Public Service Obligation Levy - Decision by CER

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Public Service Obligation Levy - Decision by CER




    1 August 2003


    This document contains a decision by the Commission for Energy Regulation under the Electricity Regulation Act 1999, (Public Service Obligations) Order 2002 (SI 217 of 2002).


    The Commission has determined the PSO Levy for 2004 in the following amounts:

    Customer Category Annual Levy Amount

Domestic customers ? 18.16 / customer

    1Small commercial customers

    (maximum import capacity of less than 30kVA) ? 54.98/ customer

    Medium and large customers

    (maximum import capacity of greater than 30kVA) ? 9.99/ kVA

    ststThese rates will take effect from January 1 2004 until December 31 2004

    inclusive. The total amount to be recovered via the Levy in 2004 is ?74.814

    million. (Refer to Appendix 1 for the allocation of the Levy by customer category and percentage of individual peaks.)


    rdOn 23 May 2002 the Minister for Public Enterprise issued an Order directing the Commission to impose a Public Service Obligation (PSO) on the Electricity Supply Board (the Board) to cover the additional costs incurred by the Board in meeting these obligations by means of a levy to be imposed on all final electricity

    stcustomers, commencing 1 January 2003.

    The aims of the Order are:

    o To ensure that Ireland has reasonable self-sufficiency in electricity

    generation capacity by ensuring that a percentage of the State’s

    generation capacity is fired on indigenous peat

    o To help protect the environment by promoting the use of renewable energy


    The PSO requires the Board, in its capacity as Public Electricity Supplier (ESB PES), to purchase electricity generated from peat and renewable, sustainable or alternative forms of energy in following Government aims for security of supply. The amount of the Levy is the excess of the Board’s allowed costs for bought-in

    and owned peat fired generation and alternative energy requirements (AER), over the Best New Entrant price for electricity. The levy includes an economic return on investment, where relevant, and any other revenue accruing to the Board associated directly with peat-fired generation and Alternative Energy Requirement (AER) generation schemes.

     1 Please note there was an error in the CER document that originally published the PSO charges (CER/03/151) - the monthly rate for the small/medium category should be EUR4.58/month (i.e. EUR54.98/12) rather than EUR4.88/month as published.

    The parameters for calculating the annual Levy were agreed between the then Department of Public Enterprise (now the Department of Communication, Marine and Natural Resources) and the European Commission. The total Levy amount will vary annually, due primarily to the implementation of AER schemes to meet renewable energy targets as set by the Government.

    Suppliers of electricity must collect the PSO levy from all customers. The levy is imposed as a fixed charge, based on the customer’s installed capacity and is

    included as a separate line item on the electricity bills issued by each supplier. The monies collected are then passed on to ESB.

    Calculation of the Levy Amount

    Under Section 9(2) of the Electricity Regulation Act, 1999, (Public Service Obligations) Order (Amended) 2002, (SI No. 217 of 2002), the Commission determines the amount of the Levy on the basis of estimates provided by ESB. In April 2003, ESB submitted their estimated costs of generating electricity from their peat-fired stations and the estimated cost of purchases from AER and Edenderry Power Ltd. The Commission has concluded a review of these estimated costs and has approved the calculation of the 2004 PSO Levy based on these estimates.

    The 2004 PSO Levy amount has increased from the 2003 Levy due to the implementation of the AER VI scheme and the construction of the new peat-fired generation plant in Lanesboro, Co. Longford. The new, more efficient peat station will replace the existing station, which is scheduled to close during the st1 Quarter 2004.

    The actual costs incurred by ESB in fulfilling the Public Service Obligation in 2004 will be audited in 2005. The Commission will review these audited accounts. Any variances between the estimated and actual costs will be recovered / rebated in the 2006 Levy.

Tom Reeves

    Member of the Commission

    1 August 2003

    Appendix 1 Allocation of 2004 PSO Levy

     ? mil. ?/customer ?/kVA ?/customer ?/kVA

     Domestic Profile 1,992,518 39.7% 29.702 1,635,615 18.16 1.51 Small & Medium Profile 561,514 11.2% 8.370 152,247 54.98 4.58

     Large Profile 2,464,679 49.1% 36.741 24,037 3,677,735 10.09 0.83


    1. PSO for 2004 is made up of the following:-

     ? m

     Peat 58.428

     AER 16.086

    Sub-Total (excluding collection costs) 74.514

    Total Administrative Costs 0.300

    Total incl. Collection Costs 74.814

2 Profiles were taken at the Connection point and not at the Trading Point.

3 DSO initial forecasts for customer no's and contracted capacity used

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