Householders and business could be facing higher energy bills after the regulator for the sector proposed a massive hike in a levy on bills.

The Commission for Energy Regulation has proposed that the public service obligation (PSO) levy goes up by 40pc for consumers.

The levy is on electricity bills and is mainly used to cover the cost of subsidy schemes to support the generation of electricity from renewable sources, such as wind farms.

Some of the levy goes to ensure there are power stations on stand-by when demand for electricity goes up, and it is partly used to subsidise peat-generated power.

The regulator has proposed that the levy go from €80 a year for domestic customers to €112, when valued added tax is included. This is a rise of 40pc.

A 12pc rise is proposed for businesses.

The regulator has sought the views of the public, with a final decision likely in July and the new levy imposed on energy bills from October.

Last year the Commission for Energy Regulation proposed a massive increase in the levy, but it scaled back the increase after objections.

Online Editors