Dempsey rejects suggestion to scrap PSO levy

The Minister for Communications, Marine and Natural Resources, Noel Dempsey, has said scrapping the public service obligation (PSO) levy which is added to every electricity bill would "devastate" the midlands.

Members of the Joint Oireachtas Committee on Communications yesterday suggested to the Minister that ending the PSO might be a way to bring down electricity prices for consumers in the absence of competition in the domestic sector.

A large part of the PSO is used to fund peat stations and renewable energy products. The ESB currently operates two peat stations - Lanesborough, Co Longford and Shannonbridge, Co Offaly - which generate 250 megawatts of power between them. Without assistance from the PSO these stations might not be economical in the long term.

Several members said the PSO continued to be added to bills at a time when the Government was taking dividends of over €70 million from the ESB.

Fine Gael Senator Michael Finucane said the PSO appeared to be "anti-competitive" and this was certainly the view of the energy regulator Tom Reeves. He said "consumers are asking when will someone cry stop".

However, the suggestion that the PSO should be scrapped or reviewed was strongly rejected by Mr Dempsey. He said peat stations in the midlands would be seriously damaged by such a decision. "Its going to devastate the midlands. I'm telling you that's what the effect will be," he angrily replied to Mr Finucane.

Mr Finucane asked Mr Dempsey whether he was going to publish the Deloitte report on the electricity industry. Mr Dempsey declined to answer the question and continued to ask Senator Finucane if he supported the closure of peat stations in the midlands. After further heated exchanges the committee chairman, Noel O'Flynn TD, suspended the meeting.

During his presentation Mr Dempsey revealed he was not necessarily going to support the ESB over its plans for the Aghada power station in Co Cork.

The ESB is considering building a new station at the site which would replace an existing plant located there. This idea is firmly opposed by privately owned companies like Viridian. Mr Dempsey said it might not be wise to make a decision on this until the Deloitte report on the electricity industry was studied.

The ESB will need the approval of Mr Dempsey to go ahead with the project, which is likely to cost about €250 million.

Earlier Mr Dempsey agreed that deregulation of the electricity industry had not resulted in many benefits so far, but said he hoped in time new players would enter the sector.