How the PSO levy increase will impact your bills - C103

Image audioImage How the PSO levy increase will impact your bills - C103

Electric Ireland was the first energy supplier to pass on a price increase from the Single Electricity Market (SEM) to its customers, soon followed by a number of other energy suppliers.

While only two suppliers have so far announced a freeze on their prices, including a price reduction on gas, over one million customers are set to see their bills rise by almost €90 per year since changes came into effect on October 1st, with a 130% increase in the PSO levy compounding matters at the same time.

Our Head of Communications at bonkers.ie joined Patricia on Cork's C103 to discuss the latest electricity price increases effecting energy customers, as well as the massive increase to the PSO levy.

Here’s an outline of the main points discussed by Daragh in the interview.

What is the impact of the PSO levy increase? 

The Public Service Obligation (PSO) levy is charged to all electricity customers in Ireland. Unfortunately, there’s no way to avoid it, no matter what your income is or how much electricity you use.

The levy is in place to support the renewable energy sector in Ireland. It's used to support the peat sector but now as we move towards a cleaner energy future, that’s being phased out. 

The CRU sets the PSO levy and they put it up by around €50 including VAT for next year. The rate runs from October 1st until the 30th of September each year.

The PSO levy is there for a good cause if it’s any comfort to customers or listeners, but people are going to feel the impact on their pocket.

A big jump

The PSO levy was €38.60 a year and now it’s gone up to €88.60, meaning it’s the second-highest the levy has ever been.

It does fluctuate a lot and tends to fluctuate in reverse to the price of energy. So when the price of coal, oil and gas is very high, the PSO levy tends to fall, but when the price of fossil fuels plummet, the PSO levy tends to go up. 

We’ve seen on international markets the price of fossil fuels has plummeted over the past 12-15 months, partly due to a slower economy and more recently due to Covid. 

Electric Ireland and Prepay Power Price increase

Unfortunately, the 3.4% increase in the general price of electricity by Electric Ireland and 2.9% increase from Prepay Power, is going to reverse some of the decreases that we’ve seen.

Customers with Electric Ireland and Prepay Power will see electricity prices go up by about €90 a year. 

Only yesterday, another three suppliers BE energy, a small supplier, Pinergy and Iberdrola all announced price increases, which will come into effect from November 1st. There are price increases across the board from suppliers.

Is there a knock-on effect with suppliers increasing prices?

There does tend to be a knock-on effect.

Electric Ireland has the biggest share of the electricity market and Bord Gáis Energy has the biggest share of the gas market still.

You tend to find that when Electric Ireland makes a decision, the others tend to follow as they have so much power. 

However, one or two suppliers came out and said that they weren’t increasing their electricity or gas prices. One of which was Bord Gáis Energy, which has a price freeze in place until March of next year. 

Flogas announced a decrease in the price of its gas a few days ago and a commitment not to increase its electricity prices until March 2021 as well.

While most suppliers have decided to go ahead with an increase in their electricity prices, a few of them haven’t.

Estimated readings

Often if you’ve had estimated readings on previous bills you may have over or underpaid. When the ESB network comes out to take a proper reading and they find out that the estimates were incorrect, your next bill will reflect this.

It’s a good idea to submit a meter reading to your supplier every time your bill is due so that you’re only paying for the energy you use. If you don’t, it’ll only be based on an estimate. 

Because of Covid, the estimates will likely be more incorrect than usual. A lot of people probably use a lot more energy than they usually would, so bills are probably underestimated. 

Prices are on the rise again

Unfortunately, since this interview, energy prices have once again seen an increase since the beginning of 2021.

Read our blog on the topic to learn more about why energy prices are increasing.

To help you combat the rising price of electricity, we’ve compiled a list of 15 ways to use less electricity and save money.

With people’s finances under pressure like never before, it’s important to ensure that you’re on the best energy deals. 

Switch and save!

Whether it’s your gas and electricity, broadband, or even your mortgage rate, there are ways to save. 

Make sure you consider all options. You can easily compare and switch to a cheaper energy supplier on bonkers.ie.

It’s quick and easy to switch and can all be done on bonkers.ie in the space of a few minutes. Use our energy comparison tool to compare the best deals today across all 13 energy suppliers nationwide.

Many consumers think that if they’ve been with a supplier for years that they’re going to value your business, but that’s not the case. If you want to get the best deals and best savings, the vast majority of the time you have to switch.

At the moment, if someone on standard rates switched their gas and electricity, they could save just under €500 a year, which is a substantial amount. By switching to a new supplier, you could get discounts of over 40%. 

If you’re seeking advice when it comes to switching, have a look at our guide on 7 things to consider when switching energy suppliers and learn what you need to switch here.

If you have any energy-related questions, feel free to reach out to us on social media! We’re on Facebook, Twitter and Instagram.