The CRU has today, 18 August 2022, published a Consultation Paper on proposed structural changes to Electricity Network Tariffs to apply from 1 October 2022 to 30 September 2023. Given the urgent need to deliver these changes ahead of 1 October, the consultation will be open for a two-week period. Closing at 17:00 on 1 September 2022.
While it is unusual to implement changes to the structure of network tariffs in such a short timeframe, the CRU considers that it is necessary to act quickly due to the electricity security of supply issues facing Ireland, and in response to the Government’s National Energy Security Framework (NESF). There is a significant risk to electricity security of supply in Ireland over the coming years, driven by the closure of large electricity generation units, the failure of contracted generation capacity to deliver, an accelerated degradation of the existing fleet as it responds to intermittent wind generation, and significant demand growth across some sectors of the economy. These pressures will place significant strain on Ireland’s decarbonisation goals and security of supply. There is an expected capacity shortfall in coming years if unmitigated, with particular challenges expected in the winter months in 2022/23 and 2023/24.
- In response to these challenges the CRU is firstly incorporating the cost of procuring temporary emergency generation to the network tariffs to apply from October 1st and secondly proposing the introduction of a suite of new tariff arrangements. It is envisaged that the suite of proposed changes will target a portion of security of supply costs to areas which are contributing more to the drivers of risk in the coming period and will incentivise changes in customer behaviours in a manner which helps alleviate security of supply concerns in the short term. In essence, the new tariffs will focus €100m of the total €478m security of supply costs included in next year’s tariffs on Extra Large Energy Users (XLEUs) which are anticipated to add large amounts of new demand onto the system; XLEUs consuming during periods of low wind (SNSP) when the system consequently has less available and more carbon intensive generation; XLEUs consuming during system alerts when the system has insufficient margin; and from all customers consuming at the evening peak between 5-7pm. This will mean that customers, in particular the largest customers, covered by these tariffs will pay a greater share of the security of supply costs than customers who reduce and/or shift their demand:
• Peak or Time of Use Tariffs to apply from 17:00-19:00 each day for both Transmission and Distribution, with the aim to reduce demand at the critical peak period;
• Increasing Block Tariffs targeted at Extra-Large Energy Users (XLEUs) who significantly increase their demand relative to the previous twelve months. This is aimed at curbing such significant increases in demand;
• A System Alert Tariff to apply to XLEUs when the TSO issues a System Alert. This is aimed at reducing demand at times of system stress;
• A Decarbonisation Tariff to apply to XLEUs when SNSP is below a proposed level of 25%. This is aimed at reducing demand at times of low renewable penetration when tighter system margins tend to be more common;
• An accelerated roll out of ESBN led demand reduction schemes for both domestic and non-domestic customers through its National Network, Local Connections Project; and
• A request to Suppliers to proactively develop products/initiatives for domestic and commercial customers to encourage them to reduce their demand and/or improve their energy efficiency.
The CRU now invites stakeholders views on the proposals set out in the paper. As indicated, the consultation will be open for a period of two weeks, closing at 17:00 on 1 September. Interested parties are invited to respond by email to NetworkTariffs@cru.ie.