Electricity price to rise 2% over plan to reduce greenhouse gases

THE price of electricity will be increased by up to 2% under Government plans to reduce greenhouse gases, and which were submitted to the European Commission yesterday.

Natural Resources Minister Dermot Ahern yesterday said the scheme to be introduced next year will push up the price of electricity by about 1% to 2% though this could have been as high as 7%.

From next year, companies will need a permit to produce a limited quantity of CO2, and they will have to pay for any extra they emit.

The Government has agreed under the scheme that power generators will be allowed to emit about 80% of what they normally produce for free but will have to pay for the rest at the rate of €10 a tonne.

Any company using less than their free allowance will be able to sell the balance under the scheme to which over 100 countries have signed up, including all EU states as well as the designate members. Mr Ahern said he expects power companies will use up considerably less than their allocation and could make €140m in the period 2005- 2007 by selling it on.

Instead gains will be recycled to the electricity sector to minimise price increases. "I propose to empower the Commission for Energy Regulation to make regulations to claw back from generators any such windfall gains arising," he said.

Ireland was one of just five EU countries that presented their plans for cutting back carbon dioxide emissions on time yesterday.

Under the Kyoto Treaty still not in force because not enough countries have signed up to it each EU country has to draw up plans that show how much of the ozone-destroying chemicals each industry will be allowed to emit. The Environmental Protection Agency said 108 major industrial sites in Ireland have applied for permits.

The sectors include power generation, cement, lime, glass and ceramics plants, paper mills and oil refining, food, drink, pharmaceuticals and universities.