Methodology for Constructing Business Tariffs

Business Tariff Components

Electric Ireland offers business tariffs in customer contracts that can vary from fully fixed to fully variable, and will reflect a combination of the four components below.

  1. Energy Wholesale Costs
  2. Supplier Costs
  3. Networks and Market Charges
  4. Taxes and Levies

Energy Wholesale Cost

The price of electricity in the Irish wholesale market varies each half hour as the price is determined by demand and generator costs. The majority of the electricity generated in Ireland uses imported fossil fuels which is a key driver of the cost of generation and therefore electricity prices.

In order to manage the volatility of wholesale costs Electric Ireland purchase its wholesale electricity requirements over a number of years primarily through contracts with generators.

Supply Costs

Supply costs refer to the operating expenditure in supporting the business (e.g. administrative costs).

Network and Market Charges

The cost associated with sending the electricity from the generation plants through the Transmission and Distribution wires to customers’ premises, are referred to as Network Charges. These costs are fully regulated and set each year by CRU.

The latest information regarding the Network tariffs from the Commission for the Regulation of Utilities (CRU) is available on the CRU website, which can be found here.

The costs associated with the management and operations of the wholesale electricity market are referred to as the Market Charges. The latest information regarding the Market Charges from the Single Electricity Market Committee (SEMC) are available on the SEMC website, which can be found here.

Taxes & Levies

There are 3 taxes and levies:

  1. Public Service Obligation (PSO): The PSO levy is a Government initiative designed to support electricity generation plant to meet national policy objectives of security of energy supply, the use of indigenous fuels (i.e. peat) and of the use renewable energy sources in electricity generation. This is calculated annually by CRU.
  2. Electricity Tax: To comply with the EU Energy Tax Directive, an electricity tax on supply of electricity was introduced in 2008.
  3. VAT: The Irish Revenue Commissioners require electricity supply to be subject to VAT at the rate of 9%.