Citizens unknowingly subsidised big businesses’ electricity bills
For 12 years, households have unknowingly subsidized the electricity bills of large companies at a cost even higher than the previously announced €600 million, according to the energy regulator.
The “Large Energy User (LEU) Rebalancing Subsidy” was developed to relieve large companies of 50 million euros in annual network charges and instead add them to household customers’ bills.
That agreement ran from 2010 to 2022, but a review by the Utilities Regulation Commission (CRU) has revealed an “implementation problem”.
The manner in which the agreement was implemented meant that “more than the amount authorized in the CRU decision was passed on to LEU customers”.
The inclusion was in response to requests from Lynn Boylan, Sen. Féin Senator, following the Irish Independent Coverage of the little-known subsidy late last year.
Last year, the CRU said phasing out the subsidy would save domestic customers €40 a year, but it’s now unclear how much extra cost they actually borne for 12 years.
The CRU says it will determine the full amount when it completes its annual network revenue review, but that won’t begin until April.
Ms Boylan said there was a more urgent need for clarity.
“It’s not good enough for them to say they’re looking at it and when it’s all done they will give a final figure. If they’re the regulator, they certainly should have kept an eye on that,” she said.
Correspondence regarding the subsidy was released to Ms. Boylan as part of a freedom of information request.
Documents show it was intended to be permanent, although it was introduced in response to cost-competitiveness concerns specific to the recession at the time.
It has been described as “the permanent realignment of network tariffs from 1 October 2010 towards LEUs, to be paid for by higher prices for domestic consumers”.
The Department of Enterprise was angered when the CRU tried to shut it down last year, complaining the move was “unhelpful”, “punitive” and proposed without an impact assessment or consultation with business.
Tensions are also evident over attempts to explain the payout after that Irish Independent questioned last year.
Emails between Environment Department officials show they felt the CRU “clearly places the blame on the government.”
“We can of course say that it was up to the CRU to remove it,” one official said.
Correspondence from around the time the subsidy was agreed is being redacted, hiding observations by then Secretary of State for Communications, Energy and Natural Resources, Eamon Ryan.
Documents show the cabinet was looking at ways to cut costs for around 1,500 of the largest energy consumers, as their electricity costs were above the European average and existing subsidies were about to be phased out.
Mr. Ryan’s department has suggested the rebalancing agreement as one possible approach.
Mr Ryan is now back in charge of energy law as Secretary of the Environment.
When asked, his department said: “The grid fees have been rebalanced in favor of the large energy consumers
as a means of securing employment in some of Ireland’s most important and export-oriented industries at a crucial time for the state.”
The CRU’s decision to end the agreement was due to a government request.
Ms Boylan said there were many unanswered questions. “We would like the CRU to be more transparent about how these network charges are designed, but there are also questions for the government about the injustice.”