Electricity customers are set to see bill increases of up to €1.75 per month next year to fund a major upgrade of the national electricity grid, a programme expected to cost close to €19 billion.
The sector’s regulator, the Commission for Regulation of Utilities (CRU), has approved an initial €13.8bn in additional spending by ESB Networks and EirGrid, which is responsible for managing the electricity network, reports RTE.
Should both organisations meet required regulatory targets, the CRU will permit total spending to rise to €18.9bn over the next five years.
At the outset, electricity bills will rise by €1 per month before VAT, but this figure could increase to €1.75 if expenditure reaches the €18.9bn level, reports RTE.
Households will cover 55% of the costs, while businesses will account for the remaining 45%.
Network tariffs paid by electricity users currently represent between 25% and 30% of an average customer’s bill, reports RTE.
The grid upgrade will support the construction of 300,000 new homes by 2030 and enable the connection of one million electric vehicles and 680,000 heat pumps.
It will also facilitate the electrification of public transport projects, including Dublin’s MetroLink, along with the expansion of electric bus services, reports RTE.
In addition, the grid will be strengthened to withstand climate change impacts and severe storms, and reinforced to manage increased electricity generation from wind and solar.
The State will invest a total of €3.5bn, while between €4bn and €5bn will be raised through the bond market, reports RTE.
The programme will deliver 520 individual capital projects, including 29 major transmission infrastructure developments, 27 large 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”, reports RTE.
Minister for Finance Simon Harris said that although households are likely to see higher bills to help fund the upgrade, the “prize” is a resilient energy supply that will ultimately deliver “cheaper energy” in the future.
Speaking as he arrived at Cabinet, he acknowledged that electricity bills are already high but said several measures were taken in the budget to support people, including expanding eligibility for the fuel allowance, reports RTE.
Mr Harris said the investment is focused on ensuring energy security and will result in lower prices for consumers over time.
He added that funding will be sourced from both the State and the bond market, reports RTE.
However, Social Democrats TD and energy spokesperson Jennifer Whitmore said any further rise in electricity bills is “really concerning”.
Speaking on the plinth, she said that while upgrading the national grid is necessary, there is also a pressing need for an investigation into price gouging, reports RTE.
Ms Whitmore again called on the Government to introduce a “targeted energy support” scheme, under which €400 would be provided to the lowest 40% of income households during the energy crisis.
The CRU said it will closely monitor the delivery of projects by ESB Networks and EirGrid to ensure customers’ money is spent appropriately, reports RTE.
There are currently almost 300,000 electricity customers in arrears, and the Government did not provide one-off energy credits in October’s Budget.
The latest Central Statistics Office data shows electricity prices have risen by 5% over the past year, reports RTE.
CRU Commissioner Fergal Mulligan said: “Changing supplier is one of the fastest and most effective ways for customers to lower their energy bills”.
He said customers who switched to the cheapest tariff could have saved almost €2,500 over the past four years, reports RTE.
“Customers could also move to a Time of Use tariff which you can avail of if your smart meter has been installed, to use less expensive electricity at different times during the day that suits their needs,” he added.
Mr Mulligan said there are also projections in place to protect vulnerable consumers, reports RTE.
Speaking on RTÉ’s Morning Ireland, he compared the scale of the grid upgrade to the construction of the Ardnacrusha power station more than a century ago.
“The demand on our network is growing exponentially,” he said, reports RTE.
“We are growing in terms of having electric vehicles, heat pumps across our homes, and microgeneration in all our homes is becoming a new norm.
“So, the investment is there to cater for all that new growth, as well as climate resilience,” he said, reports RTE.
ESB Networks said the new plan will enable it to build on and accelerate progress made during the previous price review, which saw the connection of more than 186,000 homes, farms and businesses, the addition of 2.1GW of utility-scale renewable generation, and the installation of over 1.8 million smart meters.
ESB Networks Managing Director Nicholas Tarrant said the final determination supports the level of ambition outlined in the company’s business plan, reports RTE.
“It will help pave the way for a more resilient, reliable and sustainable energy future for Ireland, supporting housing, jobs and climate action.
“We look forward to working in collaboration with our stakeholders, industry colleagues and all of society to deliver this historic and transformative investment in Ireland’s future,” he added, reports RTE.
Siobhán O’Shea, EirGrid’s Interim Chief Infrastructure Officer, said: “It is critical we have a clean, secure power system that supports increasing societal and economic growth”, reports RTE.
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