Plans to reduce levy on electricity bills a ‘hollow victory’

PROPOSALS to cut the levy on household electricity bills have been described as a “hollow victory”.

he energy regulator, the Commission for the Regulation of Utilities (CRU), is proposing that the levy on all electricity bills to support renewable energy be reduced by a third.

The CRU has proposed a public services obligation (PSO) levy of €63 for the end of this year and for next year. This is down from an annual amount of just over €88 including Vat at present.

This would represent a saving of €26 a year.

The PSO levy is charged to all electricity customers in Ireland and supports the generation of electricity from renewable and indigenous sources.

A final decision will be made in August by the regulator, which is seeking submissions on the proposed PSO levy amount for next year.

Daragh Cassidy of price comparison site Bonkers.ie said there was nothing to celebrate about the levy amount being reduced.

“It’s somewhat of a hollow victory for consumers as the only reason the levy is falling is because energy prices have increased so much this year.”

He said the main objective of the PSO levy is to promote and support the renewable energy sector in Ireland.

The State has decided that power generated from wind and solar should be protected from sharp market fluctuations.

“So in general, if the wholesale electricity price (also known as the SEM price) is high, less money is needed to subsidise and support renewable energy plants. That’s because they receive more money on the open market for the electricity they produce.”

Mr Cassidy said that when wholesale prices are low, more money is usually needed to subsidise PSO-supported schemes because they make less money on the open market.

This means that when the wholesale price of electricity rises the PSO levy tends to fall and vice versa.

The CRU said the PSO levy for 2021/22 was about supports for renewable electricity, and was key in enabling Ireland to meet its targets for 40pc of all electricity to be generated from renewable sources.

It said the main factor in setting the PSO levy is the wholesale cost of electricity which it expects to increase in the year ahead.

The regulator said Government policy determines the level of subsidy provided to energy companies, while its primary role was the calculation of the PSO levy.

PSO levy moves come as Energia became the eighth energy supplier to announce it was increasing its electricity and gas prices.

It is the second time this year the supplier has increased its prices. It has around 160,000 electricity customers in the State.

It follows price hikes this year by Bord Gáis, SSE Airtricity and by smaller players Pinergy, Flogas and Panda Power, Bright and Iberdrola.

The latest rise and the previous price rises imposed by Energia in April means customers will be paying well over €200 a year more for their electricity and almost €150 a year more for their gas.