Regulator should demand electricity price cuts as ESB zero proposal "not good enough".

Thursday, 06 August 2009

ESB needs to deliver electricity price cuts in recession.

The Energy Regulator should demand electricity price cuts from the ESB, which is proposing a zero price cut for households and only a marginal 0.4% reduction for small businesses.

Medium-sized businesses have been paying between 18% and 52% more than the EU average, with large industrial users paying the highest prices in Europe. While the ESB's proposed reduction of 5.5% for medium-sized businesses will provide some relief, the ESB seems to be providing this at the expense of struggling households and small businesses. The Commission for Energy Regulation must now clarify whether households are subsidising cheaper energy for the business sector.

There are many ways price cuts can be delivered. This year the ESB has reduced transmission costs by subsidising it with carbon windfall profits from last year. That process should continue in the absence of a windfall profits tax for carbon. Reducing transmission costs will reduce electricity costs across all sectors, affecting the regulated and non-regulated price of electricity.

But most importantly, 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.

SMEs are the lifeblood of the Irish economy and employed 800,000 people across the country before the recession. They are also more exposed to costs such as electricity. Many are suffering heavily and are downsizing as a result.

As Opposition Energy Spokesman, I have seen my primary role over the last 12 months to put Minister Eamon Ryan and the energy regulator under pressure to deliver lower electricity costs for consumers and businesses. Fine Gael has published a whole range of options to lower energy prices and for regulatory reform. This week we have seen a gas price reduction. Now we need to see electricity deliver price cuts that give a much-needed boost to small businesses and households under financial pressure.