By Ann Marie Foley - 11 August, 2015
Responding to the reduction in the 2015/2016 Public Service Obligation Levy (PSO) on electricity bills which will see the charge drop from €64.37 to €60.09 from next October, the charity said “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.”
The total levy of €325.3m for 2015/2016 announced by the Commission for Energy Regulation (CER) 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 two months been lost in the main due to decreasing wholesale costs for gas and inaccurate information on the ceasing of the *Tynagh subsidy,” Brendan Hennessy of the SVP Social Justice & Policy team criticised.
“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,” Brendan Hennessy continued.
He added that the SVP position on the PSO levy previously has been to call for the removal of this anomaly – that the less energy people use the more it costs them.
The cost does not take into account ability to pay.
“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 Brendan Hennessy.
The SVP has seen the amount it pays for energy costs for those who can’t afford to pay increase steadily over the last number of years. It has also had to pay for re-connection for many customers in arrears.
CER reported that there were 14,650 disconnections in 2012 and 10,122 in 2013.
In Great Britain there were just 453 electricity disconnections in 2012.
*Galway-based Tynagh Energy, whose shareholders include US giant General Electric and Turkish group Gama, receives PSO payments, due to run out in 2016.