariffs do not appear to be non-discriminatory,” the organisation says, noting that EU rules demand that energy charges should be transparent, not discriminate and reflect actual costs.
Electricity is already expensive here, while the American chamber calculates that some members’ energy bills have trebled so far this year.
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“Measures which result in Ireland becoming increasingly cost uncompetitive could result in future inward investment being diverted to competitor jurisdictions where energy costs are less,” it says.
The organisation states that many companies have little or no prospect of cutting electricity between 5pm and 7pm, the peak times that the CRU highlights.
“Therefore it will be impossible for these facilities to avoid the peak network tariff proposal, should it be implemented,” the lobby group explains.
Consequently, the proposal penalises those organisations that cannot simply cut their electricity demand at peak times.
The CRU hopes to discourage businesses from “ramping up” their electricity demand in the short term, easing the increasing pressure on the State’s energy system.
However, the American chamber argues that its members only ramp up their activities for compelling reasons.
“This can range from provision of essential products in response to the pandemic to stepping in when other sites in essential global supply chains are out of action,” it says, noting that this should not result in penalty tariffs.
Ramping up could be due to expanding existing factories or building new ones, which means significant investment and job creation, which meets Government objectives and so should not attract tariffs, the organisation says.
Extra charges aimed specifically at the biggest consumers involve little notice or flexibility, its document states.
“It can be argued, and the CRU paper implicitly acknowledges this, that these tariffs are designed in a manner that will be impossible for certain large manufacturing operations to avoid,” the chamber adds.
These include a “decarbonisation tariff” that the CRU intends imposing on extra-large energy users for the electricity they use during periods when wind speeds are low so there is little renewable power available.
They also involve “system alert tariffs”, which big companies will pay for using electricity during periods when national grid operator EirGrid has issued warnings that reserves are lower than ideal.
EirGrid chief executive Mark Foley told TDs and Senators this week that the company expected to issue these alerts regularly during the winter.
The CRU hopes to raise €100 million in extra network charges over the 12 months from October 1st, €30 million from all electricity customers and €70 million from extra-large energy users.
The American chamber wants the CRU to change its proposal to apply the charges only to companies that can modify their electricity use. The CRU does not comment while consultations are ongoing. The commission reviews all responses and considers them when making a final decision.