by Seán McCárthaigh
The Fianna Fáil-Green government led by
former Taoiseach, Brian Cowen, deliberately chose to impose higher electricity prices
on ordinary households in the middle of the economic downturn in order to
reduce energy costs for 1,500 large business users.
Cabinet papers released under the
Freedom of Information Act show the coalition discriminated against domestic
consumers by favouring cost-cutting measures to support some of the biggest multinationals
in Ireland.
The documents show that in July 2009 the
Minister for Communications, Energy and Natural Resources, Eamon Ryan sought
Government approval for “the permanent rebalancing from October 1, 2010 of
network tariffs towards Large Energy Users (LEUs) to be paid for by higher
prices to domestic consumers.”
The addition of €50m to domestic
customer tariffs added more than 3% to household electricity bills, although
its impact was effectively nullified by a subsequent fall in international
fossil fuel prices.
Justifying its decision, the Government
noted that industry groups had regularly complained about the disparity between
household electricity prices in Ireland which were “broadly competitive” with
other EU countries and much higher energy costs for large companies.
Faced with the prospect of having to
find €1 billion to maintain existing subsidy levels to avoid price rises for
all electricity customers, the Cabinet voted instead to only provide such
supports for large industry at the lower cost of just €176m.
Ryan also sought a special dividend of
€176m from the ESB, from the profits of its sale of a generating plant to
Spanish electricity firm, Endesa in order to ensure that LEU’s faced no
increase in electricity network charges in 2009-2010.
He pointed out that all electricity
users were benefitting from subsidies totalling €567m, which he described as
“extraordinary measures taken to prevent major (40%) increases in electricity
prices in 2008 as international fossil fuel prices soared.” However, he also
acknowledged that they could only be “a temporary remedy.”
As the subsidies were set to expire in
September 2009, Ryan warned that LEUs would see their electricity bills
increase by up to 30% unless special measures were taken.
The document shows that the Cabinet
Committee on Economic Renewal whose membership consisted of Ryan, Cowen,
Finance Minister Brian Lenihan and Tánaiste, Mary Coughlan decided that large
energy users should face no increases in their electricity bills.
Ryan highlighted how many LEUs were
based in the technological, pharmaceutical and food and drink sectors and were
major employers, representing a significant proportion of Irish export income. He
claimed other EU countries had also adopted various measurers to keep energy
costs lower for large businesses.
The Government also took care to note
that electricity prices for Irish households were 4-7% below the EU average.
“A rebalancing of network tariffs in
favour of LEUs, achieved through higher network charges for domestic users, would
help safe-guard employment in some of our most critical and export-oriented
industries,” observed Ryan.
It was estimated that adding €50m to
domestic customer tariffs would also add €5m to the social welfare bill for
providing free electricity units to some customers.
Ryan anticipated that such a measure
would “prove unpopular” but argued households could still avail of discounts
from ESB’s competitors which had recently entered the electricity market.
However, he added: “The rebalancing of
tariffs would send a clear signal to industry that Government is committed to
improving the competitiveness of energy costs for business as part of the
overall competitiveness challenge.”
Rebates for LEUs were eventually ended
in September 2012. Ireland currently has the 7th most expensive
electricity in the EU for LEUs with prices about 8% above the EU average.
Asked this week about the issue, Ryan –
the current Green Party leader – said it was a difficult decision but
“employment was a huge issue at the time.”
