Tuesday 21st July 2009

Hoteliers Reject Additional ESB Price Levies
Proposed Levies Will Cost Individual Hotels up to €30,000 per Annum

The Irish Hotels Federation (IHF) has today rejected as short-sighted proposals by the Commission on Energy Regulation (CER)* to impose a Public Sector Obligation levy of €57.7 million on electricity customers from the 1st October 2009. The IHF is demanding that the proposal to introduce a new levy of €4.62 per kVA unit of electricity should not even be considered during the unprecedented economic conditions which now prevail. Anne Lee, Strategic Issues Manager, IHF states that the additional levy is entirely out of step with the need to restore cost competitiveness and could result in additional costs of up to €30,000 per annum for individual hotels. The IHF says that imposing additional levies at a time of economic crisis will further exacerbate difficult trading conditions for businesses and particularly its members who are struggling to contain costs.

Ms Lee says, “The levy goes completely against the Government’s stated commitment to restore cost competitiveness to the Irish economy. Small and medium size enterprises are in a perilous situation, and the energy regulator is only digging a bigger hole for businesses with flagrant disregard for economic realities on the ground. We’re calling for the Government to intervene immediately and defer any additional levies until the economy improves.”

“Hotels are substantial users of electricity with larger hotels using over 500 kVAs per month and medium sized hotels using approximately 250–400 kVAs per month. The proposed levy of €4.62 per kVA for business users would add an additional cost of €20,000-€30,000 for large hotels and €13,000–€18,000 for medium sized hotels. This would have a detrimental impact on operating costs at a time when all efforts should be directed at cost reduction.  The PSO levy has been zero in 2007, 2008 and 2008/09 which makes the current proposal all the more damaging to competitiveness.”

The IHF maintains that Ireland’s cost competitiveness gap of up to 20% with other countries must be corrected as a matter of urgency, and a reduction of energy costs must be a substantial element of this correction. The IHF is calling for a review over the next six months of the PSO principle, the basis for its absolute cost and the distribution of its burden between the exchequer, domestic users of electricity and business users.

*The Commission on Energy Regulation’s Proposed Decision Paper on the Public Service Obligation (PSO) Levy 2009/2010 can be found at: http://www.cer.ie/GetAttachment.aspx?id=90fded71-a01d-4b7b-aa42-7fff882bc892

ENDS

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