Consumers to fork out for €103m ESB bill

ESB customers already paying VAT on their bills had to fork out more than €100 million last year to cover a controversial separate levy.

The Government placed a public service obligation (PSO) on the ESB three years ago requiring it to buy power from specific renewable and other sustainable sources, such as peat.

By law, the additional costs incurred by the ESB in complying with this obligation are passed onto the consumer.

This is viewed in some quarters as a form of double taxation, as customers are also charged VAT on their bills.

Last year, householders were charged €1.99 a month in PSO levies, while small businesses paid €6.18 a month. The levy for larger businesses depended on the amount of electricity they used.

According to figures released in the Dáil last week by Communications, Marine and Natural Resources Minister Noel Dempsey, domestic and business customers combined paid a total of €103.3m in PSO levies last year.

This was an increase of €28.5m on 2004, when the PSO levy raised €74.8m.

The levies are calculated on an annual basis, depending on the costs likely to be incurred by the ESB to meet its PSO each year.

The good news for consumers is that the cost of meeting the PSO has fallen in recent times, meaning a reduction in the levy this year.

The 2006 levy for householders has fallen to 81c a month, while the charge for small businesses is €2.55 a month.

In all, it is predicted customers will pay €44.2m in PSO levies this year.

But while the cost of the PSO has fallen, overall electricity bills have increased substantially.

From January 1, ESB bills saw price increases of 3.1% for householders, 5.2% for small businesses, and 8% for large industries.

These were the latest in a series of price hikes approved by the Commission for Energy Regulation (CER).

According to a report by the EU’s statistical office, Eurostat, domestic electricity prices in Ireland increased by a whopping 61% between 2000 and 2005. This was the highest energy price inflation anywhere in Europe. The cost of electricity for industry rose by 41% in the same period, according to the report.

However, both the ESB and the CER have consistently argued these tariff increases are necessary to make up for 1986-2000 period, during which time successive governments effectively froze prices even though the cost of providing electricity was rising.