Willie Penrose (Longford-Westmeath, Labour) | Oireachtas source

I thank the Ceann Comhairle for selecting this important issue which is a vital topic for debate on the floor of Dáil Éireann. The PSO levy has had a serious impact on a series of end users of electricity. The levy was introduced by the government in 2000 to ensure that Ireland had a percentage of indigenous electricity generation, peat resources principally from Bord na Móna, and also to encourage development of green energy in the form of wind and biomass. It was also introduced to have security of supply from the Aughinish and Tynagh power stations, which became relevant in the context of the reduction of the ESB monopoly. It was to guarantee new operators an income in the new markets.

The PSO levy is reviewed by the Commission for Energy Regulation each year and the levy is set according to the various formulae laid down in the original directive from government. In this context the proposed decision paper for the PSO levy for 2014-15 was published on 6 June.

The crux of the problem is that despite everybody's involvement in growing the competitiveness of domestic industry, and the clearly uncompetitive nature of the Irish electricity market, it appears all consumers - domestic, industrial and business ones - are again facing into significant and savage price increases. It is noted that large energy users are bearing a disproportionate percentage of the price increase sought: 47% for domestic users as against 80.5% for large energy users.

While the policy was introduced and designed to support laudable national objectives at the time, it has now become a millstone around the neck of Irish industry. It is threatening the sustainability of many jobs across the economy and is becoming a barrier to the entry of new industries, data centres and the knowledge economy which are highly reliant on competitive electricity prices.

This flies in the face of the continuous focus by Forfás on competitiveness and the fact that it disadvantages us economically as a country in this vital component of international competition. Large energy users are bearing the brunt of the cost of this levy. In 2014-15, if left unchanged, the contribution to the fund by large energy users will rise to no less than 80.52%. On a four-year look back when the country was in the grip of its greatest ever recession, the contribution to the fund by large energy users rose by no less than 242%.

In 2010-11, the fund stood at €156 million but is now a staggering €327 million. In just four short years, the fund has risen by 209%, which is an astronomical rise by any standards. We are aware of where the funds are used, so perhaps it is time to take a closer look at the PSO since the market is radically different from the one that existed when the levy was originally introduced.

The Minister knows my view that wind energy turbines are the most monstrous blot on our landscape, being neither efficient nor effective. They are driven by corporate greed and a dismissive approach by those involved. This industry has had its subsidy, via the levy, increased from €9.73 million to €87.8 million in just four years. It is no wonder that armed with this levy, which is provided by consumers at all levels who have no choice in the matter, wind energy promoters think they can do what they like without any care for people's concerns. This proportion of the levy increased by 295%.

However, we still appear to be hell bent on increasing the number of wind farms across our landscape, for which we will no doubt have to pay a further increase in the PSO levy. Are these great wind farms cost competitive and does this policy offer value for money? I say it does not.

A large user of energy in my constituency will have to pay an increase in the PSO contribution of 80.52%. For this company, which employs more than 250 people directly and indirectly, the increase could be the straw that breaks the camel's back. It operates in the export market, competing with Spain, Germany, England and the Benelux countries, all of which enjoy significantly lower energy costs and, in some cases, provide specific reliefs against high energy costs to their own companies. As a high level energy user, the PSO levy means that the company's overall electrical bill will rise by 4%, which will increase its energy bills by an estimated €250,000. As it competes in the markets to which I referred, it is not in a position to pass on the proposed price increases to their customers. How is the company going to survive and what impact will the increase have on workers and their families in this real life scenario?

If this economy is to survive and grow, businesses must be competitive. If we continue with the PSO levy in its current format, the inefficient generators may survive but energy users clearly will not and we will not be able to attract the data centres needed for the knowledge economy or persuade other high level operators to remain here. The outlook could be bleak in this challenging and competitive environment unless we change tack and remodel the PSO levy from its current structure. Competitiveness is the key to our survival.

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