Seán Fleming (Laois-Offaly, Fianna Fail)
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457. To ask the Minister for Communications, Energy and Natural Resources the savings to customers by the proposed removal of the public service obligation in respect of the peat supply contract between Bord Na Móna and Edenderry Power Station, County Offaly, at the end of 2015 and to West Offaly Power Station and Lough Ree Power in Lanesborough, County Longford, in 2019; the proposals and policy by his Department in relation to the way this will impact on Bord Na Móna; and if he will make a statement on the matter. [16697/15]

Alex White (Dublin South, Labour)
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The overarching objective of the Government's energy policy is to ensure secure and sustainable supplies of competitively priced energy to all consumers. The Public Service Obligation (PSO) levy has been in place since 2001 and is the overall support mechanism for generation designed for security of supply purposes, including peat generation, and for the development of renewable electricity. It is designed to compensate electricity suppliers for the additional costs they incur by purchasing electricity generated by these producers.

On average, over the operation of the PSO levy, the peat plants have received €51.4 million per annum. However this should not be taken as indicative of future payments from the PSO levy, the sum of which is dependent on the wholesale price of electricity set in a competitive market. The amount of the PSO levy varies from year to year as the levy is determined, inter-alia,by the difference between market revenues earned by generators and the returns allowed in their PSO contracts.

It is the case that having been awarded 15 year contracts to ensure security of supply, the peat plants referred to will be transitioning out of subsidy over the coming years. In line with Government policy there has been a gradual increase in the proportion of co-firing with biomass at the Edenderry plant. Market dynamics, regulatory decisions on priority dispatch for hybrid renewables as well as policy decisions on the "REFIT 3" scheme will influence the future of peat in the Irish generation fuel mix once the current peat PSOs have expired.

More broadly Bord na Móna is facing significant business challenges in the context of the deregulation of the electricity market and increasingly competitive and challenging environments across all its business areas. I understand that in order to ensure its continued success, the company is implementing a programme to transform all areas of its operations and structure, the key objective of which is to improve business effectiveness and efficiency.