Dáil Éireann Debate, Tuesday - 12 November 2013
241. Deputy Aengus Ó Snodaigh asked the Minister for Communications, Energy and Natural Resources if there has been an increase in the public service obligation levy in the case of electricity bills and in general; and the way in which he will use the money generated from this increase. [47769/13]
View answerThe PSO levy is charged to all electricity customers. It is designed to support the national policy objectives of security of energy supply, including through the use of indigenous fuels (i.e. peat), and the use of renewable energy sources in electricity generation. The proceeds of the levy are used to recoup the additional costs incurred by suppliers in sourcing a proportion of their electricity supplies from such generators. The policy and terms associated with PSO levy supported plant are mandated by Government in the relevant legislation and approved by the European Commission. The Commission for Energy Regulation (CER), as set out in legislation, acts in an administrative function to calculate and certify the levy. As part of its calculation and certification of the PSO levy, the CER only allows costs properly incurred under the relevant PSO contracts/schemes and ensures that the scheme is administered efficiently.
The cost of the levy for October 2013 to Sept 2014 as calculated by the Commission for Energy Regulation (CER) is €210.9 million, an increase of €79.7 million on the 2012/2013 levy of €131.2 million. For domestic customers, the PSO levy will increase from €2.32 per month to €3.57 per month from October 2013 and this will be reflected in their electricity bills. The reasons given by the CER for the increase in the levy are:
- A lower forecast System Marginal Price (SMP) in the Single Electricity Market (SEM). The forecast price for 2013/2014 is €64.28/MWh. This is a reduction from 2012/2013 when the SMP was calculated at €65.72/MWh. A lower SMP results in the need for an increased PSO to recover costs for electricity generation which is guaranteed a support price under the PSO. If those plants cannot recover their supported price through the market price the size of the PSO levy has to be increased to support them up to the level of their guaranteed prices.
- An increase in the quantity of renewable generation subject to PSO support. There is an increase of 265 MW of REFIT renewable generation capacity compared to 2012/2013.
- A greater "R" factor. The PSO levy is calculated each year and is based on estimates of costs to be recovered by the relevant parties if these costs cannot be recovered in the market. These figures are adjusted two years afterwards when fully audited costs have been submitted and the actual market price is known. The "R" factor is the name given to this adjustment. The actual payments from the market in 2011/2012 were lower than expected and the "R" factor for 2013/2014 retrospectively reconciles these payments.
