News Irish News

Wednesday 21 August 2019

How we pay €500 a year in 'green' stealth tax

Ryan planning another power price review on top of 5pc rise

Treacy Hogan and Michael Brennan

FAMILIES will soon be paying more than €500 a year in 'green taxes', new figures compiled by the Irish Independent reveal.

And in a double blow, consumers already facing a 5pc hike in electricity charges due to an environmental levy could be hit by a second price rise as early as next month.

The revelation comes as hard-pressed householders face a series of future green taxes on top of those already introduced by the Coalition.

The green levies -- totalling more than €500 a year -- are a cornerstone of the agreed programme for government between Fianna Fail and the Greens. These include:

  • The new electricity levy of €32.76 a year for a household.
  • At least €175 for domestic water charges.
  • Up to €275 a year in carbon taxes on petrol and diesel.
  • As much as €55 a year for carbon taxes on home heating oil.

The Commission for Energy Regulation (CER) decided to press ahead with a 5pc electricity levy, despite warnings from companies all around the country that it would put jobs at risk.

The levy -- known as a public service obligation (PSO) -- will be an annual charge and it will be used to subsidise the higher cost of using more environmentally friendly ways to generate power.

But the Government, which failed to notify the public about the hike posted on the independent commission's website on July 30, says it is powerless to reverse the levy due to be introduced from October.

The increase comes despite the ESB recording profits of some €580m last year.

Energy Minister Eamon Ryan is planning a price review in September on top of the one due to come into effect from October.

A spokesman for the CER said it was obliged by legislation to introduce the PSO levy regardless of warnings about job losses.

"It is government policy which we implement through a certain mathematical formula. We have quite a lot of discretion in a lot of areas but in this one we don't," he said.

A spokeswoman for Mr Ryan said he had no power to interfere with the electricity price hike. But the CER spokesman confirmed it would have to implement any change in policy on the PSO levy made by the Government --which could lead to a reversal of the price hike.

"If they direct us to change, we change," he said.

It is expected the PSO levy will raise about €160m a year and will be used by power firms to buy renewable energy.

Under the PSO which was calculated on 5pc of the average bill, domestic users will pay a flat fee of €32.76, for small businesses it will be €99, while large enterprises will be hit by a 5pc rise on overall usage.

Fine Gael last night claimed a second electricity price review could be a double blow for householders and businesses, with bills rising by 10pc.

"It is anticipated that this will also lead to an increase in prices, particularly for domestic users. Both hikes hitting around the same time are likely to see household bills go up by 10pc in a month," energy spokesman Leo Varadkar said.

Job creation agency the IDA warned last week that multinational companies had expressed concern about proposed increases in electricity costs. Around 150 companies represented by IBEC's Industrial Products and Services Group said the rise could add between €34,000 and €500,000 to their electricity bills.


Meanwhile, the Irish Independent has also learned that the CER received submissions from Pharmachemical Ireland which said the price increase would lead to a loss of between 550 and 800 jobs among its member companies.

"We have been informed by a number of our members that they will have to find between nine and 13 redundancies to neutralise the cost of this levy for 2011," it said.

Skretting, a fish farm food producer in Westport, Co Mayo, said the electricity price hike would add to the cost of manufacturing and would "inevitably increase the chances of employment losses".

There were also complaints about the impact of the bill on electricity prices for energy-intensive companies.

Irish Cement Limited, which has bases in Drogheda and Limerick, said it would cost it another €1.4m annually at a time when business had declined by up to 75pc in the last three years.

Baxter Healthcare, which employs 1,100 people in Mayo, said the price hike would increase its electricity bill in its Castlebar factory alone by around €126,000.

Irish Independent

Editor's Choice

Also in Irish News