Regulators’ plans to curb electricity use by charging big companies tens of millions of euro extra for using the network could face a High Court challenge, employers warn.
The Commission for the Regulation of Utilities (CRU) proposes charging data centres and big manufacturers €70 million extra for using the electricity grid at peak times from next month in a plan to tackle the Republic’s energy crisis.
Employers’ body Ibec said some members had questioned whether the commission had the authority to impose these costs on customers through network tariffs, as it proposes, rather than a public service obligation levy.
Neil Walker, Ibec’s head of infrastructure, energy and environment, warned that any suggestion that the regulator was acting beyond its powers risked judicial review proceedings, where a High Court judge would scrutinise its decision.
Mr Walker’s response warns that this would in turn lead to “lengthy delays” in implementing the new charges, which the regulator hopes can be used to fund emergency generators that are scheduled to begin operating from next winter.
Ibec’s response came as the commission prepared to close its consultation on the controversial proposals on Friday.
The CRU does not comment on individual submissions during a consultation, but said it reviewed all responses carefully and took them into account when making its final decision.
The American Chamber of Commerce, which represents US companies that employ 190,000 people, predicted this week that the CRU’s proposals would damage the Republic’s ability to lure multinational investors.
The CRU intends raising €100 million from all electricity customers through extra peak-time network charges imposed from October 1st, but wants 22 extra-large energy users to pay €70 million of this through specific tariffs.
Ibec questions whether these charges are a “sound basis” for either temporary or longer term funding for emergency generators.
“Given questions over the legal basis of the proposed measures, and the absence of any regulatory impact analysis, Ibec recommends that these aspects of the proposals should be withdrawn, and that a more considered consultation should be launched in early 2023,” said Mr Walker.
Ibec highlights a block tariff, meant to discourage data centres and others from increasing electricity use during times of peak demand.
However, Mr Walker said some of these businesses might already have contracts committing them to increasing electricity consumption.
He also pinpointed the CRU’s proposed “decarbonisation tariff” that the commission wanted to impose on extra-large energy users for using electricity when there was little wind-generated or other renewable power available.
Figures from national grid operator Eirgrid show that renewables contributed 35 per cent of electricity in 2021, so power is not available from these sources most of the time.
“It is not realistic to expect these sites to reduce their offtake whenever the contribution from wind and solar is below a specified level, which is thousands of hours every year,” Mr Walker said.
Specific charges for extra-large energy users also include “system alert tariffs”. Under this proposal, that group will pay added network charges for using electricity during periods when Eirgrid warns that power reserves are low.
Ibec doubts this will contribute to security of supplies this winter. Mr Walker said that as it was hard to predict how frequent these alerts would be, or how long they would last, it was not a reliable source of funding.
The employers’ group has also questioned a CRU plan to transfer €50 million of network charges from households to about 2,000 large energy users, which include businesses such as pharmaceutical makers and tech companies.
This “rebalancing” exercise reverses a 10-year-old government direction to switch the charges to homes from these businesses.
