Household and business electricity bills are set to rise next autumn to cover a proposed €500 million subsidy for green energy and peat-fired electricity generators.
The proposal from the State’s energy regulator could add €2.37 a month to bills paid by each home in the Republic from next October, irrespective of their supplier, while small businesses would face an increase of €8.06 a month.
The Commission for Energy Regulation (CER) is recommending increasing a levy on all electricity users in the State to support renewable energy and peat-fired power plants by €104 million to €496.5 million.
The charge, known as the public service obligation (PSO) is used to guarantee the price paid for electricity to wind farms, other renewable energy producers and peat-fired plants, and is renewed for 12 months every October.
Renewable generators
An increase in the number of renewable generators, the bulk of which are wind farms, in the Republic is driving the proposed increase. A paper produced by the regulator shows that these businesses would receive €393.5 million of the €496.5 million total.
“The main driver behind the increase in the levy is an increase in the level of renewable capacity, with the cost of renewables increasing by €73 million relative to the 2016/17 levy,” a note explaining the proposal from the CER states.
State companies such as the ESB, Coillte and Bord na Móna are all involved in wind generation. Lobbyists for the industry have consistently argued that supporting results in an effective cut in wholesale energy costs.
A spokesman for the regulator explained the the organisation is implementing Government policy. Its calculations are only proposals; it will make a final decision on the actual charge in August following a consultation with interested parties. Any increases will be imposed two months later.
Burden split
Figures produced by the CER show that the burden of the €496.5 million is to be split between domestic users, small enterprises, and medium and large businesses and spread over the 12-month period beginning on October 1st.
Householders will pay a total of €203.94 million, resulting in a flat monthly increase of €2.37, or €4.74 on bi-monthly bills. Small business will pay €58.41 million, boosting individual bills by €8.06 a month.
The CER’s numbers show that medium and big businesses, including many large homegrown and multinational employers, will pay €234.2 million.
The Economic and Social Research Institute recently produced a paper questioning the way in which the PSO is charged and arguing that it imposed all the risk associated with price movement in the cost of electricity on customers instead of generators.
