Households to Save as Electricity Levy Reduced by €21.48

Households in Ireland are set to receive some relief on their electricity bills as the Commission for the Regulation of Utilities (CRU) announced a reduction in the Public Service Obligation (PSO) levy for the upcoming year. Starting in December 2023, the PSO levy will decrease from €24 to €17.52, marking a significant drop from last year’s charge of €39.

This news comes during a challenging period for many households, as over one million consumers are facing electricity price hikes from October 2023. Most households can expect their bills to rise by approximately €200 annually, compounding the financial strain on families across the country.

The situation has been exacerbated by findings from the International Energy Agency (IEA), which reported that retail electricity prices in Ireland are three times higher than wholesale prices. This discrepancy is among the highest in the world, underscoring the significant gap between the cost of energy production and the prices charged to consumers. According to the IEA, this gap contributes to Ireland having the highest electricity prices in Europe.

The CRU stated that the adjustment to the PSO levy was made following a detailed review of updated data, which revealed inaccuracies in previous calculations. Daragh Cassidy, from the price comparison site Bonkers.ie, noted that this mid-year adjustment is unprecedented. He explained that the levy is now expected to be €1.46 per month, or €1.59 including VAT at 9 percent, a further reduction from the previously announced amount of €2.01 per month for the period from October 2025 to September 2026.

While the reduction in the PSO levy is a positive development, Cassidy emphasized that it may not significantly alleviate the financial burdens many households are facing. Electricity suppliers have raised their prices, meaning that customers will still see an increase in their overall bills.

Concerns regarding the practices of electricity companies were echoed by Taoiseach Micheál Martin, who suggested that power companies might be “factoring in” government subsidies for electricity, possibly pocketing the benefits instead of passing them on to consumers. During a recent discussion with opposition leader Mary Lou McDonald, he highlighted that retail charges for electricity remain significantly inflated compared to wholesale prices.

As households brace for increased electricity costs, the reduction in the PSO levy offers a glimmer of hope, albeit a modest one. Consumers will be closely monitoring their bills in the coming months, as the impact of these changes unfolds against the backdrop of rising energy prices.