Regulators cut State’s green energy tax by 16%

Regulators have cut the State’s green energy tax by 16 per cent, knocking almost €33 million off families’ and employers’ electricity bills for the next 12 months.

The Commission for the Regulation of Utilities (CRU) has cut the public service obligation levied on electricity bills by 16 per cent from this month to €176.46 million from the €209.19 million that businesses and homes paid in the 12 months to September 30th.

The move will reduce the charge imposed on each home in the Republic by 64 cent a month to €2.84 from €3.48 up to the end of September 2020. Small businesses will pay €10.35 a month, saving them €1.62 a month.

The State adds the levy to all electricity bills to pay for price supports given to renewable-energy generators, such as wind farms.

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The CRU applies the levy for 12 months beginning every October. The regulator calculates what the charge should be, taking into account the number of businesses generating electricity from sources such as wind and solar power, and the amount of power they are likely to produce.

Wind farms

State companies such as ESB and private players including SSE Airtricity are among those which receive cash from the scheme as they own wind farms.

Electricity consumers pay the levy on top of the sum the actually owe for the power they have used.

Overall, households will contribute €72.18 million of the total over the next year while small businesses will hand over €21.31 million.

Figures produced by the CRU show that organisations such as pharmaceutical manufacturers, high-tech companies, heavy industries and hospitals, which use large amounts of electricity, will save €15 million overall as a result of the move.

They will contribute a total of €82.97 million over the coming 12 months, down 16 per cent from the €97.08 million that they had to contribute up to the end of September.

Wind farms and other renewable energy schemes will be the biggest beneficiaries of the scheme, getting about €150 million of the total that homes and businesses will pay over the next 12 months.

The actual cost of support renewables is close to €330 million. However, the CRU is clawing back €186 million over the coming 12 months to compensate for the fact that the companies benefiting from the scheme were overpaid in the 12 months ended September 30th, 2018.

Since the Fianna Fáil-Progressive Democrats coalition originally introduced the levy to support investment in renewable electricity, all subsequent governments have maintained the policy and the charge.

The current levy supports green-energy plants s built up to 2017. The European Commission is scrutinising Government proposals for a new scheme to support future projects to ensure that it does not breach EU state-aid rules.

The Government has committed the Republic to generating 70 per cent of all electricity used here from renewable sources by 2030.