RGDATA urges Government review on electricity charges impacting retailers
RGDATA, representing 3,000 independent grocery and convenience stores, calls for an urgent review of electricity charges, warning that recent hikes will negate energy credits from Budget 2025
Print25 October 2024
RGDATA, the organisation representing the owners of 3,000 independent grocery and convenience stores and supermarkets, has called on the Government to initiate an urgent review into the range of different charges and costs being imposed as part of electricity bills.
RGDATA claims that the impact of hikes in the PSO levy and so-called Use of System (or pass through) charges will completely erode the benefit of energy credits granted in Budget 2025.
VAT for energy
RGDATA also notes that the temporary 9% rate of VAT for energy is only being extended until April 2025 without any assurance on the rates thereafter.
Tara Buckley, RGDATA director general said that modern grocery/convenience retail outlets use high levels of electricity as a consequence of lighting, refrigeration and air conditioning.
Consequently, energy costs represent a significant operating overhead.
“The announcement in Budget 2025 of a new Power Up Grant of €4,000 per company in the retail and hospitality sector is welcome. However, the reintroduction of the Public Service Obligation Levy and increases in the Use of System Charges from 1 October will fully erode the benefits of the new Budget 2025 energy grants for most retailers,” said Buckley.
Struggling SMEs
Buckley noted that on top of that, electricity companies are making ginormous profits whilst charging these extortionate levies on SMEs that are already struggling to make a living due to all the extra costs and charges being piled on them by Government and regulators.
By RGDATA’s calculations, the changes in the PSO Levy and the Use of System Charges will lead to an annual €9,000 increase in electricity charges for the average convenience store and a minimum €13,000 increase for a supermarket.
“One supermarket owner examined their increases in Use of System Charges and confirmed that they have paid €50,000 in increased levies from Sept 2022 on top of horrendous increases in energy charges.”
Many shops and supermarkets have invested significantly in energy efficiency measures and successfully reduced their consumption at a significant cost to the business – yet their bills are still increasing.
Review charges
Tara Buckley said that the Government needs to rigorously review these charges to determine if they are fair, proportionate and properly grounded.
“Given that the PSO Levy and the Use of System Charges are having a significant impact on retailers’ electricity costs, businesses deserve an assurance that these charges are being kept to a minimum.
The impression many of Buckley’s members have is that the CRU is allowing these charges to be increased without any restraint, SME test or business focused review.
“Surely the allocation of significant capital funding by the Government in Budget 2025 for Grid infrastructure investment should reduce the need for the significant Use of System charges being applied by the energy companies?”
Managing costs
RGDATA are asking the Minister for Enterprise, Trade and Employment to initiate an immediate review of this levy and charges to ensure that they are being kept to a minimum and not over inflated or misdirected.
“This is a real case of the State giving with one hand while taking away with another – there is little sense in one agency of the State giving grants to manage increased costs, including energy costs, if other arms of the State are hiking costs by increasing levies and charges.
“It is time for this Government to actually deliver on all the pronouncements it has made about supporting SMEs. The 3,000 SME business owners that RGDATA represents feel extremely neglected and unsupported by this Government, so they need to act now.”
For info contact rgdata@rgdata.ie
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