Proposed Decision Paper - Public Service Obligation Levy 2021/22 - CRU Ireland
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An Coimisiún um Rialáil Fóntas Commission for Regulation of Utilities
An Coimisiún um Rialáil Fóntas
Commission for Regulation of Utilities
Proposed Decision Paper
Public Service Obligation Levy
2021/22
Proposed Decision Paper
Reference: CRU/21/062 Date Published: 04/06/2021 Closing Date: 05/07/2021
www.cer.ie
0
Executive Summary
The Public Service Obligation (PSO) levy is charged to all electricity final customers in Ireland.
It is designed by the Irish Government and consists of various subsidy schemes, including
the Government’s new Renewable Electricity Support Scheme, to support its national policy
objectives. This year the PSO levy is entirely related to renewable electricity supports and is
key in enabling Ireland to meet its national targets in terms of the generation of electricity from
renewables and aligns with the CRU’s vision of achieving a secure, low carbon future.
Government policy determines the level of subsidy provided to generators supported under
the PSO, with the CRU’s primary role being the calculation of the PSO levy. Specifically, in
accordance with Government policy, the CRU’s role is to calculate the PSO levy annually
based on support rates that are set by Government, and to help ensure that the scheme is
administered appropriately and efficiently. The CRU has therefore prepared this Proposed
Decision Paper (CRU/21/062), which sets out the proposed PSO levy to apply to electricity
customers from 1 October 2021 to 30 September 2022.
Following a review of the PSO cost submissions from eligible suppliers, the CRU’s initial
calculation is that a PSO levy of €285.60 million will be required for the 2021/22 PSO year,
which represents a decrease of €107.53 million (27.35%) on the 2020/21 PSO levy of €393.13
million.
The key driver in this projected decrease in the 2021/22 PSO levy is the increase in the PSO
Benchmark Price. The PSO levy calculation estimates the expected market price for electricity
for the forthcoming year (the benchmark price). The higher the expected market price, the
smaller the subsidy that will be needed. There is a higher estimated benchmark price of
€81.07/MWh for the forthcoming (2021/22) PSO year, compared to an estimated benchmark
price of €53.66 for the current (2020/21) PSO year. This has lowered the 2021/22 PSO levy
by €107.53 million to €285.60.
The graph below gives a history of the PSO levy over recent years outlining the total levy and
its constituent parts. As illustrated below, the proposed 2021/22 PSO levy has decreased
relative to the previous PSO year. With reference to the 2018/19 and 2019/20 PSO years, the
CRU notes that the PSO levy for these years were particularly low due to negative R-factors
being applied in the calculation of the PSO levy in both years.
iThe CRU notes that PSO levy payments are calculated on the basis of estimated generation
and estimated wholesale electricity market prices for the year ahead. These payments are
then corrected for actual generation and prices through the R-factor. In Q1 2021, the CRU
consulted on options for managing volatility of the PSO (CRU/21/017). A decision paper in
relation to this consultation will be published later in 2021. The CRU notes that due to the ex-
ante nature of the PSO levy and given that wholesale electricity market prices and generation
from renewables fluctuate from year to year, it will only be possible to improve upon certain
aspects of the PSO levy calculation to mitigate against year on year volatility, and that it is
not feasible to remove the risk of volatility occurring in the PSO levy completely.
The PSO levy amount of €285.60 million is the CRU’s indicative calculation of the 2021/22
PSO levy. The final PSO levy for the 2021/22 PSO year will be published by the CRU prior to
the statutory deadline of 1 August 2021. The final 2021/22 PSO levy is expected to differ from
the projection contained in this Proposed Decision Paper due to expected changes in the
2021/22 benchmark price and a further review of PSO cost submissions by the CRU.
From a customer impact perspective, the forthcoming 2021/22 PSO levy, as currently
proposed, will result in a monthly charge of €4.60 and €15.35 for domestic and small
commercial customers, respectively. In comparison to the current 2020/21 PSO levy, this
equates to a monthly decrease of €1.92 and €6.06 for domestic and small commercial
customers respectively. Customers in the medium/large commercial category will be subject
to a monthly charge of €1.78/kVA, which constitutes a decrease of €1.00/kVA relative to
current 2020/21 PSO year.
