Householders overcharged by ESB to subsidise big businesses’ electricity bills will get their money back, the energy regulator has said.
he amount to be paid back has not been disclosed but it will be an accumulation of annual overcharging that took place over at least ten years.
Some estimates suggest it could be at least €100 for every domestic customer in the country.
The Commission for Regulation of Utilities (CRU) said today there had been an “administrative error” in the way the subsidy had been applied.
Pharmaceutical firms, food producers, IT companies and data centres all benefited at a cost to householders.
The subsidy, called the Large Energy User Rebalancing Subvention, was a little-known measure introduced by the government in 2010 to reduce the electricity bills of big businesses in a time of economic crisis.
Network charges, which made up around 25pc of a domestic customer’s bill, were reduced for large businesses and increased for households to make up the shortfall.
It was designed to take €50m off the bills of around 1,500 high electricity-using companies every year.
The Irish Independent revealed last October that the subvention, framed as an emergency measure, had continued to be applied every year for 12 years, resulting in €600 million worth of supports to big businesses.
It only came up for review last year at the height of the energy price crisis and the decision was taken to discontinue it.
It emerged last week after a Freedom of Information request by Sinn Fein Senator Lynn Boylan that it was actually intended to be permanent and that more than the intended €50m was added to domestic customers’ bills.
The CRU said initially the subvention added €40 a year to householders’ bills but it has refused to say how much more it actually cost.
CRU chairperson Aoife MacEvilly said an exercise would be carried out to determine the actual payments.
Ms MacEvilly told the Oireachtas Climate Committee today that the overcharge probably began in year two of the subvention, 2011.
Eirgrid and ESB Networks shared the ‘rebalancing’ responsibility and while Eirgrid applied the measure as intended, ESB Networks applied it has a percentage rather than a set figure.
As the power usage by large energy users increased, the percentage of their network charges offset by households increased.
Ms MacEvilly said the CRU would look at the implications of the “error” for ESB Networks.
“It’s important to say ESB Networks did not benefit from this. They did not retain any of that money themselves. It did not in any way favour them. It clearly was an administrative error.
“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.”
Senator Boylan questioned why the subvention was allowed in the first place when householders were also struggling in the recession in 2010.
“That was government policy at the time. We work within a government policy framework,” Ms MacEvilly said.
Senator Boylan said the CRU had many questions to answer.
“What due diligence had been carried out for the last 12 years that [the overcharge] only came to attention when the subvention was being unwound?” she said.
