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Electricity bills to increase by €70 a year under new wind levy proposal

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 on electricity bills 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 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 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 driver for the increase is the expected lower wholesale market prices for the 2020-2021 period, the regulator said.

A final decision on the levy rise will be announced in August.

Chairperson of the CRU Aoife MacEvilly insisted the CRU is fully aware of the impact of changes to the levy on customers’ bills.

Daragh Cassidy of price comparison site Bonkers.ie said the proposals mean the levy will rise by €70 a year for electricity customers once VAT is added.

At a time when finances are under pressure, and when there has been an increase in home energy usage due to more people working from home, this is the last thing consumers want to hear, he said.