The Commission for Regulation of Utilities has proposed higher electricity charges for business and domestic consumers in order to alleviate a looming supply crunch.

Extra Large Energy Users (XLEUs) such as data centres are in the firing line for the proposals, which have gone out to a two-week consultation.

The CRU wants all customers consuming at the evening peak between 5-7pm to pay more for their power, starting from October.

The aim is to reduce demand at the critical peak period.

The CRU also wants to increase Block Tariffs targeted at XLEUs who significantly increase their demand relative to the previous 12 months.

In Association with

The regulator is also calling on suppliers to proactively develop products and initiatives for domestic and commercial customers to encourage them to reduce their demand and improve their energy efficiency.

The CRU wants to implement new network tariffs by 1 October 2022. The CRU considers said “it is necessary to act quickly due to the electricity security of supply issues facing Ireland”.

Significant risk

In the CRU’s opinion, there is a significant risk to electricity security of supply in Ireland over the coming years, driven by the closure of large electricity generation units, the failure of contracted generation capacity to deliver, an accelerated degradation of the existing fleet as it responds to intermittent wind generation, and significant demand growth across some sectors of the economy.

“Particular challenges are expected in the winter months in 2022/23 and 2023/24,” according to the regulator.

The emergency move from the CRU also cites the National Energy Security Framework published by the government in April 2022.

This document was drawn up in response to the perceived need to improve Ireland’s energy security needs in the context of the invasion of Ukraine.

“Three actions identified, under the section of the Framework containing measures to reduce Ireland’s demand for fossil fuels, are directly relevant to this consultation,” says the CRU.

“Response 4 requires the CRU to review the price drivers behind electricity bills (including network costs) with a view to mitigating cost increases for consumers and businesses in the near term.

“Response 22 requires the CRU to assess the introduction of peak-rate tariffs and also leverage the roll-out of smart meters.

“Response 24 requires the CRU assess additional demand reduction and flexibility options and higher peak time network charges."

The CRU said it acknowledges that there has not been the time necessary to carry out detailed analysis on the proposals developed.

“However it is considered prudent that action is taken now. The CRU anticipates significant expenditure on security of supply mitigation measures to continue in 2024, with challenges expected to security of supply in winter 2023/24.”

Smart meters

Electricity demand in Ireland is forecast to increase by 13% between 2021 and 2025, with over 60% of this demand growth to be driven by a small number of extra-large energy users.

According to the CRU: “The proposed introduction of a peak time of use differential will leverage the roll out of smart meters for domestic customers and provide consumers who avail of smart tariff offerings from suppliers with the opportunity to shift their demand and control costs.

“Lowering the peak demand can also reduce the need for peaking generation plants, reduce the need to curtail wind generation and improve generation adequacy."

For a domestic customers, the CRU anticipates that additional network charges, outside any higher tea-time tariffs, will add c.€26 to a typical annual bill for households.