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Monday 22 September 2014

Electricity bills to rise as green energy levy soars by 50pc

Published 29/07/2014 | 02:30

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The cost of electricity is set to rise
The cost of electricity is set to rise

HOUSEHOLDERS are to be hit with a higher-than-expected increase in the levy on their electricity bills.

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Last month the energy regulator said the levy would rise by 47pc, but in a final decision it has now been decided to increase the levy by 50pc.

This will take to €73 per household the cost of the levy, which is in place to subsidise wind and peat-produced power. And the levy will impact on households irrespective of how much electricity they use. The Commission for Energy Regulation said the new higher levy would take effect from October 1. It goes from €42.87 per customer to €64.37 – an increase of €21.50 per household.

But when valued added tax (VAT) is added, the levy comes to €73.06 per bill over a year, according to calculations by David Kerr of price comparison site Bonkers.ie.

The higher public service obligation (PSO) levy is being imposed despite a fall in the wholesale cost of generating electricity. Mr Kerr said the levy was due to generate €335m this year.

This is up from €211m last year. Last month, the Commission for Energy Regulation announced an interim decision to raise the levy to €328m, but it has now made a final decision to generate €335m from it.

Mr Kerr said: "The PSO levy increase is due to take effect from October 1 and will affect all domestic electricity customers in Ireland regardless of how much electricity they use.

"Although the PSO levy is fixed per customer, it is possible to achieve significant savings by comparing electricity suppliers – Bonkers.ie offers a free price check and is the only service in Ireland which offers customers the ability to switch to all electricity suppliers for free."

Consumers' Association vice-chairman Michael Kilcoyne called on the Government to change the rules.

"This is just another sneaky tax rise. The regulator, the minister and officials are not in touch with reality if they are imposing such a large increase in the levy."

The levy is going up despite a fall of up to 11pc in the wholesale cost of generating electricity.

A warm winter means there is spare gas capacity, which has seen costs fall.

Firms that generated electricity from wind and peat need a higher subsidy to cover the fall in revenue from the market for the electricity they produce, the spokesman for the regulator's office said.

Funds from the levy also go to two gas-fired electricity plants on the west coast to ensure there is "security of supply".

The Irish Wind Energy Association said supports for power generation from renewables only accounted for a small proportion of the cost of the levy.

Irish Independent

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