Brace yourself for energy price hike, warns Ryan
Published 25/08/2010 | 05:00
ENERGY Minister Eamon Ryan has warned consumers to brace themselves for higher electricity costs, as he meets the regulator today to discuss the controversial 5pc price hike.
The effective reintroduction of public service obligation (PSO) levy, which comes into force in October, is the first of two possible energy price hikes.
The minister will carry out a separate electricity price review next month, which could push bills even higher.
But Mr Ryan offered no hope to hard-pressed consumers that the levy would be postponed, saying it had already been in force for the past decade.
Mr Ryan said that in recent years the levy stood at 0pc as energy companies could cover the cost. However, because market prices are now significantly lower, the levy must be raised, he added.
He said he was concerned that the Greens were being unfairly blamed for a spate of recent price increases and regretted that he was away on holidays when news of the Energy Regulator's 5pc PSO levy broke earlier this month.
The levy is used to achieve national energy policy objectives, such as providing security of supply, or supporting green energy.
When energy company revenues are not sufficient to cover the cost, additional "top-up" payments are needed and consumers are hit with the levy.
The Commission for Energy Regulation calculates how much money is needed each year to support these objectives and sets the levy.
It has calculated this year that almost €195m will be needed to meet the Government's energy objectives over the next 12 months.
"The system has been in place where we've had the PSO for the last 10 or 11 years," said Mr Ryan.
"And for most of that time it hasn't led to any cost because wind power has actually subsidised some of the other sources.
"Because prices have come down. . . that has led to an increase in the PSO.
"But it is not a new levy, it is not a new tax," he insisted.
Speaking at the launch of a new website for Active Retirement Ireland (ARI) in Dublin yesterday, he insisted that his aim was to protect the Irish consumer and bring down prices.
However, with the recent introduction of the carbon tax and the likelihood of water charges on the horizon, the minister said he was concerned there was a perception that the Greens were seen as a party of tax.
He admitted that he needed to outline the Government's energy policy more clearly.
"I regret that, I suppose, I was away in the August period when those figures (on the PSO levy) came out," he said.
"I think I need to get back and actually explain to people what we're doing in energy policy, how it's going to save people money as well as create jobs here.
"I'm looking forward to talking to the regulator again and then trying to give some sort of clarity because this is not an easy market mechanism for people to understand."
Meanwhile, ARI president Tom O'Mahony said price increases and the possibility of cuts to the old-age pension in the forthcoming Budget had led to an "atmosphere of uncertainty for older people".
"The incoming levy on electricity will further erode the spending power of the pension," he said.