Energy bills to jump as plans unveiled for 'massive' hike in levy
Householders and businesses are facing higher electricity costs after the regulator for the sector proposed a massive hike in a levy on bills.
The Commission for Energy Regulation has proposed that the public service obligation (PSO) levy goes up by 40pc for consumers.
The levy is mandated by the Government and is mainly used to cover the cost of subsidy schemes to support the generation of electricity from renewable sources, such as wind farms.
Some of the levy goes to ensure that there are power stations on stand-by when demand for electricity goes up. It is also partly used to subsidise peat-generated power.
The regulator has proposed that the charge go from €80 a year for domestic customers to €112, when value added tax is included.
This is a rise of 40pc.
A 12pc rise is proposed for businesses.
The regulator has sought the views of the public, with a final decision likely in July.
The new levy would then be imposed on energy bills from October.
Last year the Commission for Energy Regulation proposed a massive increase in the charge, but it scaled this back after objections.
"The increase is the second largest in the history of the PSO levy and the reason is mainly due to subsidies for renewable energy," said Simon Moynihan, from price comparison site Bonkers.ie.
He said this country now produces more than 40pc of its electricity from renewable sources, according to the latest numbers from the regulator.
"That's up from just 12pc in 2010 and the steady increase in the PSO levy reflects this increase in the renewable electricity production," Mr Moynihan said.
The price comparison expert said that the PSO levy now makes up some 10pc of the average domestic electricity bill. "We need to ask how much is too much?" he said.
Eoin Clarke, of price comparison site Switcher.ie, said that the proposed increase would mean that households would be paying €112.64 a year on this levy from October, compared with €80.30 per year at the moment.
"The standard electricity bill for an average customer in Ireland is already a whopping €1,136 per year," he said.
"So any increase in the PSO levy - which all electricity customers have to pay - will be unwelcome news for anyone already struggling to make ends meet."
He said that more households could save money if they looked to switch energy suppliers.
"Energy bills are one of the biggest costs to Irish households.
"But still only 15pc of us switch energy every year, which means most of us are missing out on a better deal."
He encouraged people to take a look at their energy bills and at the deals that are out there, and switch if they can find a better offer.