Struggling households will get no reprieve in their electricity costs, with annual hikes sanctioned for a further four years to compensate for the massive costs of grid connections for ‘green’ energy, The Sunday Business Post has learned.
Despite falling prices across most sectors of the economy, the energy regulator has sanctioned increases in ESB’s network charges totalling 16.7 per cent over the next four years.
It means a rise of 5.28 per cent each year from next October to cover the networks portion of the bill, translating to a hike of almost 2 per cent on the overall household bill for each year up to 2015.
This comes on top of a 5 per cent Public Service Order (PSO) levy added to bills last autumn and fuel price hikes forecasted for next year. Networks costs alone make up 30 per cent of the total electricity bill.
Some 2 per cent of the autumn PSO levy was linked to the added costs for energy companies of supplying wind and other renewable energy to the grid.
When combined with the latest increase, it means the shift to ‘green’ energy will add about €34, or 4 per cent, to the average yearly household bill of €870.
A spokesman for the Commission for Energy Regulation (CER) confirmed there would be a rise in network charges. He said it was to fund the capital costs of new grid connections for wind power, which will bring down the overall costs of electricity supply in the short term.
It means ESB will be allowed a 23 per cent income increase from its networks operations, from €682.6 million yearly to €842.9 million. Fine Gael TD Leo Varadkar described the €16 million revenue rise as ‘‘not justified’’, on the grounds that prices should be going down instead of up, particularly in the current economic climate.
‘‘We cannot control fuel prices, but we can control network charges.
‘‘This decision ensures that electricity prices will continue to rise over the coming years,” said Varadkar.
He warned that if the economy continued to decline, increases could continue to climb, as the ESB would seek to secure ‘‘more and more money from fewer customers’’.
Last October, there was a drop of 4.4 per cent in network charges, but generation costs from higher fuel prices and the PSO levy cancelled out this increase.
CER confirmed that from next October to 2015, there would be a 1.7 per cent additional tariff on the final household bill, excluding fuel and the PSO levy, and that this arose from the networks charges of 5.28 per cent.
Assuming fuel prices don’t drop next year to offset network costs, a hike would be expected. ACER spokesman said that wind energy brought benefits in reducing the wholesale price of electricity in the short term, and acted as a hedge against fuel prices.
Varadkar insisted that CER had over-valued ESB’s assets, allowed for capital expenditure that was unnecessary and failed to put more pressure on ESB to reduce its costs.
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