Energy regulator criticised, ISME calls for Government intervention

Economist John Fitzgerald has blamed the energy regulator for failing to forecast energy capacity shortages
Energy regulator criticised, ISME calls for Government intervention

Vivienne Clarke

Economist John Fitzgerald has blamed the energy regulator for failing to forecast energy capacity shortages.

The IDA continued to “sell” data centres when the energy capacity wasn’t there, he told Newstalk Breakfast.

There was a need to look at the energy market structure for the future, he said. However, he warned that neither the Government nor the energy regulator in the Republic could make unilateral decisions because of the north-south energy grid. He did not anticipate the all-island grid being divided.

Emergency generators

The regulator was at fault because of its failure to anticipate capacity issues, he said. Now it would be necessary to “scrabble around” for emergency generators which were “scarce on the ground".

It made sense to encourage reduced energy use at specific times. The wind did not blow all the time, so it was necessary to think in terms of behaviour, not just in terms of prices, he said.

The Government needed to encourage different ways to guide the public in their energy use such as public announcements after the main evening news indicating when was a good time to use appliances, he said. That would be unusual and could prompt people to respond faster than a warning about higher bills.

“It’s how you communicate the message.”

Later on RTÉ radio’s Morning Ireland Fianna Fáil MEP Billy Kelleher also criticised the energy regulator for failing to keep the Government informed “of the situation". The uncertainty (about supply) could not continue. There needed to be back up for supply, he said.

Shannon LNG

Mr Kelleher said he agreed that the liquid gas storage facility on the Shannon estuary should go ahead to provide gas for energy generation in the event of a shortage.

Relying on the wind to blow all the time was not the way to run a modern economy, he said. If the current situation continued there would be amber alert after amber alert. That was a risk to the State.

While Mr Kelleher agreed the need for more renewable energy, fossil fuels were needed as back up, otherwise it was not sustainable to run a modern economy. “Are we to cut off investment into the country because we are incapable of producing energy?”

The Ireland South MEP warned of the risk to Ireland’s reputation internationally if the situation was not rectified. He also agreed with a call from the Irish SME Association (ISME) for a windfall tax on energy providers who made large profits.

“We can’t have energy companies profiting on the back of families and businesses. There is excessive profiteering.”

Mr Kelleher called on energy companies to share profits in the form of reduced bills for consumers.

The ISME is calling on the Government to provide greater levels of support for SME businesses in Ireland amid the ever-worsening energy cost crisis.

While the Government has tried to mitigate the impact of rising energy costs for consumers, the measures announced for business owners will not be sufficient to avert a crisis this winter, the ISME said.

My electricity bill is going from €3,500 to €8,000 per month with forecasts indicating it will be over €11,000 per month in the new year.

The ISME is "aware of businesses that are facing cost increases of 100 per cent (or more) in their monthly bills and increases of this magnitude can only result in cost increases for their customers".

While the Government announced a reduction in the VAT rate on gas and electricity from 13.5 per cent to 9 per cent until October 31st, large increases in energy prices are expected after this time.

"Meanwhile, the German Government has pledged to cut VAT on gas by 63 per cent and Greece has announced a €30 per MWh subsidy for businesses.

"Small businesses do not have the purchasing power of big businesses, and invariably pay higher unit costs for energy. The businesses most affected will be in retail, distribution, hospitality, manufacturing and food processing. Furthermore, Irish supports for consumers and businesses to shield them from spiking energy prices are the second lowest in the EU."

Neil McDonnell, chief executive of the ISME, said: “The inevitable price inflation from energy cost increases can only be moderated if there is Government intervention to mitigate the impacts on small business. We will need a scheme of direct supports for small business, similar to the COVID-19 Restrictions Support Scheme (CRSS) during the pandemic. The cost of Government inaction will be far higher in terms of business closure, and we also need to see an explicit Government strategy to avert another energy crisis in the winter of 2023.”

Finbarr Filan, member of the National Council of the ISME and owner of the family owned Centra store in Sligo, said: “My electricity bill is going from €3,500 to €8,000 per month with forecasts indicating it will be over €11,000 per month in the new year. My business, like most SMEs, cannot sustain ongoing cost increases of this magnitude. SMEs are only starting to get back on their feet after covid, most do not have the financial safety net to cope with the current energy increases. Now is the time for the Government to support those businesses, to ensure they remain in business, keep people in jobs and provide service to the consumers of the nation at an affordable cost for all.”

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