Regulator proposes hitting households with electricity levy hike from October

This is because the energy regulator is proposing that the levy that subsidises renewable energy operators should be set at €225m next year.

This is in contrast to this year when the public service obligation (PSO) levy on electricity bills was set at zero.

The PSO levy was put in place to subsidise the generation of electricity from wind and other sustainable sources.

It is imposed on electricity bills.

The levy guarantees the price renewable energy generators get for the electricity they produce.

The Commission for Energy Regulation (CRU) sets the level of the PSO levy that applies from each October.

It has just produced a consultation paper proposes that from October a sum of €2.98 a month will be levied on each consumer’s electricity bill.

Over a year this works out at €35.76.

Wind and solar generators get guarantee prices for the energy they generate, in a bid to encourage the transition to renewable energy generation.

When wholesale electricity prices are high, mostly because of high gas prices, renewable generators, which do not require gas, receive greater revenues for the electricity they sell in the wholesale market, the CRU said.

But recent falls in wholesale gas prices mean the prices renewable energy generators are getting at the moment have dropped, so under Government policy they get a subsidy to ensure they can compete with fossil-fuel electricity generators.

In the consultation paper, the CRU said it was proposing to set the PSO levy at €225m for next year, up from zero.

It explained: “Government policy determines the amount of subsidy provided to generators supported under the PSO.

“Following a review of the PSO cost submissions from eligible suppliers, the CRU’s initial calculation is that a PSO levy of €225m will be required for the 2024/25 PSO year, which represents an increase of €225m on the 2023/24 PSO levy which was set to zero.”

The CRU said it will publish the final PSO levy for 2024/25 by August 1.

Responses to the consultation should be submitted via the CRU consultation portal by June 28 next.

The proposed hike in the levy comes SSE Airtricity recently announced a second reduction this year in electricity and gas prices for households.

It is the third time the supplier has cut charges since the energy crisis began in 2022. ​

The move puts pressure on its main rivals Electric Ireland, Bord Gáis Energy and Energia to announce more cuts. They have each announced two reductions in the past year.

The latest SSE reductions will not take effect until the start of July.

Cuts in electricity prices mean there is some doubt about whether the Government will announce another round of energy credits in the Budget expected in October.

The last Budget saw three credits being paid households, totalling €450.

Daragh Cassidy of price comparison site Bonkers.ie said that at the moment electricity bills are still around 70pc to 80pc above pre energy crisis levels.

“So although the proposed levy is only just under €3 a month, it’s adding to bills at a difficult time,” he said.

“And many consumers will, of course, struggle to understand why we’re paying an extra levy for renewable energy when we’re constantly told renewable energy will bring our electricity prices down,” Mr Cassidy added.