By Ann Marie Foley - 31 July, 2014
Levy is clearly out of proportion to low income customers' ability to pay and can be viewed as a regressive tax: SVP.
“This is clearly out of proportion to low income customers’ ability to pay and can be viewed as a regressive tax,” the Society of St Vincent de Paul (SVP) has commented.
Customers will pay on average €73.06 in total when VAT is added to the 2014/2015 Public Service Obligation Levy (PSO) on electricity bills.
Details, which were announced by Commission for Energy Regulation (CER) earlier this week, came as a surprise as the levy was higher than suggested as recently as June 2014.
Customers will lose no matter what with the PSO, according to the SVP.
When wholesale electricity prices fall customers pay a higher PSO because the plants covered by the PSO have to be compensated but if wholesale prices increase, the increase is passed on to the customers through unit costs.
“In this context of lower wholesale prices, policy dictates that end customers including vulnerable end customers have to pay more to subsidise the energy market players,” John-Mark McCafferty, SVP Head of Social Justice and Policy, said.
Another consequence of this policy is that a levy (tax) to subsidise electricity generation is imposed on all domestic customers at a flat rate, creating an increased burden on low income customers and those with a history of arrears and indeed multiple debts.
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 Britain there were just 453 electricity disconnections in 2012 and in the same year SVP provided €11.1million to help people in Ireland meet their energy costs.
The Public Service Obligation (PSO) Levy is a charge relating to the costs of purchasing peat generated electricity and the output of renewable, sustainable or alternative forms of energy purchased under various Government schemes.
All electricity suppliers are obliged by government to apply these charges in the interests of security of supply and environmental protection.