- The PSO levy has increased by over 270% since 2013
- Independent review into the efficacy of wind generated power and a thorough investigation of viable alternatives needed
ISME notes that the Commission for the Regulation of Utilities (CRU) has tendered for advice on the future administration of the Public Service Obligation (PSO) levy, which everybody pays. This is welcome and overdue. We note the tender wants the current process critiqued as part of the review. As ISME may not have an opportunity to contribute during the review, we are happy to share our views on this levy now.
The PSO levy is a direct subsidy paid by bill payers (residential and commercial) to renewable energy producers and to operate peat burning energy plants. The CRU is guided by six goals, one of which is directly impacted by the PSO levy. This is the requirement to ensure “consumer prices for energy and water are fair and reasonable.”
Each year, the CRU publishes a decision, which normally results in an increase of the PSO levy. The annual consultation process to review the PSO takes little account of end users.
The PSO levy has increased by over 270% since 2013 and can represent up to 25% of a commercial bill. It is extremely difficult for businesses to reduce their exposure to this charge as they become more energy efficient. Many ISME members who have undertaken expensive green-retrofitting have found their energy savings are being wiped out by the galloping inflation in this charge.
The PSO levy was introduced in 2010 but has increased many times the rate of inflation since then. The vast majority of buildings in Ireland are being charged a PSO levy based on notional rather than actual usage levels. The system hinders businesses that are investing in retrofitting and green policies from benefitting from lower energy usage.
It is also notable that the CRU is operating the levy entirely contrary to the Government’s (and line Minister Denis Naughten’s) stated objectives for buildings and energy users. As it is currently charged, the PSO levy is DIRECTLY contradictory to our Climate Change objectives, since it penalises companies that invest in green policies, rather than rewarding them.
ISME is calling for:
- The immediate removal peat burning stations from the PSO levy calculation;
- The easy re-rating of buildings for the purpose of calculating the PSO levy;
- An independent review into the efficacy of wind generated power and a thorough investigation of viable alternatives; and
- The joining up of the Green Public Procurement goals (for business and the State) and Climate Change initiatives with the PSO levy.
For further information, please contact
Ross McCarthy, Key Stone Procurement
M: 085 713 2514