Reduction in renewable power levy could cut €213m from bills

The energy regulator plans to cut the State’s renewable power levy in a move that will slice a potential €213 million from electricity bills.

The State imposes a public service obligation on all electricity users that is mainly used to subsidise wind farms and other renewable energy ventures. In a consultation paper published on Thursday, the Commission for Regulation of Utilities (CRU) proposes cutting the overall amount raised through the levy by €213 million to €258.6 million.

The proposal would result in cutting the charge by €3.43 a month for households. The regulator also wants to reduce the levy by €12.30 a month for small and medium-sized businesses.

Consumer and business groups are likely to welcome the proposal, as energy costs are rising on the back of recent oil price increases.

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Interested parties have until June 29th to respond to the CRU’s proposal. The regulator will decide on the levy decrease in August and implement the new charge in October.

The controversial levy funds the price that the State guarantees to pay wind farms and other renewable energy generators for the electricity they produce and also supports peat-fired power plants.

As the guaranteed price is higher than the actual cost of power, the levy bridges the gap between the two.

The regulator’s move is partly driven by the fact that wholesale electricity prices are rising, narrowing the gap between the two figures.

Since the Fianna Fáil-Progressive Democrats coalition originally introduced the levy to support investment in renewable electricity, all subsequent governments have maintained the policy and the charge.

The levy has risen steadily in recent years as the number of renewable energy generators has grown. The increases hit businesses that use large amounts of energy hardest.