A proposed €100 million rise in the State’s green energy levy threatens the recovery in construction, building materials suppliers warn.

The Commission for Energy Regulation (CER) wants to increase the public service obligation (PSO) levy on electricity bills by €104 million to €496.5 million from next October to support renewable energy developers and peat-fired power plants.

However, cement and concrete manufacturers, whose businesses face high energy bills, have warned the regulator that such a move could hit jobs and endanger the recovery in construction.

In a submission to the commission, manufacturer Kilsaran International says that over the 12 months from October, the increase would add €43,984 to its energy bills and points out that it cannot recover this from customers.

Kilsaran argues that the recovery in construction has only taken hold in Dublin and remains fragile throughout the rest of the Republic. The company says it is inconceivable that the commission would seek such an increase to the levy.

“Irish electricity prices are among the highest in Europe and the yearly increases in the PSO levy only serve to undermine the cost base and competitiveness of Irish companies, thereby limiting the potential for growth and job creation,” Kilsaran says.

Many other companies in the industry submitted versions of the same letter to CER analyst Gráinne Black, pointing at the likely cost of the increase to their businesses and its implications for job creation.

Unsustainable increase

Gerry Farrell, chief executive of the Irish Concrete Federation, states the proposal would result in an overall 143 per cent increase in the levy since 2013/2014, which he argues is unsustainable for any business.

“Irish Concrete Federation urges the CER to recognise the fact that businesses cannot be asked to absorb the extra costs of this levy in a time when recovery is still fragile and businesses are still struggling for survival,” he says. His organisation represents 75 companies which employ 4,000 people.

According to the CER, large energy users, which would include cement and concrete producers, most manufacturers and multinationals, will pay €234.2 million of the €496.5 million total.

The charge guarantees the price paid for electricity to wind farms, other renewable energy producers and peat-fired plants. It is renewed for 12 months every October. It is meant to implement Government policy to support green electricity generation.

Wind farm operators are the biggest beneficiaries. The regulator’s figures show these businesses would receive €393.5 million of the €496.5 million that will be collected from industries and households over the 12 months from next October.

State companies such as the ESB, Coillte and Bord na Móna are all involved in wind generation. Lobbyists for the sector argue that supporting renewable power cuts energy costs.

The CER’s proposal could add €2.37 a month to bills paid by each home in the Republic from next October, irrespective of their supplier, while small businesses would face an increase of €8.06 a month.