Households across Ireland paid higher energy costs for 12 years to benefit ‘big business’, the Oireachtas Environment and Climate Action Committee heard yesterday.
Sinn Fein senator Lynn Boylan questioned the Commission for Regulation of Utilities on the total cost to domestic customers as a result of the Government decision.
CRU chair Aoife MacEvilly didn’t provide a figure but said the decision was taken as “large companies were leaving Ireland”.
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It emerged the move, which residential customers were not made aware of, was put in place as a result of the financial crash.
The ‘large energy user (LEU) rebalancing subvention’ ran from 2010 to 2022 and was designed to shift €50m of network tariffs onto residential energy users.
Senator Boylan slammed the CRU’s lack of oversight of the subsidy following the Oireachtas committee hearing.
She said: “The CRU is supposed to be an independent body with a mission to protect the public interest and to ensure safe, secure sustainable energy at a reasonable cost, yet it appears they failed to carry out any distributional impact of this measure, and how it would have affected people struggling to pay bills.
“What is even more damning is that it was not until 12 years later, when this measure was being unwound, that they noticed ESB networks had implemented the measure in a manner that meant it was more than the €50m per annum.”
The committee was told householders were charged more than they should have been under the scheme as ESB Networks didn’t cap the subvention at €50m a year as instructed.
Senator Boylan added: “It is also shocking that they could not give me an exact figure of how much domestic households have subsidised large energy users over the last 12 years.
“The households that paid at least half a billion euro want answers, but the CRU turned up without those answers today.”
During the committee meeting, Senator Boyle revealed details of a Government memo at the time, which she said “conceded this [move] would be an unpopular measure, [but] that domestic users could still shop around on their energy use to bring down their costs”.
She added: “The Government memo says they were unwinding the measures for domestic users and they wanted a permanent rebalancing in favour of large energy users, that the domestic users would subsidise.”
Ms MacEvilly said: “That was the Government policy at the time - we work within the Government policy framework.
“The challenge at the time, which we could all clearly see, was that large companies, large employers were leaving Ireland and leaving people jobless and unable to pay bills.
“That was part of the reality of the time.”
Senator Boylan said: “We know the financial crisis at the time, we know that we were losing jobs... equally there were a lot of very hard pressed families who were also in a financial crisis.
“Did you do any analysis as to how fair this measure would be for domestic users?”
It emerged at the meeting, ESB networks did not apply the charge as advised, instead skewing a percentage of network charges in favour of large users.
Deputy Jennifer Whitmore also hit out at the CRU’s lack of oversight asking how they didn’t know ESB adopted a percentage approach.
“In the event ESB took your direction and misapplied it, is there a penalty for that? That’s quite a large administrative error,” said Ms Whitmore.
The Utility regulator said they will repay households.
CRU chair Aoife MacVelly said: "Domestic bills were being charged more than we had directed, and the benefit did not go to ESB Networks. It went to the large energy users.
"Having identified that now, just to be absolutely clear, we have decided absolutely that money will be paid back to domestic customers."
LEU has now ended with CRU saying last year it would saved domestic customers €40 a year.
A spokesperson for ESB Networks said: “ESB Networks identified this issue and has been engaging with the CRU for some time. We are continuing to engage with CRU to finalise the rebalancing of the relevant tariffs, which will require CRU approval in due course.
"While the process and mechanism of the rebalancing is still to be determined with the CRU, ESB Networks anticipates it will result in the reduction of a domestic electricity bill in the order of €50 in total.”
A Department for Environment, Climate and Communications spokesperson said the government was not aware tariffs recouped from households by ESB exceeded the agreed £50m ahead of today’s committee hearing.
They added: “The Minister has asked that his officials engage with the CRU on this matter – to determine if there is any action required to ensure people are compensated and that the CRU have the appropriate powers to ensure this does not happen again.
“The Minister welcomes the CRU’s commitment that households will be repaid (the monies which they were overcharged) and requests this be done as quickly as possible.”
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