Pass through costs

Dispute

The business customer was unhappy that their electricity supplier had increased their unit rate in the middle of their contract term. The customer believed the rate they signed up to should be applied to their account for the duration of their agreement/contract term. The supplier maintained that the increase was due to increasing regulated costs/’pass through electricity costs’ and that the terms and conditions, which were provided to the customer upon sign up, clearly stated the right of the supplier to pass on such costs to the customer.

Pass through costs are set by ESB Networks (ESBN), Eirgrid and the Single Electricity Market Operator (SEMO) and approved by the CRU. Such charges include those associated with use of the system (generation and network costs). Whilst international fuel prices are a key driver of electricity prices, some of the cost components in a business customer’s electricity price are directly regulated and suppliers are required to pay them.

Changes to these regulated charges generally come into effect on 1st October annually. While it is the decision of each supplier whether or not to pass on such costs to final customers, most suppliers pass on all such costs. An increase in pass through costs does not however affect any discounts a customer may have.

Outcome

The CRU investigated and did not uphold the customer’s complaint. The supplier’s terms and conditions clearly outlined that pass-through charges are subject to change. When the pass-through charges increased, these charges were passed on to the customer by their supplier in accordance with the supplier’s terms and conditions agreed by the customer at sign-up.

It is a customer’s responsibility to ensure that prior to entering into any business contract that they fully understand and agree to the terms and conditions associated with the contract.