Dáil Éireann debate -
Wednesday, 17 May 2000

Vol. 519 No. 3

Written Answers - Public Service Obligation Levy.

Ivan Yates

Question:

123 Mr. Yates asked the Minister for Public Enterprise if she will include, in the forthcoming proposed Statutory Instrument in relation to the application of P.S.O. levies on auto generation, a threshold of 25 megawatts beneath which those producing electricity primarily for their own combined heat and power needs, such as a company (details supplied), will be considered in view of the regional employment factors and the need for cost efficiencies as part of their manufacturing process. [13935/00]

Minister for Public Enterprise (Mrs. O'Rourke)

The public service obligation levy is intended to be imposed on final customers and not on generators and therefore, the question of a threshold of 25 megawatts in respect of generators producing electricity primarily for their own combined heat and power needs, such as the company referred to by the Deputy, does not arise.

My Department is currently preparing a notification to the European Commission in relation to a public service obligation to be imposed on the ESB in its function as public electricity supplier. This public service obligation relates to the use of peat and renewable/sustainable generation for reasons of security of supply and environmental protection respectively.

It is likely to take the European Commission a number of months to process the notification, following which I will make a public service obligation order under Section 39 of the Electricity Regulation Act, 1999. This order will provide for, among other things, a public service obligation levy on final customers in respect of the additional cost to the public electricity supplier of purchasing electricity under the public service obligation. I would like to reiterate that the levy is on final customers and not on the generation of electricity.

The rationale behind the recovery of the public service obligation levy from all customers, including customers of independent suppliers as well as customers of the public electricity supplier, is because to do otherwise would be discriminatory and would distort competition. It would provide an artificial incentive for customers to leave the public electricity supplier for independent suppliers, irrespective of their relative underlying costs of supply and would accordingly, also lead to inefficiency and higher costs of electricity overall.

Furthermore, it would be unjustifiable to have a bias in the levy arrangements in favour of one form of generation over another. It would be discriminatory not to charge the levy on the consumption of users who happen to have a generator on-site as against those who do not.