(South Tipperary) asked the Minister for Transport and Power how ESB special service charges are calculated; whether such charges are arrived at on the basis of a rigid formula; and whether there is ever any arbitrary element in their computation.
Ceisteanna—Questions. Oral Answers. - ESB Special Service Charges.
5.
As the answer to this question is somewhat lengthy and complicated, I propose with the permission of the Ceann Comhairle to have it circulated with the Official Report.
Following is the answer:
The provision of electricity supply in a rural area gives rise to substantial costs for service of the capital involved and for subsequent maintenance, repair, etc. To meet these costs, after allowing for State subsidy amounting to 75 per cent of the capital cost with a maximum of £75 per dwelling, the ESB require a minimum return by way of fixed charge. The minimum rate of return which at present amounts to 4.5 per cent of the capital cost of connection takes into account not only State subsidy but the surplus arising in those cases where the normal rate of fixed charge is more than sufficient to meet costs. In cases where the normal rate of fixed charge yields a return of less than 4.5 per cent on the capital cost, the consumer is required to pay a special service charge sufficient to bring his total fixed charges up to this level. The surplus arising from the most economic connections is thus used to secure the connection of the maximum number of consumers at relatively reasonable charges; to date out of a total of 375,000 rural premises some 313,000 or 83 per cent have been connected of which 21,000 pay special service charges and it is expected that eventually some 360,000 or 95 per cent of all rural premises will be connected of which some 45,000 may be liable for special service charges.
The surplus arising from profitable connections is not, however, sufficient to benefit all rural premises and is not extended to some 12,000 relatively isolated premises which could not in any case be offered connection at a reasonable level of fixed charge. In these cases electricity is supplied only on payment of special service charges sufficient to yield an economic return on the total capital cost after allowing for maximum State subsidy. These premises are, of course, eligible for bottled gas subsidy as an alternative.
The special service charges are arrived at by a strictly mathematical application of the principles above and the Board does not apply any arbitrary considerations in determining the amount of charge in individual cases or in different areas.