We are paying more for electricity and gas due to the State’s ‘Alice in Wonderland’ policies, writes Colm McCarthy
The Independent — August 10, 2014
The cost of electricity to households and to industry has been a hot topic in the United Kingdom over the past couple of years and could be a key issue in the general election next May. The Labour opposition has been hammering the Conservative-led government over high energy bills and has promised to take on the energy companies should it win the election. Irish consumers pay considerably more than their UK counterparts for electricity and further increases are on the cards, but strangely the issue has not featured in the Irish political debate.
According to Eurostat, the EU’s statistical service, Irish households paid 20pc over the EU average for electricity in the second half of last year while Irish industry paid a premium of 15pc. Prices here, for both households and industrial users, are well ahead of the levels which have caused so much controversy in the UK. With the recent announcement of higher public service subsidies from the Commission for Energy Regulation (the CER), these excess costs for Irish consumers are set to rise further over the winter.
Intriguingly, one of the reasons why the CER has allowed additional charges to customers (called PSO charges, for ‘public service obligation’) is that the wholesale price of gas has fallen. You might have imagined that lower gas costs, since Ireland imports almost all of the gas used for power generation, would pass through into lower prices for consumers, but not in the ‘Alice in Wonderland’ of Irish energy policy. The CER is required to compensate certain electricity generators if they cannot recover their costs in the (supposedly free) wholesale electricity market. When wholesale prices weaken, the CER compensates these generators, with the household and industrial customer picking up the tab.
Who, you might ask, are these fortunate generators? They are none other than the wind-farm operators, bringers of supposedly cheap electricity (wind is a ‘resource’) as well as saviours of the planet; peat-fired generators, those stalwart producers of ‘indigenous’ Irish energy; and even some gas-fired generators, deemed to be delivering “security of supply”. There will be €318m in PSO payments to these generators in the coming regulatory year, revenue additional to whatever they earn from selling their electricity output in the wholesale market. Continue reading here…..