Households are set to have their annual electricity bills cut by €30 from October due to a reduction in a levy paid to support the development of renewable energy.
The energy regulator has sanctioned a 34% decrease in the annual cost of the PSO levy for domestic customers which will see their annual energy bills reduced by €30.24.
The Commission for the Regulation of Utilities (CRU) reduced the PSO levy for 2021/22 which will run from October 1 from its current rate of €6.52 per month to €4.30.
Business customers will enjoy an even bigger reduction with small commercial customers having their levy cut by 36% or €93.36 per annum, while larger businesses will have their levy cut by 41% or €1.15 per kVA.
However, the savings enjoyed by many energy customers will be offset by recent increases to electricity prices announced by energy providers.
The CRU said the new PSO levy rate was entirely related to renewable electricity supports and would be key in enabling Ireland to meet its targets for 40% of all electricity to be generated from renewable sources.
Overall the regulator has calculated that the PSO levy must raise €263.7m in 2021/22.
The figure is down from €393.1m in the current year and the provisional figure of €285.6m for 2021/22 set earlier this summer.
The CRU said the main factor in setting the new PSO levy rate was the wholesale cost of electricity which is set to increase in the year ahead based on rising coal, gas and oil prices.
It pointed out that there is an inverse relationship between the PSO levy and wholesale electricity prices. “The higher the expected market prices, the smaller the subsidy that will be needed,” it observed.
The regulator said Government policy determines the level of subsidy provided to energy companies, while its primary role was the calculation of the PSO levy.
CRU chairperson, Aoife MacEvilly, acknowledged that many customers would have felt price increases by suppliers by the time they will experience a decrease in the PSO levy.
“These increases to a bill can be beaten by customers who renegotiate with their supplier or switch to a new provider where they could save over €300,” said Ms MacEvilly.