Statement by Viridian Power & Energy relating to Carbon Windfall Levy (signed into law Thursday 1st July 2010)
Posted onFriday, 02 July 2010
This law has the potential to inhibit competition and competitive pricing in the Irish electricity market.
The levy targets a small number of generators in the market which includes the main private investors Viridian and Endesa.
Far from making excess profits, Viridian has been passing the carbon benefit back to customers in the form of discounts. This has been demonstrated to the Government. Viridian has consistently led the development of a competitive energy market, being the first to market with many of the products needed to help the market flourish, and bringing lower energy prices to Irish businesses.
The levy excludes those thermal generators with lucrative Public Service Obligation (PSO) contracts who face no market risk.
Our understanding is that the carbon levy monies will not decrease prices but will be used to offset the increase in PSO costs, largely due to peat plant, for large customers only. SME and domestic customers will still see this increase.
In effect the Government is levying investors in the market who have taken market risk to offset the costs of those plants which are not exposed to the market.
The increased competition following Viridian’s entry into Ireland’s electricity market in 2000 has saved Irish businesses over €170 million. The company currently supplies more than 50,000 business customers, representing over 25% of the business electricity market, and over 20% of the gas market. Since entering the energy market, Viridian has invested a total of over €1.1 billion in new energy generation infrastructure in Ireland.
The levy will distort the all-Ireland market. It is also a signal to other potential market entrants that retrospective measures may be introduced at any time to reduce the income they derive from their investments in Ireland.
Viridian is studying all the options open to us in this regard.