ALMOST ONE million households will have their electricity prices frozen for a year from next autumn under proposals made by the ESB to the energy regulator.
The plan, which includes a proposed reduction of 0.5 per cent for small businesses and 5.5 per cent for medium-sized businesses, has been criticised by Fine Gael and business groups.
The wholesale price of energy has almost halved since the start of last year while the price of electricity went up 17.5 per cent last year and came down just 10 per cent earlier this year.
Earlier this week, An Bord Gáis said it would be looking for a 9.3 per cent cut in gas prices from the autumn.
The ESB argues that it has provided more than €500 million in support to stabilise electricity prices, including a subsidy from its own reserves which offset by 12.5 per cent price increases due as a result of the spike in energy costs last year.
Last May’s 10 per cent decrease was introduced four months early and was paid for from revenues due internally to the ESB’s network subsidiary, the company said. This money is now being paid to ESB Networks.
Wholesale energy prices account for less than 60 per cent of the cost of producing electricity, so end-user prices cannot be directly correlated to wholesale tariffs, according to Pat Fenlon, general manager of ESB customer supply.
The company was investing heavily in green initiatives but Mr Fenlon said this was not being done at the expense of domestic electricity users.
The reason business rates were being reduced while domestic tariffs remained stationary was because the wholesale cost of energy accounted for a greater proportion of the cost of generating electricity for high-volume business users, he said.
ESB workers have not had their pay cut and are not subject to the pension levy, but Mr Fenlon said the company’s submission to the Commission for Energy Regulation did not allow for any increase in payroll costs.
Under deregulation, the ESB has lost 200,000 customers this year to its rivals, An Bord Gáis and Airtricity, which have undercut its prices by up to 15 per cent. However, further deregulation to be introduced soon will allow it to compete more actively on price.
Fine Gael’s energy spokesman Simon Coveney said the company’s proposals were “not good enough”. He called on the regulator to demand greater cuts from the ESB in view of the challenges posed by the recession.
Mr Coveney claimed the ESB was providing price reduction for large businesses at the expense of struggling households and small businesses. “Finding efficiencies and giving consumers the benefit of reduced fuel prices should allow the ESB to deliver much-needed electricity price cuts for consumers and businesses.”
Isme, the Irish Small and Medium Enterprises Association, expressed disappointment with the scale of the proposed reductions, saying they would do little to relieve the impact of excessive electricity costs on small businesses.
Isme chief executive Mark Fielding said: “While we welcome any reduction in electricity costs, the reality remains that these prices have a long way to fall before we reach the EU average”.
Electricity costs for businesses in Ireland were among the highest in the EU, he said.