The table below summarises the 2021/22 indicative change in the levy charged for each
customer category.
iiMonthly Levy Monthly Levy Decrease
PSO Customer Category
Amount (2020/21) Amount (2021/22) (%)
Domestic €6.52 / customer €4.60 / customer -29%
Small commercial
€21.41 / customer €15.35 / customer -28%
(MIC < 30 kVA)
Medium/Large commercial
€2.78 / kVa €1.78 / kVa -36%
(MIC ≥ 30 kVA)
The allocation of the total 2021/22 PSO levy between customer categories is based on ESB
Networks’ Indicative 2021/22 PSO Cost Allocation Model. The CRU notes that due to the
ongoing economic uncertainty resulting from the COVID-19 pandemic, ESB Networks’
Indicative PSO Cost Allocation Model should be caveated, as the customer number and peak
demand estimates for the forthcoming 2021/22 PSO year may change when ESB Networks
submit the final 2021/22 PSO Cost Allocation Model to the CRU in July 2021, prior to the
publication of the CRU’s 2021/22 PSO Decision Paper.
iiiPublic/Customer Impact Statement
For the PSO year starting 1 October 2021 the CRU has calculated that the indicative PSO
levy will decrease by 27.35% in total. The indicative PSO levy rate from 1 of October 2021 to
30 September 2022 is €4.60 per month for domestic customers. This means that each
household will pay €1.92 per month less on the PSO charge on their electricity bill than in the
current PSO year.
The indicative PSO levy rate from 1 October 2021 to 30 September 2022 for small commercial
customers (where MIC 30 kVa) is €1.78 per kVa per month. The is a decrease by €1.00/kVA
relative to 2020/21 PSO year. The graph below provides a breakdown of monthly PSO levy
paid by each customer category since the 2011/12 PSO year.
A number of factors determine what a customer is charged for the PSO levy in a given period.
The biggest influence is the wholesale price of electricity. There is an inverse relationship
between the PSO levy and the wholesale electricity price. This means if the wholesale
electricity prices are high, less money is required to be raised through the PSO levy to
subsidise PSO supported generators. This is because these generators receive more money
from the wholesale market for the electricity they produce.
The CRU notes that although a decrease in the PSO levy will reduce the fixed charge element
on electricity bills, the variable charge (i.e. the price per unit of electricity) may in fact increase.
The CRU emphasises that savings on the variable aspect of the electricity bill (i.e. the price
per unit of electricity) can be gained through switching electricity supplier and through energy
efficiency.
ivTable of Contents
Executive Summary .................................................................................................. i
Public/Customer Impact Statement ...................................................................... iv
Glossary of Terms and Abbreviations .................................................................. vi
1. Introduction .......................................................................................................... 1
1.1 The Commission for Regulation of Utilities.......................................................................... 1
1.2 Purpose of this Document .................................................................................................. 1
1.3 Structure of Paper .............................................................................................................. 1
1.4 Responding to this Document ............................................................................................. 2
1.5 Related Documents ............................................................................................................ 2
2. Background .......................................................................................................... 4
2.1 The PSO Levy ..................................................................................................................... 4
2.2 Legislation Governing the PSO Levy .................................................................................... 6
2.3 State Aid Notifications........................................................................................................ 7
3. Key assumptions ................................................................................................. 8
3.1 Benchmark price ................................................................................................................ 8
3.2 Capacity payment .............................................................................................................. 8
4. Proposed 2021/22 PSO levy ................................................................................ 9
4.1 Total levy cost and generation capacity supported .............................................................. 9
4.2. Drivers of year on year change ........................................................................................ 10
4.3. Allocation of Costs .......................................................................................................... 11
4.4. True PSO Levy Cost .......................................................................................................... 13
5. Cost breakdown of proposed levy ................................................................... 16
5.1. Overview of support schemes.......................................................................................... 16
5.2. R-factor........................................................................................................................... 21
5.3. PSO CfDs ......................................................................................................................... 22
5.4. PSO Monies Owed........................................................................................................... 23
6. Next Steps .......................................................................................................... 24
Appendix 1 – Allocation of 2021/22 PSO ..................................................... 25
Appendix 2 – 2019/20 Benchmark Price ...................................................... 24
vGlossary of Terms and Abbreviations
Abbreviation or Term Definition or Meaning
ACPS Annual Capacity Payment Sum
AD Anaerobic Digestion
AER Alternative Energy Requirement
CfD Contract for Difference
CHP Combined Heat and Power
CPI Consumer Price Index
Department of the Environment, Climate and
DECC
Communications
DSO Distribution System Operator
HICP Harmonised Index of Consumer Prices
I-SEM Integrated Single Electricity Market
MIC Maximum Import Capacity
MWh Megawatt Hours
PPA Power Purchase Agreement
PSO Public Service Obligation
REFIT Renewable Energy Feed-In-Tariff
RESS Renewable Energy Support Scheme
SEM Single Electricity Market
S.I. Statutory Instrument
TSO Transmission System Operator
vi1. Introduction
1.1 The Commission for Regulation of Utilities
The CRU’s mission is to protect the public interest in Water, Energy and Energy Safety.
