Businesses ‘struggling’ to pay electricity costs

ELECTRICITY suppliers must reduce costs to ease the pressure on Irish business, according to an energy report issued yesterday by the National Competitiveness Council (NCC).

The NCC report says businesses are struggling to pay Irish electricity charges of 35.5% above the eurozone average and 28% more than in Britain, according to figures dating to the end of 2008.

Since that time, some efforts have been made to reduce electricity prices for the food, pharma and ICT sectors, a move the NCC praised.

However, late last year the regulator approved ESB price increases of 17% and another 5% in line with soaring world oil and gas costs. The NCC says that regulated electricity and gas prices must now come down to fully reflect the current decrease in global fossil fuel prices.

IBEC group Retail Ireland agrees with this view, and it has called on the Government to cut all state-controlled electricity costs, citing in particular the need to compete with cross-border retailers.

Director of Retail Ireland Torlach Denihan said: “This is a significant burden on retailers and makes it more expensive to run a retail business here than in Northern Ireland, Britain or Spain. If it is more expensive to run a retail business here, it means higher prices for the public.”

The NCC praised the efficiencies achieved by the creation of the all-island wholesale Single Electricity Market (SEM), and by the closing of inefficient legacy plants. Again, however, these cost savings need to be reflected in reduced electricity prices. The NCC says regulations are needed to bring the differential in controllable domestic costs (ie non-fuel costs) into line with costs in Ireland’s main competitor countries.

In a written reply, Bord Gáis said it is investing in a new efficient, renewable and flexible power generating plant, which will contribute to achieving the national strategy on energy. Bord Gáis also said its electricity service allows business users to save 10% on their bills compared to ESB rates, while households can save up to 14%.

The Bord Gáis reply also stated: “The NCC report discusses a number of issues which Ireland, as a small country with limited indigenous resources, will face in the future. Ireland’s obligations under EU legislation could have the greatest influences on our long-term energy framework.”

An Airticity spokesman said: “Renewables drive down electricity costs, not increase them. Real customer cost savings will be achieved through creating an electricity trading environment in which real competition exists in the marketplace. This includes opening up all elements of the electricity market to competition as highlighted in [the NCC] report.”

In reply, ESB stated: “The electricity prices for the industrial sector reflects Ireland’s high dependence on imported fossil fuel for electricity generation. The Eurostat comparison referred to in the report relates to 2008, a time when global fossil fuel prices were high.

“ESB has provided €500 million in support to the electricity market to help minimise electricity costs for all customers, including business customers in 2009, irrespective of their supplier. ESB supplies electricity to just 40% of the business sector.”