The PSO levy explained

Every domestic electricity bill in Ireland carries a line called the PSO levy. It is small, it is identical on every plan from every supplier, and it is the single most misunderstood charge on the bill — largely because it is the one line your supplier has no control over and therefore never explains.

What it is

PSO stands for Public Service Obligation. The levy is a government-mandated charge, set annually by the Commission for Regulation of Utilities (CRU), collected by electricity suppliers on behalf of the State and passed through to a central fund. It is not revenue for your supplier. They collect it, they remit it, and they make nothing on it.

For the current levy period the domestic rate is €1.46 per month excluding VAT, which with the reduced 9% VAT rate on electricity comes to roughly €1.59 a month, or about €19 a year on a household bill. The CRU sets a new figure each year, running from 1 October to 30 September, and publishes the decision paper that explains how it was calculated.

Every household in the country pays the same amount, regardless of how much electricity they use. It is a flat charge per meter, not a charge per kilowatt hour.

What it funds

The levy exists to make up the difference between what certain generators are paid under long-standing State support schemes and what electricity is worth on the wholesale market. Historically it has covered three categories:

• Renewable generation supported under the REFIT schemes — mainly onshore wind, plus some biomass and hydro. These contracts guaranteed a price per unit to generators who built capacity when it would not otherwise have been commercially viable.
• Peat generation, now historic, which supported the midlands peat stations for security-of-supply and regional employment reasons before they closed.
• Security of supply — payments supporting particular plant that the system needs available, whether or not it is running.

The renewable component is by far the largest and, in recent years, effectively the only one that matters.

Why it moves so much — and why it went negative

Here is the part that surprises people. The levy is the gap between the guaranteed price and the market price. That means it moves inversely with wholesale electricity prices.

When wholesale prices are low, supported generators receive far less from the market than their guaranteed price, so the levy has to make up a large shortfall and the charge on your bill rises. When wholesale prices are high, those same generators earn more on the market than their guaranteed price, and the difference is paid back — which is why in the 2022/23 period the PSO levy was negative and appeared on Irish bills as a credit.

So a rising PSO levy is, counter-intuitively, a symptom of cheaper wholesale electricity, and a negative PSO levy accompanies an expensive one. The two move in opposite directions and largely offset.

Why it can never be discounted

This is the practically useful point.

When a supplier advertises “20% off your electricity bill”, the discount applies to their own charges — the unit rates, and sometimes the standing charge. It cannot apply to the PSO levy, because the levy is a pass-through the supplier is legally obliged to collect in full. The same is true of any cashback or welcome credit: those reduce what you pay overall, but the levy line itself is untouched.

The consequence for comparison is straightforward: the PSO levy can never be a reason to pick one supplier over another. Since every plan carries an identical charge, it drops out of any comparison between suppliers entirely. We include it in every annual cost estimate on this site — because it is money you will genuinely pay, and leaving it out would understate your bill — but it shifts every plan by exactly the same amount and changes no ranking. Our electricity comparison and cheapest provider pages both build it in.

Where to find it on your bill

Look for a line reading “PSO Levy”, “Public Service Obligation Levy” or occasionally “Government Levy”, in the charges section beneath the unit charges and standing charge. On a bi-monthly bill it will show as roughly €3.18 including VAT; on a monthly bill, about €1.59. If your bill period is unusual the amount is pro-rated by days.

Some suppliers show the levy excluding VAT and then apply VAT to the whole bill at the bottom, so the figure you see on the line may be the €1.46 monthly rate rather than the €1.59 you actually pay. Both are correct; they are just presented differently.

Common misconceptions

“I can avoid it by using less electricity.” No. It is a flat charge per meter point, unrelated to consumption. The only way to stop paying it is to disconnect the meter.

“It’s my supplier profiteering.” No. The rate is set by the regulator and is identical across the market. Two suppliers charging different amounts for the PSO levy would be an error, not competition.

“It’s a green tax.” Partly, in the sense that most of it now supports renewable generation, but it is better understood as a legacy contract-settlement mechanism than as a tax on carbon. The actual carbon tax in Ireland applies to fuels — including natural gas, at about 1.25 cent per kWh including VAT — and does not appear on electricity bills at all.

“Businesses don’t pay it.” They do, on a different and considerably larger scale, banded by connection size.

The short version

About €19 a year, set by the CRU, the same on every plan, cannot be discounted, moves inversely with wholesale prices, and occasionally becomes a credit. It is worth knowing about so you can read your bill correctly and so you are not taken in by a discount claim that implies otherwise — but it is not something to shop around over. The charges that are worth shopping around over are the unit rate and the standing charge, and the whole of your bill is worth understanding once, which is what our guide to reading an electricity bill is for.