Energy customers are in line for €127 savings on their electricity bills later this year, under new legislation agreed by the Government.
Cabinet has approved plans to allow the Public Services Regulatory Commission (CRU) to set the Public Service Obligation (PSO) tax on bills at a negative rate.
It was originally believed that the fee would be set to zero, saving customers around €52 a year. However, the new legislation will allow the CRU to set the tax at a negative rate, resulting in expected refunds of €75 for electricity customers.
The PSO tax is charged to all bills and supports the generation of electricity from local sustainable and renewable energy sources, such as wind and solar power.
The rate is calculated annually by the CRU and energy providers are required to collect this tax from customers through bills.
Tax payments are calculated based on estimated wholesale electricity and generation prices for the coming year.
The Indo Daily: Fuel’s Gold: From car travel bans to fuel rationing, how a doomsday fuel plan could affect you
Payments are then corrected based on generation and actual prices.
The CRU estimated that the financing to be raised with the fee will decrease from €263 million for the winter of 2021/2022 to a figure of minus €408 million for next year.
This equates to an ‘indicative’ annual saving of €75, excluding VAT, for households and consumers.
Including the €52 savings from the PSO going to zero, customers are potentially in line to save €127 on their bills for next winter.
The CRU will issue a final decision at the end of July on the exact PSO tax that will apply from October 2022 to September 2023.
On the other hand, the Cabinet approved 350 million euros for the purchase of 450 megawatts of additional emergency capacity for the electricity grid.
This additional generation capacity will be contracted for a limited period during the winter of next year.
It is due to increased demand on the power grid and the decommissioning of the old power plant.
“It will be available when needed and will add to the existing generation capacity in the electricity market. As part of today’s wide-ranging announcement, the Government has approved the necessary capital financing of the order of €350 million for EirGrid.
“This will support and enable the implementation of the initiative for the winter of next year (2023/2024),” a statement said.
The CRU welcomed the move but issued a warning about the potential impact of data centers on the power grid.
The Commission said EirGrid projections suggested that the gap between electricity demand and generation would widen in the coming years.
“There remains a risk that increased data center demand, above EirGrid’s estimate, could further increase the 2023/24 gap currently recommended by EirGrid,” he said.
“The CRU believes that all possible demand-side mitigation measures should be pursued, along with those on the supply side,” he said.
He said mitigation measures should include deferring the approval of any additional data center connections to the grid for the next two winters.
The Government also approved a €3 billion loan to EirGrid to strengthen our national grid as part of the “Shape Our Electric Future” plan and to deliver the Celtic (Ireland-France) interconnector.
EirGrid seeks to rely on the 80% renewable electricity target by 2030.
Currently, about 40% of electricity comes from renewable generation.