Commercial Electricity Customers: Notification of Changes to Pass-Through Charges
The unit price (i.e. the kilowatt hour (kWh) rate) which Flogas charges you in accordance with your electricity supply contract includes both an energy charge and regulated pass-through charges. As highlighted in your contract, the energy charge will follow the agreed contractual position e.g. fixed energy price, for the duration stipulated in the contract, and pass-through cost will only change with approval by the Regulator, the Commission for Regulation of Utilities (CRU).The CRU is Ireland’s independent energy and water regulator. The CRU was originally established as the Commission for Energy Regulation (CER) in 1999. The CER changed its name to the CRU in 2017 to better reflect the expanded powers and functions of the organisation.
The CRU has a wide range of economics, customer protection and safety responsibilities in energy and water. One of the CRU’s responsibilities is to regulate the electricity transmission costs charged by Eirgrid and ESB Networks.
The various pass-through charges charged by ESB Networks, Eirgrid and the Single Energy Market Operator (SEMO) for the 2017-2018 period have now been approved by the CRU, and the net overall impact of the various changes will be reflected in your overall Tariff effective from 1st October 2017.
Please also note that an increased PSO levy for 2017/18 has now been confirmed by the CRU. This will lead to an increase in charges for all customers as detailed below.
What are Pass-Through Charges?
Pass-through charges are the charges that all electricity suppliers must pay other entities in the Single Electricity Market (SEM) when supplying electricity to customers, such as those incurred for the use of the ESB Networks’ and Eirgrid’s systems. Usually, ESB Networks and Eirgrid set these charges, subject to regulatory approval (i.e. the CRU), on an annual basis.
Pass-through charges include:
- Transmission Use of Systems (TUoS)
- Distribution Use of Systems (DUoS)
- Market Operator Charges
- Imperfection Charges
- Supplier Capacity Charges
- Electricity Tax
- MIC Charges
- Standing Charge
- Low Power Factor Surcharge
- PSO levy
How will the changes in pass-through charges impact my electricity bill?
The level of pass-through charges applicable to your premises and the change in these charges from 1 October 2017 is dependent on the DUoS (Distribution use of system) or ‘DG’ number. All supply points connected to the electricity network have an associated DUoS Group. The DUoS Group is assigned by ESB Networks to the premises based on the network connection characteristics and metering configuration. The changes in the various Pass-through charges are detailed below.
The CRU has allowed an increase in the average unit price of Transmission Use of System charges of 8.23% or 0.11 c/kWh. The CRU’s stated reason for the increase is that in order to facilitate more renewable electricity generation on to the grid, the grid operator has to pay more to conventional generators for system support services to ensure the grid continues to operate in a safe and secure manner (e.g. maintaining the frequency of the grid within safe limits).
The CRU has allowed an increase in the Single Electricity Market (SEM) Imperfections Charges from 0.205 c/kWh to 0.500 c/kWh, an increase of 144%. The CRU has stated that the main reasons for this increase are:
- More wind generation has come online that is entitled to generate electricity when it can generate it (known as Priority of Dispatch) and these generators have to be paid when they are not allowed to generate for grid security reasons (receive Constraint Payments).
- The introduction of a new wholesale electricity market structure in May 2018 known as I-SEM.
How do I Identify my ‘DG’ number?
The DUoS Group (DG) which your premise belongs to can be located under “Account Information” on the right hand side of your bill.
This is identified by the code:
- DG 5
- DG 6
Public Service Obligation (PSO) Levy: Increase Cost for 2017/18
The public service obligation levy (PSO Levy) relates to the purchase by ESB of the output of certain peat generated electricity, (in the interests of security of supply), and the output of certain renewable forms of generation such as Wind Generation. This is in accordance with the Public Service Obligation Order made pursuant to the Electricity Regulation Act 1999.
ESB is obliged by the Irish government to make these purchases in the interests of security of supply and environmental protection. The proceeds of the levy are used to recoup the additional costs incurred by the ESB and other suppliers in having to source a proportion of their electricity supplies from such generators.
