Electricity costs increase for households under new PSO levy

The recent hike in the electricity PSO (Public Service Obligation) levy is hitting households hardest, while large data centres benefit from a disproportionately low share of the costs, according to Cllr Padraig Fallon.

The Government announced that households are to experience an almost €40 increase on electricity bills from October 1, to subsidise the production of electricity from renewable energy sources such as wind farms and solar panels.

This will be charged as a monthly PSO levy worth €3.23 before VAT for domestic electricity customers, costing €38.76 a year.

Irish households pay some of the highest electricity prices within Europe with the public paying nearly double than before the Covid pandemic. 

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Small commercial customers of energy suppliers will also see their charges rise by nearly €155 over the next 12 months.

For small business customers, they will see a monthly increase of €12.91.

The Commission for Energy Regulation (CRU) sets the PSO levy.

This marks a significant change from this year, when the PSO levy was set at zero due to high wholesale prices.

“In the same week we learned that 20,420 more households have fallen into debt to electricity companies compared to last year, the Government has imposed an additional financial burden on them,” Cllr Fallon said.

“This increase will inevitably lead to more families struggling to pay their bills.

The PSO levy, as it stands, is deeply regressive. It charges all electricity customers, but disproportionately affects households.

“This is because the levy is based on peak demand rather than total demand. For instance, in the last year, domestic users accounted for 39.7 percent of peak demand, yet only about 28 percent of total demand.

“The government could address this imbalance by simply changing the legislation to apportion the levy based on total demand, ensuring that data centres pay their fair share.

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“The Government's current political choices indicate a preference for protecting large energy users over ordinary families,” Cllr Fallon concluded.