Electricity bills to rise due to hike in levy

Electricity bills are to rise from October after the Commission for Energy Regulation approved an increase in the public service obligation levy.

Although the increase on the levy only constitutes a small proportion of the overall electricity bill for households and businesses, it represents further bad news for consumers who face rising energy costs.

The annual levy for all domestic customers will increase by almost €8.50 to €27.82 — an increase of 42% on last year’s levy.

The same levy for small business customers will rise by 50% to €85.73 per year, while medium and large business customers face a 38% rise in the levy.

The increases derive from the commission’s decision to up next year’s levy by €39.1m to €131.2m — an overall increase of 42%.

The levy is used to support the recovery of costs associated with a number of issues, including security of supply and the use of native peat supplies.

The business group, Ibec, has expressed concern about the timing, level, and competitive impact of the increased levy. It warned some of its largest members would face additional energy bills of €900,000 as a result of the increase.

The latest rise follows the recent application by Bord Gáis Energy to the commission for a 7.5% price increase which it hopes to introduce in October.

Bord Gáis Energy has blamed the falling value of euro against sterling over the past year for seeking a price increase, as Ireland purchases virtually all its gas supplies from Britain.

There is also upward pressure on prices as a result of falling demand for gas and higher finance costs for Bord Gáis Energy.

A Bord Gáis Energy spokesperson also warned yesterday about the upward pressure on global energy prices, which saw wholesale energy costs jump by 8% last month.

The company has blamed the rising prices on the expectation of growth stimuli by EU and other global leaders, as well as political unrest in the Middle East.

The commission is set to issue its ruling on the 7.5% rise by the company before the end of the month.

Meanwhile, switching rates by electricity and gas customers have dropped sharply in the first six months of 2012.

New figures compiled by the commission show that switching levels by domestic electricity users between January and June have declined by 32% compared to the same period in 2011. The rate of switching by gas customers dropped by 10%.

An average of 21,843 electricity and 8,825 gas customers switched supplier every month in the first half of the year. The comparative figure in the first six months of 2011 were 32,228 and 9,825 respectively.

In early 2010, switching levels among electricity customers peaked at 45,000 per month and 15,000 for domestic gas users.

Since Jan 2010, Electricity Ireland (formerly ESB) has lost more than 334,500 customers, according to the commission’s figures.

The main beneficiaries of deregulation of the electricity market have been Airtricity which has added almost 271,000 customers over the period, and Bord Gáis Energy, which grew its customer base by more than 45,000.

In contrast, deregulation of the gas market has seen Bord Gáis Energy lose more than 183,000 customers since Jan 2010.


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