Irish energy customers will see a €127 saving on their electricity bills later this year after the Government signed off on new legislation on Tuesday.
The Cabinet agreed to allow the Commission for Regulation of Utilities (CRU) to set the Public Service Obligation (PSO) levy on bills to a negative rate.
The Government previously announced that the PSO levy would go to zero from October 1 this year (2022), which would lead to an annual saving of €52 (excluding VAT) on household bills.
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However, the new announcement will see the proposed PSO levy decrease from €263 million for 2021/2022 to an estimated figure of minus €408 million for the forthcoming year.
This will result in a rebate for domestic household bills equating to an ‘indicative’ annual saving of €75, excluding VAT, for householders and consumers.
Combined with the €52 saving, this will result in a combined saving of €127, excluding VAT, for 2022/2023.
The PSO levy is charged to all electricity customers in Ireland and supports the generation of electricity from sustainable, renewable and indigenous sources.
The levy is calculated and certified annually by the Commission for Regulation of Utilities (CRU) in line with relevant legislation.
All energy suppliers are required to collect this levy from customers through bills.
Levy payments are calculated based on estimated generation and estimated wholesale electricity market prices for the year ahead.
These payments are then corrected for actual generation and prices.
At the end of July, the CRU will issue a final decision on the exact PSO levy that will apply for the period from October 2022 to September 2023.
The Government approved the legislative amendments to enable PSO levy payments to be credited to electricity customers on Tuesday in recognition of the rising cost of living and the impact on households and businesses of increasing energy bills.
Elsewhere, the Cabinet signed off on the purchase of 450 megawatts of extra emergency capacity for the electricity grid costing €350 million.
A statement said: “The CRU currently has a programme of work underway to ensure the security of our electricity supply over the coming winters. As part of this work programme, the regulator has directed EirGrid – the Transmission System Operator – to source and deliver approximately 450MW of additional generation capacity for the winters of 2023/2024 to 2025/2026.
“This additional generation capacity will be contracted for a limited period.
“It will be available when needed and will be in addition to existing generation capacity in the electricity market.
“As part of today’s broad-ranging announcement, the Government approved the necessary capital funding – in the order of €350 million for EirGrid. This will support and enable implementation of the initiative for winter of next year (2023/2024).”
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