Electricity bills should fall marginally after CRU cuts PSO levy

The PSO levy is paid by all electricity customers in Ireland and is used to support the renewable energy sector.

Following a review of the PSO cost submissions, the CRU’s final calculation is that a PSO levy of €263.70 million will be required for the 2021/22 PSO year. This represents a decrease of €129.43 million (32.92%) on the 2020/21 levy of €393.13 million.

Domestic Customers will see the PSO levy on their electricity bill reduce by 34% or €4.30 per month – previously €6.52 per month.

Small Commercial Customers will see the levy reduce by 36% or €13.63 per month – previously €21.41 per month.

Medium/Large Customers will see the levy reduce by 41% or €1.63 kVa – previously €2.78 kVa.

Daragh Cassidy, Head of Communications at price comparison website, bonkers.ie, said the fall in the levy is welcome but it is a hollow victory for consumers.

“To put things into perspective, recent price increases have added around €300 to the average household’s annual energy bills,” he said.

“Because the main objective of the PSO levy is to promote and support the renewable energy sector in Ireland it has been determined that certain types of power generation e.g. wind and solar, should be protected from sharp market fluctuations.

So in general, if the wholesale electricity price (also known as the SEM price) is high, less money is needed to subsidise and support renewable energy plants. That’s because they receive more money on the open market for the electricity they produce.

“When wholesale prices are low, more money is usually needed to subsidise PSO supported schemes because they make less money on the open market,” Mr Cassidy said.

“Thus when the wholesale price of electricity rises the PSO levy tends to fall and vice versa. And this is what we’re seeing now.”

The CRU’s role is to calculate the PSO levy in accordance with Government policy and the governing legislation and to ensure that the scheme is administered appropriately and efficiently.