Statutory Instrument No. 217 of 2002 made under Section 39 of the Electricity Regulation Act 1999 requires that the Commission for Regulation of Utilities (CRU) calculates and certifies the costs associated with the PSO and sets the associated levy for the required period. This is completed during the summer and the resultant levy then applies from the 1st October. As the amount of subsidised Wind Generation has increased and so also has the levy charged to customers.
The CRU has calculated the payment by customer category for the levy period 1st October 2017 to the 30th September 2018 to be as follows:
|PSO Customer Category||Monthly Levy Amount (2016/17)||Monthly Levy Amount (2017/18)||% Increase year on year|
|Domestic||€5.90 / customer||€7.69 / customer||30%|
|Small Commercial (MIC < 30 kVA)||€20.73 / customer||€26.55 / customer||28%|
|Medium/Large commercial (MIC ≥ 30 kVA)||€3.33 / kVA||€3.64 / customer||9%|
Glossary of Terms
Distribution Use of System (DUoS)
These are the costs all electricity suppliers pay ESB Networks to transport electricity through the distribution system to a customer’s premises. The distribution system is the local part of the network that serves the customer. The charge which is set by ESB networks is called Distribution Use of System (DUoS) tariff and is regulated by the CRU.
Government imposed tax on electricity supply.
The actual dispatch of electricity on the all-island transmission network differs from the optimal dispatch derived for the market schedule. This is because constraints are introduced due to network bottlenecks (e.g. the North South Interconnector) and due to the need for the system operator to maintain reserve for operational security of supply. The wholesale energy ‘system marginal price’ calculated in the market is the lowest possible price that the electricity required on the island of Ireland could theoretically be generated at (assuming that there are no constraints). It ignores the limitations of the transmission network and is calculated with perfect foresight. As generators are obliged to sell into the SEM, they are guaranteed not to operate at a loss. The imperfections tariff covers the gap between the market price and the cost of dispatching generation in real time into a market where constraints do exist. The charge, which is set by SEMO, is called the Imperfection Charge and is regulated by both the CRU and NIAUR.
Low Power Factor Surcharge
The low power factor surcharge applies to all ‘Wattless Energy’ (kiloVolt Apmeres hours (kVArh) recorded in any billing period if the metered kVArh is more than one third of the metered kWh in any billing period. The charge is only applicable to the kVArh in excess of one third of the kWh.
Maximum Import Capacity (MIC) charge or Capacity Charge
MIC is measured in kiloVolt Amperes (kVA). It is the level of electrical capacity, which represents the maximum load you are contracted to import from the electricity network for use in your premises. Additional charges normally apply if you exceed this level.
Pass-through charges are the costs that all electricity suppliers must pay other entities in the Electricity Market when supplying electricity to customers such as those incurred for the use of the Eirgrid Transmission and ESB Networks distribution systems.
Public Service Obligation (PSO) Levy
The public service obligation levy relates to the purchase by ESB of the output of certain peat generated electricity, in the interests of security of supply, and the output of certain generating stations using renewable forms of energy (e.g. Wind energy), in the interests of environmental protection, in accordance with a Public Service Obligations Order made pursuant to the Electricity Regulation Act 1999.
Single Electricity Market (SEM)
The All-island wholesale electricity market. All suppliers purchase their electricity in the SEM.
You pay a standing charge for each day in which you have a connection to the electricity network.
Supplier Capacity Charge (SCC)
This charge covers the capacity cost of the generators in the SEM. It is calculated for every 30-minute period by SEMO.
System Market Operator (SMO) – Market Operator Charge
This covers the cost of operating the Single Electricity Market (SEM). The cost is shared across all electricity suppliers and generators on the island of Ireland. It is a flat charge per unit on loss adjusted consumption. The charge, which is set by SEMO, is called the Market Operator Charge and is regulated by both NIAUR and the CRU.
Transmission Use of Systems (TUoS)
These are the costs all electricity suppliers pay Eirgrid to transport electricity from the generating station through the transmission grid to the distribution system (or to the customer’s site for the small number of customers connected to the transmission system). The charge, which is set by Eirgrid, is called the Transmission Use of System (TUoS) tariff and is regulated by the CRU.