Electricity customers to pay €60m extra for wind power

ELECTRICITY customers will have to pay €60 million extra for wind power and €90 million more for peat generation from next autumn if a proposed levy on energy bills is introduced.

The Commission for Energy Regulation is proposing to introduce a public service obligation on all electricity bills to pay for incentives for green energy and to support peat-fired power plants.

The measure is likely to lead to electricity consumers paying a combined total of €195 million extra for 12 months from October, which means the electricity generated from these sources costs €195 million above the market price.

Wind energy’s share of this is €60 million. Wind generators are paid a guaranteed minimum price as an incentive to attract investment in green energy.

The guaranteed price paid to such generators means that the wind power on the system will cost €60 million more than the market price.

Price supports for peat-fired electricity generators come in at €90 million.

Customers are not currently paying a public service obligation as electricity prices were high enough to support green energy and peat. However, the market price for electricity has fallen, partly because oil and gas costs have dropped over the last two years, and also because demand has eased.

This means that the regulator has to re-introduce the charge. It is estimated that the levy will cost the average household an extra €40 a year.

Large industrial users are likely to have to pay €86 million extra, which could mean a five-figure increase for individual companies.

The public service charge covers wind, peat and contracts for electricity sold by Aughinish Alumina and Tynagh Energy, who will share €20 million.

The breakdown is: peat, €90 million; wind, €60 million; contracts (Aughinish/Tynagh), €20 million; other, €25 million; for a total of €195 million.

The Government last week introduced a carbon windfall tax which it expects to raise €75 million from power plants, and it intends passing this money back to large energy users, as most of them are big employers, to ease their costs.

However, Viridian Power and Energy, the independent power supplier which operates the two Huntstown power plants in Dublin, has warned that the carbon windfall levy will increase energy bills.

The company said in a statement that it will distort the market and inhibit competition and argued that it is unfair. The levy targets a small number of generators in the market which includes the main private investors Viridian and Endesa,” the company said.

It added that those with lucrative public service contracts, such as Tynagh Energy and Aughinish, will be excluded from the windfall tax.