Large users will pay 10% more for peak-time electricity use

The energy regulator has stepped back from plans to impose €100 million in tariffs on large business users as it looks to address Ireland’s energy crisis. However, it is going ahead with plans to curb peak power usage by raising prices.

The Commission for the Regulation of Utilities (CRU) said peak pricing will be implemented, with a 10 per cent rise in network charges between 5pm and 7pm. This increase during peak periods will be offset by lower charges during offpeak periods.

“This is designed to act as an incentive to suppliers to promote appropriate offpeak products and services to customers,” the CRU said in its decision. It follows a compressed consultation period as the regulator looks to ensure Ireland avoids energy blackouts this winter, as power station maintenance and rising energy demands put pressure on the network.

However, utilities will not be able to target residential consumers with higher peak-time charges until they persuade them to sign up to smart meter rates. Current smart meter rates have been condemned as entirely uncompetitive, effectively penalising users for being conscientious energy consumers.

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The new charges will be implemented from October 1st, a year ahead of the original timeline for new tariff structures. It is expected that the changes will increase domestic electricity bills by approximately €41 a year, the CRU said.

The regulator said the decision was “in alignment with the draft European Commission Emergency Regulation currently in development, and our National Energy Security Framework”.

[ Electricity price squeeze: Regulator wants all customers to pay extra €100m for use during peak time ]

It had proposed a series of new tariffs to fund about €100 million of €478 million in costs related to security of supply with a focus on peak use periods, times of low wind supply and system stress, and to the customers driving the largest growth in energy demand. But in its final decision it said that, on the basis of feedback during the consultation process and wider EU plans, it would not be implementing proposals for block, system stress or decarbonisation tariffs at this point in time.

Block tariffs were intended to persuade those large commercial users most rapidly increasing their energy to slow down over the short term. The system stress tariff would have penalised those large industrial users that could not or would not lower their demand at times when system alerts had been issued, as has happened several times this year when the network was under stress. The decarbonisation tariff would levy additional charges on large users to incentivise them to reduce demand when renewables supplied less than a quarter of generating power and the network was more reliant on using fossil fuels.

“The €100 million proposed to be allocated to the new tariffs will now be recovered across all customer groups,” the CRU said in a statement.

Other measures, such as obliging large energy users, such as data centres, to cut their demand for power from the system, would continue to be pursued, it said.

The CRU noted that a reduction in the public service obligation (PSO) levy would result in an annual net saving of approximately €140 for domestic consumers and €475 for small commercial customers in the coming year. It said that, as indicated in its August consultation document, “there will be an increase in overall network tariffs resulting primarily from the impacts of inflation and the funding of responses to the security of supply challenges Ireland is facing”.

Employers had warned that the regulators’ plan could face a High Court challenge, questioning whether the CRU had the authority to impose such costs on customers through network tariffs, rather than a PSO levy.