How the PSO Levy works in Ireland

You may have seen the PSO Levy on your energy bills, but what is it? Here’s all you need to know about Ireland’s PSO Levy and how it affects your electricity bills.

Latest Update PSO Levy credit due until September 2024

In 2022 the PSO levy on electricity bills was set to a minus figure, giving domestic customers an annual payment of €89.10 for 2022/2023.

From March until September 2023, customers will receive a monthly credit of €12.73 on their energy bill.

In July 2023, the PSO levy for 2023/24 was decreased to €0. This will come into affect for customers on Oct 1st, 2023.

What is the PSO Levy?

The Public Service Obligation (PSO) Levy is a subsidy charged to all electricity customers in Ireland. All energy suppliers are legally required to collect this levy from electricity customers.

It’s collected by the Government to pay towards meeting its national policy objectives of providing:

  • renewable energy
  • indigenous fuels
  • security of electricity supply

The money collected from the PSO Levy is primarily used by the ESB and other suppliers to cover the costs of generating sustainable and renewable energy in Ireland.

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Who has to pay the PSO Levy?

All residential and business electricity users have to pay the PSO Levy.

It’s paid as part of your overall electricity bill, either monthly or bi-monthly, and VAT will be added. You’ll usually see it displayed as a separate flat rate charge on your bill alongside the standing and usage charge.

How much is the current PSO Levy?

The PSO levy from 1st October 2022 to 30th of September 2023 is an annual credit of €89.10.

The amount depends on the wholesale price of electricity. If electricity prices are high, the levy cost will fall.

Due to unprecedented levels of wholesale electricity prices, this is the first time there will be a negative PSO.

How much is the PSO Levy for the year 2023/24?

The new PSO levy from 1st October 2023 to 30th of September 2024 will be set to a zero figure.

Although wholesale electricity prices are still at record highs, they are dropping. That means this year’s PSO credit has been reduced from -€89.00 to €0.

How much has the PSO Levy cost in previous years?

The table below highlights the monthly and annual changes to the PSO Levy since 2011. All rates are excluding VAT.

PSO Levy Year Monthly Levy Annual Levy  
2011 - 2012 €1.61 €19.33  
2012 - 2013 €2.32 €27.82  
2013 - 2014 €3.57 €42.87  
2014 - 2015 €5.36 €64.37  
2015 - 2016 €5.01 €60.09  
2016 - 2017 €5.90 €70.75  
2017 - 2018 €7.69 €92.28  
2018 - 2019 €3.48 €41.76  
2019 - 2020 €2.84 €34.08  
2020 - 2021 €6.52 €78.24  
2021 - 2022 €4.30 €51.60  
2022 - 2023 €0 €-89.10  
2023 - 2024 €0 €0  

How is the PSO Levy calculated?

The Levy is calculated annually by the CRU (Commission for Regulation of Utilities).

PSO Levy payments are based on the estimated wholesale electricity prices and generation needed for the year ahead. Payments are then adjusted to take into account actual generation and wholesale electricity prices.

Typically, the lower the expected wholesale market price, the larger the subsidy needs to be.

How is the PSO Levy money spent?

The PSO Levy is used to support costs associated with producing sustainable and renewable energy in Ireland.

Examples of supported energy generation are:

  • Wind farms
  • Biomass gas
  • Landfill gas
  • Solar energy
  • Micro-generation
  • Thermal power stations

This type of power is more expensive to produce than electricity produced by traditional methods but is better for the environment and is more sustainable.

Another way the PSO Levy supports Ireland’s future energy plan is to fund the Renewable Electricity Support Scheme (RESS) which provides support to renewable electricity projects in Ireland.

The RESS scheme seeks to ensure that Ireland can meet climate targets and supports the growth of a cost-effective renewable electricity market which, over time, will benefit the customer as renewables become cheaper.

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When does the PSO Levy change each year?

The cost of the PSO Levy is set by the CRU every year which runs between 1st October and 30th September. The price is dependent on wholesale gas prices so doesn’t always increase, but fluctuates up and down each year.

Can I refuse to pay the PSO Levy?

No, electricity suppliers are legally obliged to add the PSO Levy to your bill, and therefore, you’ll need to pay it to settle your bill and guarantee supply.

What is the Carbon Tax?

It’s a tax applied to all fuels that give off carbon emissions, like heating oil, natural gas, and coal.

Gas suppliers are legally required to add a Carbon Tax charge to your gas bill which currently adds about €105 (inc. VAT) per year to the average household energy bill.

This figure will continue to rise annually through to 2030 to meet environmental targets.

What is a Standing Charge?

It’s a charge which is added to all energy bills. It’s a fixed amount you have to pay regardless of your energy usage. It covers the cost of supplying your home with gas and electricity, for example:

  • development costs
  • repairs to energy networks
  • account administration
  • meter readings