Dáil Éireann Debate, Thursday - 8 July 2010
564 Deputy Liz McManus asked the Minister for Communications, Energy and Natural Resources if he will provide an update on the public service obligation levy; the estimated costs to the domestic consumer when the PSO is implemented; the probable percentage increase in electricity prices to come into effect this autumn; and if he will make a statement on the matter. [31161/10]
View answerPublic Service Obligations (or PSOs) are imposed to achieve national energy policy objectives which would not otherwise be delivered by competitive energy markets. In line with EU and national legislation, PSOs have been imposed to support power generation from peat as an indigenous fuel supply for security of supply purposes, to support renewable generation capacity to reduce emissions and reduce dependence on imported fossil fuels, and to support the development of additional generation capacity when it was needed in advance of the introduction of the Single Electricity Market.
Electricity consumers pay for the additional cost of these supports through the PSO levy. Each year, the Commission for Energy Regulation (CER) calculates the estimated costs associated with implementing the various obligations and forecasts of electricity market revenues for the energy companies involved. Where market revenues are not sufficient to cover the cost of implementing the obligations, additional supports in the form of "top-up" payments are necessary and are funded by electricity consumers through the PSO Levy.
For the past few years, electricity market prices, and accordingly electricity market revenues, have been sufficiently high that additional "top-up" payments to support the obligations have not been required. Therefore the level of the PSO levy has been zero. This year, however, electricity market prices are significantly lower than in recent years and the CER has calculated that additional supports totalling some €194.5 million will be required to cover the full cost of implementing the obligations over the 12 month period commencing October 1st 2010. These additional supports will therefore be reflected in an increased level of PSO levy on consumers for 2010/2011.
A public consultation on this proposed PSO Levy was conducted by the CER in June and a final decision is likely to be published in the coming weeks. The CER has advised that a PSO Levy of this scale would add €40.85 to a domestic customer's annual electricity bill. As the CER has calculated that the typical annual household electricity bill is €838, without allowing for other factors mentioned below, this would increase such bills by some 4.8%, all other things being equal.
However, a number of other changes come into effect on October 1st, including new transmission and distribution charges, and a new form of price regulation for ESB which gives it slightly more flexibility in terms of setting its own domestic tariffs, subject to oversight by the CER and a requirement to keep within certain revenue parameters. Following the CER decision on deregulation, the CER will no longer regulate ESB tariffs for business customers. This means that it is not currently possible to accurately predict the tariffs that will apply from October 1st.
The successful entry of independent suppliers into all segments of the electricity market means that all customers are now free to shop around and benefit from the value and choice offered by these suppliers. Domestic customers can achieve savings of some 10% — 14%, as well as choosing alternative billing options, dual-fuel (electricity and gas) savings, or "greener" sources of electricity, simply by switching supplier.
In addition, there are a number of concrete actions that any customer can take to reduce their electricity consumption and electricity costs as advised by the Sustainable Energy Authority of Ireland (SEAI) and electricity suppliers themselves.
