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Tax on tax applies in Ireland in relation to Alcohol.  A duty is charged on alcoholic drinks and then VAT is applied on the total. It seems unfair that smaller electricity consumers should be effectively subsidizing larger consumers but that is probably a function of political negotiating power. Are all the exemptions larger consumers receive reflected in the average electricity prices shown in the graphs, or are those the average prices paid by consumers who don't get the exemptions, and thus is some of the price increase shown a function of the huge increase in the number of exempted consumers?

The bigger issue here is perhaps the question of why electricity is taxed so highly in Europe in the first place. Higher electricity prices mean that electricity's total share of the energy consumption mix is depressed when surely we want to encourage increased electricity consumption (as % of total energy consumption) as the renewable proportion of electricity production rises.

I'm thinking particularly of consumption related to home/office/production building heating which is prohibitively expensive using electricity (in Ireland) and which thus forces oil/gas/coal/turf based home heating systems often using inefficient open fire combustion.

Policymakers should be focusing not just on incentivising an increase in the renewable proportion of electricity production, but in incentivising the consumption of electricity relative to domestic oil, coal, and gas consumption and thus increasing the proportion of renewables in the overall energy consumption mix still further.

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by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jul 4th, 2013 at 06:47:52 AM EST
It seems unfair that smaller electricity consumers should be effectively subsidizing larger consumers but that is probably a function of political negotiating power.

It's protectionism/mercantilism. Charge the consumers and exempt the export earners (or avoid delocalising industry) by keeping their energy costs down. This is also why Europe's carbon pricing is dead (murder by shock doctrine).

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Thu Jul 4th, 2013 at 07:12:22 AM EST
[ Parent ]
Thanks for the insights Frank.


Are all the exemptions larger consumers receive reflected in the average electricity prices shown in the graphs, or are those the average prices paid by consumers who don't get the exemptions, and thus is some of the price increase shown a function of the huge increase in the number of exempted consumers?

The latter. Numbers above are the equivalent for the 'standard' household, thus consumers which are not exempted. BDEW sticks the average household to the figure of 3500 kWh, Eurostat uses several ranges. The graph using Eurostat data is based on the 2500 - 5000 kWh band.

The bigger issue here is perhaps the question of why electricity is taxed so highly in Europe in the first place.

I'll keep that in mind when (if) I reach the European perspective.

by Bjinse on Thu Jul 4th, 2013 at 07:26:35 AM EST
[ Parent ]
It was suggested to me by a reasonably senior engineer that it is government/ESB policy for domestic subscribers to subsidise commercial users. It's the sort of thing that passes as industrial policy around here.
by Colman (colman at eurotrib.com) on Thu Jul 4th, 2013 at 07:29:41 AM EST
[ Parent ]
The bottom line is that domestic consumers have nowhere else to go for electricity, mobile international capital does.

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by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jul 4th, 2013 at 08:27:11 AM EST
[ Parent ]
Higher electricity prices mean that electricity's total share of the energy consumption mix is depressed

Only where there would be an easy choice between electricity and burning stuff. But using electricity often requires significant and long-term investment, which will be avoided even if electricity is already the cheaper option on the long-term (think of rail electrification). Meanwhile, if you lower taxes, consumption is more likely to rise in ways that don't replace other energy consumption: leaving all the lights and computers on, more elaborate Christmas lights, bigger TVs and such.

If we are to use taxes as an incentive to further electrify energy consumption, then surely in the form of tax increases (for fossil fuels) rather than tax cuts (for electricity).

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu Jul 4th, 2013 at 07:44:35 AM EST
[ Parent ]
By all means increase taxes on fossil fuels, but it is the price differential which matters. I doubt the extra electricity usage of a larger TV is a material consideration for most users (and the extra electricity it uses ends up heating the house a little anyway). I am always a bit amused by friends who insist on completely switching off a TV (to save on the tiny amount of power the standby light uses) but insist on keeping their (often poorly insulated)  water heating system on permanently.

However when deciding on a home heating system, the capital cost of a few plug in storage heaters is much less than an oil/gas/solid fuel central heating system - often with underfloor plumbing etc.) and the latter is generally much less efficient or targeted at when you need the heat most. I haven't done the sums recently, but even with night-rate electricity, the cost of an electrical heating system was always prohibitive when the critical house design and modification decisions were being made (as were heat pumps, solar panels, or a domestic wind turbine).

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by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jul 4th, 2013 at 08:07:49 AM EST
[ Parent ]
Solar/Eco heating is still highly specialised, so there are limited economies of scale at the consumer end.

But PVs and panel prices have been heading downwards steadily. If some of the subsidies were diverted from Dinosaur Energy to New Energy, it's likely there would be some impressive cost reductions fairly quickly.

As always, the real issues are political. Fossils have had power over governments for a long time, and are embedded in the financial and political establishment.

New Energy is challenging that - but still making good headway, regardless.

The change has to happen eventually. The real question is whether it happens smoothly, or whether fossils lemming themselves and everyone else off the cliff edge before the rest of us get a chance to pick up the pieces and start being sane about energy.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Jul 4th, 2013 at 08:27:05 AM EST
[ Parent ]
the extra electricity it uses ends up heating the house a little anyway

That's no benefit in the summer...

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu Jul 4th, 2013 at 08:33:11 AM EST
[ Parent ]
Have you experienced an Irish summer? Even if I only want to achieve a 15 degree summer aminimum room temperature, I still have to turn the heating on sometimes, and that is with a relatively well insulated house...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jul 4th, 2013 at 08:37:47 AM EST
[ Parent ]
Yeah I've experienced an Irish summer... I visited in 2006. Can't understand why guys complain so much, the climate was fine.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Jul 4th, 2013 at 09:20:10 AM EST
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