The Society of St Vincent de Paul (SVP) has described as derisory the €4 per household decrease in the 2015/2016 Public Service Obligation Levy (PSO) on electricity bills.
In the current period October 2014 to September 2015 the annual PSO levy is €64.37 on household electricity bills. From October next the levy will be €60.09.
“This has to be seen in the light of increases of over 100% between 2012 and 2014 when the levy increased from €28 to €64.37.” says SVP.
The total levy of €325.3m for 2015/2016 announced by the Commission for Energy Regulation (CER) at the weekend is a reduction of 3% on the 2014/2015 figure.
"It is noteworthy that a reduction of 9% proposed by the CER in June last has in 2 months been lost in the main due to decreasing wholesale costs for gas and inaccurate information on the ceasing of the Tynagh subsidy.
"It must also be noted that a significant contributor to the reduction for 2015/16 is a once-off windfall amount to be paid by Electric Ireland (with interest) following a recalculation of their contribution. This once off rebate is an accounting issue and therefore one could argue that the ‘overall reduction’ is not a progressive act, but simply a once off accounting anomaly.” says Brendan Hennessy of the SVP Social Justice & Policy team..
"The SVP position on the PSO levy in previous years has been to seek to address the anomaly that the less energy people use the more it costs them, and that the cost does not take into account ability to pay.
"Higher wholesale electricity prices mean higher unit prices for customers as these are passed on; yet when wholesale electricity prices drop, customers pay anyway because the PSO plants need to be compensated for the lower money they are predicted to get from the market
"The PSO levy is clearly out of proportion to the ability to pay of low income customers and can be viewed as a regressive tax. As VAT is added to the levy it is a case of a tax on a tax. At a minimum there is a clear case for the VAT on the PSO levy to be zero-rated” said Mr Hennessy.