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Independent

Energy regulator seeks a 32pc rise in levy on electricity bills

Charlie Weston looks at the rise of the PSO levy and it's affect on the Irish Energy Market. 

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 and 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 much of the price cuts due from Electric Ireland.

Bills for the 1.2 million Electric Ireland electricity customers are due to fall by 6pc from today, knocking €57 off the average bill. And the levy 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 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 were lower.

The regulator said: "Lower wholesale prices mean 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 being generated from renewables like wind and biomass.

The regulator estimates that the total amount of money needed for the PSO levy in the 2016 to 2017 period will be €440.9m, compared with €325.3m at present.

The levy was put in place to subsidise the production of electricity from peat and renewables and to pay power plants to produce energy to ensure we have a steady supply to the network, what the regulator calls 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."

A call for submissions from the public has been made by the regulator on the proposed rise in the levy.

The move comes days after it was revealed that households here pay the third highest electricity prices in the European Union, despite having seven suppliers in the market.

And the figures from Eurostat also show that domestic electricity charges here are the second highest in the EU once taxes and levies are stripped out. The EU's statistics agency found prices were way ahead of the average across 28 countries.

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