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Dublin: 2 °C Saturday 18 January, 2020

Customers in 'a no-win situation' with electricity levy

The CER has announced an increase in the Public Service Obligation levy.

Image: Electricity via Shutterstock

THE LEVY ON electricity bills announced yesterday has been described as a “regressive tax” that will put a financial burden on vulnerable people, the Society of St Vincent de Paul (SVP) has said.

It described the increase in the 2014/2015 Public Service Obligation Levy (PSO) on electricity bills announced by Commission for Energy Regulation (CER) as “even greater than proposed by the Regulator just two months ago”.

“The proposal at the beginning of June was to raise €327.7m. The levy announced today will raise €335.4m,” said SVP.

The CER said that the next levy period runs from 1 October 2014 to 30 September 2015.

Vulnerable customers

The society said this will add €21.50 per year to the average household electricity bill and will substantially increase costs to SMEs and larger electricity users.

The PSO levy for 2014/2015 will now be €64.37 per customer. This is more than three times the levy, €19.33 announced by CER this time three years ago. This is clearly out of proportion to the ability to pay of low income customers and can be viewed as a regressive tax.

SVP said it believes customers are “in a no-win situation” with the PSO.

John-Mark McCafferty, SVP Head of Social Justice and Policy, said that the biggest single driver for this proposed increase, among the lower running of a gas plant (Tynagh) and more renewable generation, is lower wholesale electricity prices.

Herein lies the irony for SVP: higher wholesale electricity prices mean higher unit prices for customers as these are passed on; yet when wholesale electricity prices drop (circa 9% year on year), customers pay anyway because the PSO plants need to be compensated for the lower money they are predicted to get from the market.

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