Energy watchdog to decide on generators passing on gas costs

A decision on a proposal that threatens further electricity and gas price rises for consumers and business is expected from the State’s energy industry watchdog shortly.

The Commission for Energy Regulation (CER) has been consulting with power plant operators such as the ESB and Huntstown Power on a technical issue relating to how they pass on charges for supplies of natural gas that they burn to generate electricity.

The power plant operators want the regulator to give them the green light to pass on charges for short-term use of the gas network to their customers.

There is a debate over whether rules governing how the Irish electricity market operates prevent them from factoring these costs into their prices in the first place.

If the CER allows power plants to pass on the cost it could lead to energy price increases of up to 9 per cent in the near term, according to some estimates published last year.

The regulator recently confirmed that the consultations were ongoing and it expected to publish “further information” in relation to this in coming weeks. Industry sources suggest a final decision could be made around April or May.

Fuel supplies

Electricity companies have to book space on the country’s natural gas network to ensure that the fuel supplies they need are shipped to them. The space can be booked on a yearly, monthly or daily basis.

The daily, or short-term rate, is almost three times the yearly rate and is about twice what companies are charged for booking capacity a month in advance. Generators are understood to be buying more short-term capacity, partly because the fall in electricity demand of the last five years means they have cut back on the longer-term option.

Separately, Bord Gáis Networks, which operates the natural gas network, has applied to the regulator to be allowed to increase its charges. It is likely this will result in the State-owned company being given the go ahead for a 13 per cent increase, although it is not thought this will have an immediate downstream impact on customers.

Household bill

Last year electricity suppliers, including ESB subsidiary Electric Ireland, Bord Gáis Energy and Airtricity, increased their charges to both businesses and consumers, adding between €50 and €60 a year to the average household bill.