THE energy regulator is proposing a massive rise in the levy imposed on household electricity bills to cover the cost of producing electricity from renewables, peat and to ensure security of supply.
The regulator has proposed that the so-called Public Service Obligation (PSO) levy go up by 32pc for households from October.
This would mean every household would end up paying €90 a year on the levy.
Energy experts said this would more than wipe out price cuts due today from Electric Ireland.
Bills for the 1.2 million Electric Ireland electricity customers are due to fall by 6pc from June 1, knocking €57 off the average bill.
The proposal comes days after a report found that electricity prices here are the third highest in the European Union.
The levy is currently €68 a year when value added tax (VAT) is included, according to Simon Moynihan of price comparison site Bonkers.ie.
The Commission for Energy Regulation said the reason for the proposed rise was the fact that wholesale energy prices are lower.
The regulator said: “Lower wholesale price means that the payment to companies engaged in the PSO increases.”
Wholesale gas prices in May were down 37pc compared with a year ago.
The other reason for the proposed hike in the levy is the fact that there is more electricity is being generated from renewables like wind and biomass.
The levy was put in place to subsidise the production of electricity from peat, renewables and to pay power plants to produce energy to ensure we have a steady supply to the network, what the regulator calls a security of supply.
Mr Moynihan said: “The main reason seems to be the entry of peat burning power stations like Edenderry into REFIT (the Renewable Energy Feed-In Tariff) which is adding €150m to the PSO levy and more than offsetting plants like West Offaly and Lough Ree coming off the security of supply payments.”
The regulator has called for submissions from the public on the proposed rise in the levy.