ESB apologises as customers overcharged for a decade
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ESB Networks has apologised for an error it made which resulted in households being overcharged for over a decade.
At the Oireachtas environment committee, ESB managing director Nicholas Tarrant said the error resulted in households being overcharged just over €100m from 2011 onwards. This worked out at about €54 per customer, he said.
The committee called a meeting to hear from the ESB, the energy regulator and the Government, on the topic of the little-known Government subvention introduced at the beginning of the recession, which left households paying more to subsidise the energy costs of big business, or “large energy users”.
According to a 2009 Government memo, a Cabinet committee had determined large energy users “should face no increases in their electricity bills” given they were “major employers” at a time of economic turmoil.
It also conceded changing electricity tariffs to pile more on households in favour of big business “may prove unpopular”, but it pressed ahead and the provision remained in place until 2022.
At the committee on Tuesday, Minister of State at the Department of Public Expenditure Ossian Smyth said the decision came at a time of “crisis”, when people were more concerned with losing their jobs than with their energy bills. He said since then, the number of large energy users had increased from 1,300 businesses in 2009 to 2,100 today.
Early last year, it emerged households had been overcharged for over a decade over and above the €25 extra a year they had to pay to subsidise big business.
In its opening statement, ESB Networks said it did not gain financially from the error and regretted it happened. Furthermore, the error was “difficult to detect” due to the complexity of the calculations involved.
“ESB Networks is confident that the enhanced [distribution of system] revenue and tariff setting process, as well as associated key controls and governance measures now in place, are fit for purpose,” Mr Tarrant said.
“I’d like to conclude by again apologising for the error that occurred.”
The Commission for the Regulation of Utilities said it investigated the matter once it was brought to its attention, and a decision was made to get rid of this subvention where customers subsidise energy companies.
While CRU said it took the action after a direction from government, Mr Smyth said it was up to the regulator to implement.
People Before Profit TD Paul Murphy said it was “wrong” to implement a measure in 2009 that “effectively became permanent”, as it lasted for over 12 years.
Mr Smyth said while he could understand the motivation behind charging households more in 2009, “it could’ve been reviewed more carefully in the period since then”.