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The PSO levy is increasing by 20%, but what does that mean?

The PSO levy change comes into effect from 1 October, with electricity bills increasing by €13.84 per year as a result.

You may have heard in the news that the Commission for Energy Regulation (CER) is increasing the Public Service Obligation Levy (PSO levy) by 20% for 2016/17. But what is this levy, and what does the increase actually mean for you?

What is the PSO Levy?

The PSO Levy is one of the standard charges that makes up your electricity bill. The purpose of the levy is to cover the additional costs associated with producing sustainable and renewable energy in Ireland.

Certain energy sources, such as some thermal power stations and wind farms, are also supported by the levy, because this kind of power is relatively more expensive, and these energy sources are better for the environment.

Who decides how much the levy will be and how is it collected?

The CER calculates the PSO Levy in accordance with the Government’s plans, and based on an estimate of costs.

In terms of the payment process, customers pay the levy to their electricity supplier through their bill, and ESB Networks then collects the levy from electricity suppliers and passes it to EirGrid. EirGrid then distributes the amount to the relevant generators/suppliers supported by the PSO.

How much is the levy for 2016/17?

The total amount required is €400.9m, up from €325.3m last year.

The increase has been attributed to a drop in the cost of wholesale prices, as well as a 40% increase in renewable energy generation.

What does this increase mean for me?

Basically, when the increase comes into effect on 1 October, you’ll be paying €12.19 per year more, before VAT, on your electricity bills - or €13.84 after VAT.

What can I do about this increase?

Unfortunately, there’s nothing you can do to avoid paying the increased levy, as it’s a standard part of all domestic electricity bills.

But it would be worth taking a look at your energy bills and the deals that are out there, as switching to a cheaper energy supplier would more than cover the cost of the levy increase.

Only 14% of us switched our electricity last year, so there’s loads of scope for the rest of us to make savings. At the moment, the average dual fuel customer can save up to €360 per year by switching from standard tariffs to the cheapest deals on the market.

Switch and save: Compare electricity deals