The cost of supplying electricity comprises the cost of generating the electricity, transmitting it through the grid, distributing it through the network, and supplying this energy to end customers. There are also additional costs of the Public Service Obligation (PSO) levy and Capacity Margin (further explained below). Each of these costs is reflected in Electric Ireland PES’s end-user price of electricity.
The following provides a high-level explanation of each electricity tariff components:
Fuel is a large component of the generation cost, with plant capital and operating costs accounting for the remainder. The Single Electricity Market (SEM) commenced on the 1st November 2007 and consists of a gross mandatory pool market, into which all electricity generated on or imported onto the island of Ireland must be sold, and from which all wholesale electricity for consumption on or export from the island of Ireland must be purchased.
Click here for more information on the SEM
This is the cost all Suppliers pay the Transmission business 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 is called the Transmission Use of System (TUoS) tariff and is regulated by the CER.
For more information on the TUoS tariff see the Transmission Network Regulated Revenue and Tariffs section of our website.
This is the cost all Suppliers pay ESB Distribution to transport electricity from the transmission grid through the distribution system to the customer site. The charge is called the Distribution Use of System (DUoS) tariff and is regulated by the CER.
For more information on the DUoS tariff see the Distribution Network Regulated Revenue and Tariffs section of our website.
Supply costs represent a small percentage of the final cost of electricity. These costs include the cost of procuring energy, administration costs and customer accounting and service costs.
The capacity payment is required to ensure the expected demand of the system is met even under situations of unexpected failure of generation during system peak demand or unusual or unanticipated increases in demand. This cost, which is reflected in the end-user electricity tariff, is necessary to ensure security and continuity of supply for electricity customers.
The decision on the level of the capacity payment mechanism each year is published on the All Island Project website.
Click here for more information on the capacity payment mechanism.
The Public Service Obligation (PSO)
The 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 generating stations using renewable, sustainable or alternative forms of energy under the Alternative Energy Requirement (AER) schemes, in the interests of environmental protection, in accordance with the PSO Order (S.I. No 217 of 2000). The PSO charge is levied on all customers of electricity, regardless of supplier, and appears as separate items on customer’s bills.