From October, households and businesses will see a rise in electricity costs as a contribution towards eco-friendly energy development. The Commission for the Regulation of Utilities (CRU) has announced a hike in the public service obligation (PSO) charges, which supports various State initiatives for promoting renewables. This decision implies that each household will be charged an additional €3.23 per month, while businesses will incur a €12.91 increase.
The escalated charge aims to recover almost €276 million given back to customers and businesses from October 2022. CRU had banked on an upsurge in wholesale electricity prices, which, if high enough, would have allowed for wind farms to be paid beyond the stipulated price of the State’s Renewable Energy Support Scheme (RESS). As a result, the regulator had granted an approximate €89 credit to every household during this period.
However, the situation changed when the wholesale prices didn’t shoot up as per estimates, and the wind farms earned less than predicted for their electricity. This discrepancy has triggered the need for the regulator to reclaim some of the money credited back to businesses and households.
The CRU explicated that this inflation could have been higher for the succeeding 12 months from October. Still, a strategic move in the previous year kept €67.5 million worth of credits from being refunded to electricity customers, concurrently levelling the public service fee to zero for the next 12 months until October 2024.
The Renewable Energy Support Scheme sees rates being set at €74-€100 per mega watt hour for energy produced by wind and solar farms. Any excess of these rates earned on the wholesale market is transferred to consumers as credit on their electricity bill. In the event of the wholesale prices plunging below these figures, customers compensate the difference via the public service levy.
John Melvin, Director of Wholesale Markets at CRU, expressed that the policy guarantees security for electricity firms, facilitating capital accumulation for constructing additional renewable power plants. Although customers benefited from credits and zero charges in the past couple of years, he stated that renewable generators now require substantial support through government schemes.