Séamus Kirk (Louth, Fianna Fail)
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607. To ask the Minister for Communications, Energy and Natural Resources his plans to reduce the public service obligation levy on charities and sporting organisations due to the increased costs in the public service obligation levy, which directly impact sporting bodies and charities nationwide; and if he will make a statement on the matter. [7848/15]

Alex White (Dublin South, Labour)
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The Public Service Obligation (PSO) levy is the support mechanism used for two very important objectives. Firstly, it supports electricity generation which was constructed for security of supply purposes, including peat generation. Secondly, it supports the development of renewable electricity which is important for both security of supply and for reducing carbon emissions from electricity generation. The levy is designed to compensate electricity suppliers for the additional costs they incur by purchasing electricity generated by these producers. It has been in place since 2001. The legal basis for the PSO levy and its method of calculation are set out in Regulations made under the Electricity Regulation Act 1999 (S.I. 217 of 2002). The Commission for Energy Regulation (CER) determines the PSO levy which is a charge on all electricity customers without exception. The annual PSO levy amount for 2014/2015 is €335.4 million. This equates to €64.37 per annum for residential customers, €221.66 per annum for small to medium sized business customers and €34.20/kVA for medium and large customers.

While I fully understand and appreciate concerns about the cost of the PSO levy to customers, the development of renewable energy in Ireland, supported by the renewable part of the PSO, will enable Ireland to reduce its fossil fuel dependency and vulnerability to rises in fossil fuel prices. The PSO levy is also vital to enable Ireland to meet its 2020 40% target for electricity generated from renewable sources by 2020, which in turn is important for the achievement of Ireland's 16% EU 2020 target for renewable energy.

The biggest driver for the levy rise for this year is the lower predicted wholesale market electricity price, which is estimated to be around 10% lower than last year. This results in lower predicted market income for the PSO plants and, therefore, a higher levy is required to cover their allowed costs. The lower wholesale electricity price is being driven by lower international gas prices which in turn drives up the PSO levy. However, lower gas and wholesale prices also reduce the wholesale cost of electricity that suppliers pay. In turn, suppliers are in a position to reduce their retail prices and potentially offset the PSO levy increase. Increased competition in the retail electricity market has led to a number of suppliers reducing their retail prices of late and I welcome these developments. The CER is tasked with retail market monitoring and executes this role vigorously to ensure competition leads to the fairest prices for customers.