herald

Tuesday 6 December 2016

Electricity bills could soar as ESB and Eirgrid line up for €1.8bn spending hike

The spending increase is proposed by industry regulator, the Commission for Energy Regulation (CER).
The spending increase is proposed by industry regulator, the Commission for Energy Regulation (CER).

ELECTRICITY bills could soar after the country’s energy watchdog proposed huge spending hikes for companies that run the electricity grid.

The regulator for the ESB and Eirgrid, the semi-state companies which own and operate Ireland’s grid, is proposing they get an extra €1.8bn in spending increases between 2016 and 2020.

The organisations had asked for even more – requesting over €2bn in extra spending money.

Consumers could feel the pinch if the spending hikes are ultimately awarded, as they pay for many of the costs associated with running the ESB and Eirgrid through their energy bills.

One economist estimated the spending hikes would push up the average family electricity bill by 5pc over five years.

The spending increase is proposed by industry regulator, the Commission for Energy Regulation (CER).

The commission is jointly led by three people – Commissioners Garrett Blaney, Paul McGowan and Aoife McEvilly.

ESB and Eirgrid need the spending increase partly because of the rise in the use of renewable energy sources, a consultation paper from the regulator said.

Investment

“The scale of change the electricity system will undergo between now and 2020 will  require investment and innovation,” said the regulator in a consultation report published earlier this month.

“The increase in revenue is required in order to achieve this by further developing and reinforcing the electricity network, which is increasingly important as the system transitions to one with a high penetration of renewables.”

The spending hikes are part of a new five-year revenue plan proposed for the ESB and Eirgrid. Its old revenue plan comes to an end in December of this year. A final decision has not been made, however.

The report also revealed that the consultation report was published alongside findings by consulting group Jacobs, which criticised bonuses paid to staff at Eirgrid.

The report found that Eirgrid’s staff costs had spiked by more than €16m in the last five years to more than €134m, compared to an allowance of €118.6m.

Performance targets at Eirgrid do not appear to be linked to business cost reductions, meaning between €6m and €7m in staff costs “may have been incurred inefficiently”, Jacobs found.

“This is a significant concern” the regulator said.

Eirgrid previously told the Herald that it reduced spending on contractors and professional fees during the period, which saw overall cost reductions.

“This meant that Eirgrid’s overall staff costs were below the [regulator’s] allowance,” a spokesperson said.

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