Plans for windfall tax on electricity suppliers delayed

A PROCEDURAL mix-up in the Dáil has left Government plans to impose a €75 million windfall tax on electricity suppliers facing a long delay.

Minister for Energy Eamon Ryan recently announced that the Government intends to tax the profits earned by power companies on free carbon credits and to distribute it to employers who use large quantities of energy.

He wanted to include the tax as an amendment to a Bill aimed at promoting the use of biofuels, but this was deemed inappropriate as the windfall charge is a revenue-raising measure.

The problem means that Mr Ryan will have to introduce separate legislation to allow the Government to impose the tax, which is likely to delay its planned introduction.

A number of players in the power industry are opposed to the move, and sources yesterday argued that the procedural problems illustrate their claim that Mr Ryan is attempting to rush the legislation through the Oireachtas in order to impose the charge as quickly as possible.

However, a Department of Communications, Energy and Natural Resources spokeswoman rejected that claim, and pointed out that the Minister and the Government have been looking at proposals to introduce the charge for a year. She said that department officials believed that it should have been possible to introduce the tax by amending the biofuels legislation.

The Minister has now decided to introduce a separate Bill imposing the tax. His spokeswoman said that the issue will still be dealt with during the current legislative session and will become law “as soon as possible after that”.

Electricity companies are getting the windfall because their customers have to pay the full cost of greenhouse gas emissions, while the EU has exempted them from doing so until 2012.

The companies affected, including State-owned ESB and private sector player Viridian, have not made any statement relating to the charge.

However, it is possible that a number of them could challenge the tax’s introduction in the courts as the EU forbids member-state governments from profiting from carbon emissions charges.

Under the scheme that the Minister is proposing, the State’s Commission for Energy Regulation will collect the tax and the Government will then decide how to spend the money.

However, the Minister has already indicated that the Government intends passing the money back to high energy users, many of whom are big, multinational employers who have warned about the cost of electricity here.