Energy levy will have 'significant impact'

 

PLANS TO introduce an additional levy to electricity bills will reduce Ireland’s competitiveness, according to the American Chamber of Commerce in Ireland.

The Government and the energy regulator have defended the decision to introduce the levy, which could lead to a rise of up to 5 per cent in electricity prices.

Chief executive of the chamber, Joanne Richardson, said the move would have a significant impact and called for the Government and regulator to decrease uncompetitive costs within their remit.

“Ireland’s energy prices are already among the highest in Europe. Energy prices have been a continuous source of concern for our members, and there is no doubt that adding 5 per cent to the cost of electricity will have a significant impact on Ireland’s business sector,” she said.

Minister for Energy Eamon Ryan unveiled plans for the public service obligation (PSO) levy last week.

Coming into effect from October, the charge is expected to raise up to €157 million, and will be used to offset costs faced by electricity producers which are obliged to buy a proportion of renewable and peat-generated electricity.

However, Ms Richardson said the introduction of the levy would increase costs at a time when multinationals should be encouraged to grow.

“While we accept Ireland has made progress in bringing energy costs into line with our competitors, they are still higher than competing destinations for foreign investment, and this levy increases them further,” she said.

Opposition politicians and consumer groups have also opposed the move, warning the increase in prices will put more pressure on consumers.

Speaking on RTÉ’s Morning Irelandprogramme yesterday, the chairman of the Commission for Energy Regulation, Michael Tutty, said electricity prices had not increased for some time, and the levy was needed to ensure security of future supply.

“It is just reflecting the actual costs that are out there, it’s not that someone decided there should be a price increase,” he said. “[The PSO levy] is there to protect the consumer in the future through promoting renewables which will give us security of supply. We are very dependent on imported fossil fuels. Most of our electricity is produced from gas, which is almost all imported.”

Mr Tutty said the recently reported profits of more than €500 million for ESB included the disposal of capital assets, and did not reflect its usual business.

Minister for Agriculture Brendan Smith said the levy was “absolutely necessary”, and said it would help the Government deliver on its EU targets for renewable energy.

“The Government has a very strong green energy commitment to ensuring that we generate more of our energy needs throughout our own country through renewables, and through wind, tide and wave generation of electricity as well,” he said yesterday. “If we don’t set about putting in place the necessary infrastructure to ensure security of electricity supply, down the road we could be in serious trouble.”

He also defended the timing of the levy’s introduction, saying prices had fallen in the past year almost 24 per cent compared to the EU average.

However, Fianna Fáil TD for Dublin South Chris Andrews said the ESB should absorb some of the PSO levy instead of passing the full cost on to businesses and consumers.

“The proposed price hike is particularly testing for people given the large salaries of some senior staff in the ESB . . . No increases should be forced on to taxpayers before the review of pay rates of semi-State chief executives is complete.”

Labour’s energy spokeswoman Liz McManus said Mr Ryan’s silence on the issue was “unacceptable”, and called on him to ensure consumers and businesses were supported.

Sinn Féin’s energy spokesman Martin Ferris said the proposal would “punish already struggling families” and businesses struggling with costs.

Age Action warned the levy could tip many older people into fuel poverty.