The CRU is guided by four strategic priorities that sit alongside the core activities we
undertake to deliver on the public interest. These are:
• Deliver sustainable low-carbon solutions with well-regulated markets and networks
• Ensure compliance and accountability through best regulatory practice
• Develop effective communications to support customers and the regulatory process
• Foster and maintain a high-performance culture and organisation to achieve our vision
1.2 Purpose of this Document
This document explains the proposed Public Service Obligation (PSO) levy to apply to
electricity customers in Ireland from 1 October 2021 to 30 September 2022. A final decision
on the PSO levy will be issued by 1 August 2021 in compliance with statutory requirements.
The PSO levy is likely to change between this proposed PSO decision and the final decision.
This is due to the potential change in a number of inputs, in particular the predicted wholesale
market price which can change in line with changing commodity prices.
1.3 Structure of Paper
The remainder of this document is structured as follows:
Section 2 – Background: Provides detail on the PSO levy, and an overview of the legislation
governing the PSO levy and State Aid Decisions.
Section 3 – Key Assumptions: Provides detail on the benchmark price and capacity
payment applied in calculating the proposed PSO levy for 2021/22.
Section 4 – Proposed 2021/22 PSO Levy: Gives a high-level overview of the proposed PSO
levy in terms of total cost and total generation capacity supported, as well as the allocation of
the cost to the different PSO customer categories.
Section 5 – Cost Breakdown of Proposed Levy: Provides a breakdown of the proposed
PSO levy in terms of the support schemes and generation technologies that it supports.
1Section 6 – Next Steps.
Appendix 1: Contains key data from ESB Networks’ model used to allocate the proposed
PSO levy to the different categories of customer.
Appendix 2: Provides an analysis of the CRU’s 2021/22 benchmark price.
1.4 Responding to this Document
Responses to this Proposed Decision Paper should be forwarded by close of business on 5
July 2021, preferably in electronic format to PSO@cru.ie or alternatively by post to:
PSO Team
Commission for Regulation of Utilities
The Grain House
Belgard Square North
Tallaght, Dublin 24
Unless marked confidential, all responses may be published on the CRU’s website.
Respondents may request that their response is kept confidential. The CRU shall respect this
request, subject to any obligations to disclose information. Respondents who wish to have
their responses remain confidential should clearly mark the document to that effect and
include the reasons for confidentiality. Responses from identifiable individuals will be
anonymised prior to publication on the CRU website unless the respondent explicitly requests
their personal details to be published. Our privacy notice sets out how we protect the privacy
rights of individuals and can be found here.
1.5 Related Documents
Relevant Legislation
• Electricity Regulation Act, 1999
• S.I. No. 217 of 2002, “Electricity Regulation Act 1999 (Public Service Obligations)
Order 2002”, as amended.
Relevant CRU Papers
• CRU/19/126, “Information Paper: Arrangements for PSO Invoicing and Collection”,
11 October 2019;
• CRU/20/005, “Notification to Suppliers – Submissions to the CRU for the 2021/22
Public Service Obligation (PSO) Levy”, 24 January 2020;
2• CRU/20/013, “Decision Paper: Arrangements for the Calculation of the Public
Service Obligation Levy Post I-SEM Implementation”, 27 January 2020;
• CRU/20/086, “Decision Paper: Public Service Obligation Levy 2020/21”, 31 July
2020;
• CRU/21/045, “Decision Paper” Arrangements for Calculation of the PSO Levy:
Renewable Electricity Support Scheme & Clean Energy Package.
