ESB to say sorry for overcharging users by €100m

THE ESB is set to apologise today for overcharging customers for over a decade to help large businesses during the economic crash.

In 2009, a government decision was made to help large energy users in the midst of the crash by rebalancing how much they would pay.

This was paid for by charging domestic energy users an additional fee. However, the ESB made an error in the rebalancing of the tariffs and ended up overcharging every domestic consumer in the country for their electricity use.

Overall, it overcharged by €100million, adding up to €54 per household over the decade in which the error was made. It will today apologise for the error to the Oireachtas Committee on Environment and Climate Action.

Nicholas Tarrant, the managing director of ESB Networks, will tell the committee: ‘While the tariffs are submitted to the Commission for the Regulation of Utilities (CRU) each year for approval, this was an error in the calculation process for the tariffs made by ESB Networks.

‘We regret that this happened and I would like to apologise to the committee that it occurred.

‘The total cumulative package of this over-adjustment between customer groups covering the period from October 2021 onwards is €100.86million, which equates to approximately €54 per domestic customer in total since 2011.’

He will say the ‘reversal’ of this misallocation is under way and is taking place across the tariff year October 2023 to September 2024. This means that large energy users benefited to the tune of an additional €50million subvention from domestic energy users over the past decade, substantially reducing their energy bills.

Mr Tarrant will tell the committee: ‘With the complexity of the calculations together with the way it was programmed in the financial model, it was difficult to detect the error after the second year of implementation.

‘ESB Networks has identified two key areas when considering lessons learned from this incident.

The first relates to the need for stronger governance to oversee how changes are made to these financial models and to ensure there is a clear record of what, why and how a change was made. The second relates to the need for ESB Networks to enhance the engagement with CRU during the tariff setting process.’

Mr Tarrant will also say the ESB is now ‘confident’ the new tariff and governance measures in place are ‘fit for purpose’.