Power price shock is hard to absorb

News this week that electricity users will face price increases next year of up to €1.75 per month on bills to fund major upgrades to the national grid, is difficult to digest.

The Commission for Regulation of Utilities (CRU), has sanctioned increased spending of an initial €13.8bn by ESB Networks and EirGrid, the body which manages the electricity network.

If the two organisations meet regulatory targets, the regulator will allow the spending increase to €18.9bn over the coming five years.

Initially, €1 will be applied to bills every month before VAT. But this could rise to €1.75 if spending is allowed to rise to €18.9bn.

The upgrades, it’s reported, will facilitate the building of 300,000 new homes by 2030, the connection of one million electric vehicles and 680,000 heat pumps to the grid.

The money also be used for electrification of public transport projects, including Dublin’s MetroLink and increased use of electric buses. It remains to be seen how much benefit that will bring to those who live in rural counties. In this region – the delivery of the North South Interconnector project, which has been promised for almost two decades now – is still outstanding. It has been said that “the lights would go out” if this project were not delivered but, still, we are here on the brink of 2026 – the lights are still on, and the line is still not in place. This newspaper reported earlier this year that it would be 2031 at least before the project is delivered. That timeline is likely to be later given little appears to have happened in 2025.

It's clear the landowners and the people still want those lines to go underground and it’s difficult to know where it will end but with almost €19bn on the table, surely it’s time to look at it again. Yes, it would require going back to the drawing board in many respects but what difference would another few years make at this point?

It is good news to hear that some of the money will be spent on upgrading the grid to prepare for climate change and storms, and reinforcing the grid to handle increased power from wind and solar power.

The State is investing a total of €3.5bn and between €4bn and €5bn will be raised on the bond market. It will result in 520 different capital projects. Among them will be 29 major transmission infrastructure projects, 27 major distribution substations, 80,000 pole replacements and hundreds of kilometres of overhead and underground lines.

Minister for Energy Darragh O'Brien said the investment "would be the largest investment in the electricity grid since rural electrification".

Minister for Finance Simon Harris acknowledged that, while households are likely to be paying more in their bills to help cover the upgrade, the "prize" will be a more resilient energy supply that will lead to "cheaper energy" in the future. The jury is out on that one.

Pity the Government didn’t see fit to award the energy credits in their latest budget to help struggling households. With almost 300,000 electricity users in arrears, it’s difficult to understand why the credits were not repeated.

Energy is not a luxury, it is a necessity. Yet prices appear to go up and up.

Wholesale electricity prices, which is the price suppliers pay, fell by more than 16% in the year to September, according to latest figures from the Central Statistics Office (CSO). Yet electricity prices have increased by five per cent over the last year and utility companies are reporting massive profits. Why are the savings not being passed on?

A recent report from the International Energy Agency (IEA) found that energy retail prices in Ireland are three times higher than wholesale prices. The gap between what energy providers pay on the wholesale market and what they charge customers for the same energy is one of the highest in the world.

The CRU needs to look at this before €1.75 a month is added to householders’ bills. It might not seem like a lot of money but it’s the principle of the thing.

The CRU has said it will monitor ESB Networks and EirGrid's delivery to ensure customers’ money is spent responsibly.

The CRU’s Commissioner Fergal Mulligan has said consumers should shop around.

"Changing supplier is one of the fastest and most effective ways for customers to lower their energy bills."

He said people who move to the lowest tariff could have saved almost €2,500 over the past four years. Certainly it’s worth looking at that but the government and the CRU must also look at regulating energy prices.

Investing in our national grid is important and should be funded. But we can’t continue to let energy companies continue with such blatant profiteering at the expense of householders.