The energy regulator is proposing a huge increase in the levy paid to wind farm operators by consumers. The annual public service obligation (PSO) levy is proposed to go from €34 a year to €96 next year, a rise of €62.
This is a rise of 184pc.
Once valued added tax (Vat) is added in the rise for consumers amounts to €70 a year, taking it to almost €110 a year.
The low cost of wholesale electricity at the moment means renewable energy suppliers need a larger subsidy to operate.
The Commission for Regulation of Utilities (CRU) said the proposed rise would amount to an increase of €5.22 per month for domestic customers and €14.46 per month for commercial customers.
The PSO levy is a subsidy charged to all electricity customers in Ireland and was originally designed by the Government to support policy objectives related to renewable energy, indigenous fuels such as peat and security of supply.
The proceeds are used to pay for the costs incurred by supported electricity generators which are not covered by the market.
The levy for this year and next is now entirely dedicated to renewable electricity supports and a key factor in enabling Ireland to meet its national targets in terms of the generation of electricity from renewables, the regulator said.
The CRU said a total of €480m will be needed from the levy for next year, a rise of €303m on this year’s total.
The key drivers for this year’s increase is the expected lower wholesale market prices for the 2020/21 period, the regulator said.
Chairperson of the CRU Aoife MacEvilly said the cost of the levy has been trending upwards, as the level of renewable electricity supported by the scheme has increased.
She said there is a clear variability to the cost of the levy for each year, due to the volatility in wholesale electricity prices.
“While the CRU is fully aware of the impact of any changes to the charges on a customer’s bill, the proposed increase to a bill can be beaten by customers who renegotiate with their supplier or switch to a new provider where they could save over €300.”
The CRU levy proposals comes as plummeting costs of wholesale energy on world markets have prompted calls for energy providers to reverse recent steep price rises imposed on householders.
The energy suppliers have been accused of profiting from a succession of price hikes for households that they pushed through in the past two years.
Prices for households have come down in the past few months, but the decreases have been dismissed as “measly”.
Daragh Cassidy of price comparison site Bonkers.ie said the proposals from the CRU mean that the levy will rise by over €70 a year for electricity customers once VAT is taken into account, taking it to almost €110 a year.
At a time when people’s finances are under pressure like never before, and when there has been an increase in home energy usage due to more people working from home, this is probably the last thing consumers want to hear, he said.
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