CRU proposes extra electricity charges at peak times - KFM
The Commission for Regulation of Utilities (CRU) recently announced a proposal asking all suppliers to introduce a peak tariff, or a surcharge on consumers for using electricity during peak hours.
Our Head of Communications at bonkers.ie, Daragh Cassidy appeared on KFM to discuss the latest announcement from the CRU, what it means for customers, and the reasons behind the news.
Daragh also spoke extensively about the current state of the energy sector and the future of the grid.
Two big issues
The first issue is around price - gas and electricity costs are at record levels.
We had over 35 price hike announcements last year, and we’ve had well over a dozen again this year.
The second issue is around the security of supply and in Ireland, there is a bit of a mismatch between demand and supply this winter in particular, and next winter.
This is due to things like data centres, a growing economy, the electrification of public transport, and so on. The demand will surpass what we have available to supply.
We haven’t had any blackouts in a long time, but the CRU is very worried that this winter and next winter will be very tight. So we need to make changes.
The CRU’s announcement
The CRU is holding a two-week consultation but will introduce charges to tariffs from the 1st of October. The CRU says the network requires €478 million to secure supply in 2023. The tariff changes are intended to cover €100 million of that.
The CRU, in conjunction with Eirgrid, manages the grid and has had to try and source emergency generation.
Usually planning to build electricity power plants or gas-fired power plants takes years, but earlier in the year, the CRU decided it would have to source emergency generation from overseas. This is what consumers are now having to pay for, and it’s why tariffs are going up.
Some of the deals fell through at the last moment, while some others have gone through.
When you get your bill, around a third of it goes to Eirgrid and ESB for the upkeep of the grid. Very little goes to the supplier, not as much as you might think. These upkeep charges are known as transmission charges.
It’s those charges that are going to be increased by the CRU. The CRU reviews those charges every year, but they’re quite high in Ireland. They’re going to increase by approximately €30.
What else is causing price increases?
Along with this mismatch, we were likely too quick to shut down some fossil fuel power plants, in a bid to transition to renewable energy.
We shut down our last two remaining peat power plants two years ago, reducing supply.
The other issue is that wind is very variable. Sometimes it can be very windy, and we can get 70-80% of our electricity from it, and then other days it can be very calm and may only provide 5% of our electricity.
What that means is that gas and coal-fired power plants and one of the remaining oil power plants have to turn on and off at regular intervals, depending on how windy it is. They weren’t designed to do that, so it’s causing excess wear and tear in a lot of the generators, which wasn’t foreseen.
Then of course there’s the issue around the growth of data centres and the growth of the economy, with more people installing heat pumps and purchasing EVs. There’s a lot of pressure on the grid.
Peak electricity usage times
The CRU is now trying to encourage people to reduce their electricity consumption between 5 and 7 PM because that’s when there’s the most pressure on the grid.
It looks as though it’s going to force suppliers to charge people extra where possible for using electricity during this time. That may not suit a lot of people either.
Smart meters are being rolled out at the moment, which means you can be charged different rates depending on when you use your electricity. Suppliers will be under pressure to encourage people to sign up for smart meters.
Those who have a smart meter tariff will know there’s already a ‘penalty’ charge between 5 and 7 PM.
It’s going to be difficult to encourage those with a NightSaver Meter and a regular meter, to move consumption to other hours, as the meters aren’t set up to be billed in a different way.
We don’t really know how this is all going to work, we’ll likely know more after the two-week consultation period.
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