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A PROPOSED INCREASE to a public levy on electricity bills could see savings being made on electricity bills wiped out, according to St Vincent de Paul (SVDP).

The Commission for Energy Regulation has suggested that the Public Service Obligation (PSO) levy be increased by 36%.

SVDP is one of the parties with a vested interest asked to submit their thoughts on such an increase.

In its submission the charity says that the proposed increase will see domestic electricity bills increase by as much as €90 (including VAT) per year.

Source: CER

John-Mark McCafferty, head of policy with SVDP, says that “with VAT added, domestic customers are effectively paying a tax on a tax”.

“In the interest of social justice and fairness, we urge a review of the PSO application for low income and struggling energy customers,” he said.

The PSO levy is basically a tax with which the government orchestrates its energy policy.

Most of that policy is now targeted at funding renewable energy sources.

In 2011, the levy (not including VAT) was €19.33. Currently it stands at €60.09 annually. The CER proposes to increase it to €80, a 400% increase in just five years.

SVDP are arguing that while recent price reductions had saved customers roughly €50 per year, the increase to the PSO would see that figure halved.

“While we are in favour of supporting renewable and sustainable energy, in the light of such an increase the operation of the PSO levy must now be reviewed,” says McCafferty.

At present the PSO levy raises about €440 million for the exchequer each year.

The deadline for submissions regarding the proposed increase was last Monday, 27 June. The final decision regarding the levy increase will be announced on 1 August with an implementation date of 1 October.

Last year, electricity bills were repeatedly in the headlines with consumers feeling that a fall in gas and oil prices wasn’t being passed on to domestic electricity bills.