Dáil Éireann Debate, Thursday - 16 June 2016
8. Deputy Shane Cassells asked the Minister for Communications, Energy and Natural Resources the rate at which the public service obligation, PSO, is levied on electricity bills; his views on increasing this; and if he will make a statement on the matter. [16205/16]
View answerI welcome the opportunity to contribute. I wish the Minister well in his role and look forward to working with him closely in the months ahead in order to ensure that he instructs EirGrid to run its cables underground and save us from the proposed monstrous pylons that would otherwise desecrate County Meath.
What are the Minister’s views on increasing the PSO levy on electricity bills for hard-pressed families? Is it justified?
I wish Deputy Cassells the best of luck, not just for the current term but also for a long-term career in the House.
The PSO levy has been in place since 2001 and consists of a set of support schemes designed to facilitate the Government's electricity policy objectives for renewables, indigenous fuels and security of supply. It also supports employment in the renewables and peat industries.
The PSO has supported the connection of more than 2,000 MW in renewable energy to the electricity grid and will continue to support the development of renewable energy so that we can meet our target of 40% renewable electricity penetration by 2020.
Recent international studies have shown that Ireland has had one of the lowest per unit supports for renewable energy in the EU.
The calculation of the level of the PSO is a matter for the CER. The CER has published a consultation on the proposed levy of €441 million for the period 2016 to 2017, equating to just less than €7 per month for domestic consumers and representing an increase on 2015 of €1.61 per month or €19.32 per year. The greatest drivers for the proposed levy increase are the lower predicted wholesale market electricity price and increased deployment of renewables.
I am conscious of the impact of energy costs on industry and households alike. As the wholesale electricity price is falling, this decrease should be passed on to domestic electricity customers and more than outweighs the proposed levy increase in the current period. In that regard, I am pleased that some electricity suppliers have recently reduced their prices. Consumers can also avail of discounts either by contacting their suppliers directly or using the price comparison websites accredited by the CER, such as bonkers.ie and switcher.ie, to switch to discounted tariffs. A customer consuming the average amount of electricity could save over €150 by switching suppliers.
I thank the Minister. This morning, many Deputies discussed bin charges but the PSO increase of €20 for a residential customer and €65 for a small business is another hit on families and small businesses that are trying to survive, and all to create a fund of some €300 million for promoting renewable sources of energy such as that produced by wind turbines, a technology that is being forced on small communities in my county of Meath from Loganstown and Carlanstown to Longwood in the south. Communities do not want them, never mind what I already mentioned in the context of EirGrid.
Ireland has the third highest average price of electricity in the EU at €1,900 per annum. I am concerned by the high retail energy prices. The Minister stated that some providers had reduced their prices. However, any decrease will be negated by the planned PSO levy increase of more than 30% in October. He referred to the CER but does he believe that this increase is justified, given the current scenario?
Electric Ireland's reductions in the past two years have amounted to approximately €184 per electricity customer, which is multiples of the PSO levy increase. SSE Airtricity recently announced discounts. A 5% discount on electricity would save €60 on a typical annual bill of €1,200, and an 8% discount could be applied to any customer who moves to direct debit billing. Given that the PSO levy accounts for just under €20, which is a small percentage of the overall bill, it is more than made up for by the reductions.
The PSO levy exists for a purpose, namely, to support wind and biomass. A significant biomass project to come on stream in the Deputy's constituency will be supported by the levy. There are other renewable energy projects. Every Deputy has contacted me about biomass, biogas, pyrolysis, solar and wind projects across the country.
All are funded through the PSO. As the Acting Chairman would know, the levy also supports two peat-fired power stations in the midlands, namely, in Lanesborough and Shannonbridge. It is specifically to deal with energy security. A complex calculation is used but there is a specific purpose. The cost of renewables in this country is far lower than anywhere else in Europe.
I acknowledge what the Minister said about the proportion of the overall bill attributable to the PSO. The fact still remains that the price is still going up at a time when people can least afford it. Wholesale prices decreased by some 30% but the retail equivalent was only 5%. The decrease is not reflected in people's bills.
