2 days ago
- Business
- Irish Independent
Levy on electricity bills to subsidise wind farms set to fall
Energy regulator, the Commission for the Regulation of Utilities, has decided to set the levy at €1.94 a month from October.
This works out at €23 a year, and is half of what the Public Services Obligation (PSO) levy is at the moment.
Electricity prices in this country are already among the highest in Europe
However, it comes after a warning this week that household electricity bills are to be hit with an increase by at least €83 a year to pay for a major upgrade of the country's power system.
Households currently pay on average €254 per year as part of their bill to help fund annual upgrades but that would increase to €337 next year under the current proposal.
ESB Networks has asked the energy regulator to approve a price increase that would enable it to fund investment of between €10.1bn and €13.4bn over the next five years.
At the lower estimate, the average residential bill-holder would be charged €1.60 extra per week, totalling €83 per year or €415 over the investment period.
This is on top of the standing charge imposed on electricity bills.
The CRU is tasked with working out how much money wind farms and solar panel operators will need each year to enable them to supply electricity. This is charged to households and companies in the form of the PSO levy.
The regulator has now issued a decision paper which indicates that the PSO levy for 2025/26 has been calculated that €156.22m.
This is the amount the CRU says will be required to support these renewable energy projects. 'This will result in a monthly charge of €1.94 and €7.59 for domestic and small commercial customers, respectively,' the CRU said.
Last year it was revealed that the average household electricity bills was to rise by €100 over a year from last October after the energy regulator approved an increase in the funding needed to operate and develop the electricity grid.
Daragh Cassidy of price comparison site said the proposed reduction in the PSO levy is obviously welcome.
But wholesale electricity prices remain so high.
This is why less money is needed to support renewable projects as they are already receiving enough money for the electricity they generate on the open market.
'But given how high prices remain, many households will probably be wondering why the levy is still needed at all,' he said.
Mr Cassidy said the move towards net zero is going to be difficult and billions of euro is needed by EirGrid and the ESB over the coming years to help reinforce our grid in order to meet our climate targets.
'And while renewable energy should help electricity prices ease from their near-record highs over the coming years, some of the savings will be cancelled out by the money that's needed to invest in infrastructure like battery storage, interconnectors, and the grid itself to better manage all the renewable energy.'
The executive said electricity prices in Ireland are still around 70pc to 80pc above where they were before the war in Ukraine broke out.
It means the average household is still paying over €500 a year more for their electricity than they were only a few years ago.
It is similar for gas. But it is highly unlikely prices will revert anywhere near to pre-war levels in the medium term unfortunately.