• CRU/21/17, “Managing Volatility of the Public Service Obligation Levy”, 25 February;
Relevant EU State Aid Notifications and Clearance Decisions
• EC C(2012) 8, “State aid SA.31236 (2011/N) – Ireland, Renewable Feed In Tariff”
(REFIT 2);
• EC C(2020) 4795, “State Aid SA.54683(2020/N)–Ireland Renewable Electricity
Support Scheme (RESS)”, 20 Jul 2020;
• EC C(2007) 4317, State aid N 571/2006 – Ireland, “RES-E support programme”
(REFIT 1);
• EC C(2020) 4795, “State Aid SA.54683(2020/N)–Ireland Renewable Electricity
Support Scheme (RESS)”, 20 Jul 2020;
32. Background
2.1 The PSO Levy
The PSO levy is used to fund various schemes designed by Government to support national
policy objectives related to renewable energy.1
The PSO levy is charged to all electricity final customers2 in Ireland, and the proceeds are
used to compensate the:
i. additional costs3 incurred by market participants in generating or purchasing electricity
from PSO-supported generators4. In the case of in-market generators, these are the
additional costs over and above the revenues received from selling that electricity into
the market, and in the case of out-of-market generators, they are the additional costs
over and above the avoided cost of buying that electricity from the market; and
ii. administrative expenses incurred by suppliers, the Distribution System Operator
(“DSO”), i.e. ESB Networks, and the Transmission System Operator (“TSO”), i.e.
EirGrid, in collecting payment of the PSO levy.
Policy and terms associated with the generators eligible for support from the PSO levy under
the various schemes are set out in legislation and documents published by the Department
of the Environment, Climate and Communications (DECC), which have also been subject to
state aid approval from the European Commission. The CRU has no discretion over the terms
of the various schemes. The CRU’s role in relation to the PSO is to calculate the levy and
1 Until 2016, the PSO levy supported security of supply policy objectives. The PSO levy also supported national
policy objectives in relation to indigenous fuels through the Peat PSO Scheme. This scheme expired at the end
of 2019.
2 In accordance with Electricity Regulation Act, 1999, final customer means “a person being supplied with
electricity at a single premises for consumption on those premises”.
3 “Additional costs” as referenced in the 2002 Order does not define what is meant by such costs other than to
state in Article 2(3) of the 2002 Order that they include costs incurred by the Board (i.e. ESB) in complying with its
obligations under Article 5(1) and (b) (i.e. Public service obligations for Peat), Article 6A or 6B (i.e. Public service
obligation for short-term peaking capacity), Article 6(C) (i.e. CADA), and the costs incurred by a supplier in
complying with its obligations under Article 6D (i.e. Public service obligations for REFIT contracts). Under the
CRU’s current arrangements for the PSO levy, the relevant market participants are not entitled to recover such
additional costs, unless those costs are in accordance with the relevant State Aid Notifications, legislation and the
terms and conditions of the relevant schemes.
4
Under PSO support schemes such as REFIT, this electricity is procured via Power Purchase Agreements (PPAs)
that suppliers (also referred to as off-takers) enter into with electricity generators.
4payments in respect of supported generators in accordance with Government policy, and to
ensure that the scheme is administered appropriately and efficiently.
Before the start of each PSO year, which runs from 1 October to 30 September, the CRU
calculates the PSO levy for that PSO year based on:
i. An estimate, for the forthcoming PSO year, of the additional costs based on a forecast
of the cost of selling or buying from the market using a benchmark wholesale electricity
price (“the Ex-ante Benchmark Price”) as determined by the CRU, and an estimate of
the generation output determined and submitted to the CRU by the relevant market
participant.
ii. A reconciliation, for the preceding PSO year, of the additional costs actually incurred
or deemed to have been incurred, with the estimates made in advance of that PSO
year. Thus, for example, the PSO levy calculation carried out by the CRU prior to the
start of the PSO Year 2021/22 includes a reconciliation of the costs actually incurred
or deemed to have been incurred during the PSO year 2019/20 with the estimates
made for the PSO year 2019/20 prior to the start of PSO year 2019/20 The resulting
reconciliation payments are known as “R-factors” or “R-factor payments”, and may
be positive or negative, depending on whether the actual costs incurred or deemed to
have been incurred are higher or lower than the estimates. Such differences arise
primarily due to differences between the estimated and the actual amount of electricity
generated, and between forecast and actual market prices.
The PSO levy is collected from electricity final customers by electricity suppliers5.. For
distribution-connected customers, the levy collected by electricity suppliers is passed to the
DSO and then from the DSO to the TSO, while for transmission-connected customers the
levy is passed directly to the TSO6. The TSO pays out the appropriate PSO amounts, as
instructed by the CRU, to the relevant market participants. Although the PSO levy is paid to
5
The CRU has previously received queries in relation to Value-Added Tax (VAT) being paid on the PSO levy. The
CRU has raised this matter with Revenue who stated the following: “In broad terms, Value-Added Tax (VAT) is
a tax on consumer spending, charged on the total consideration which the person supplying goods or services is
entitled to receive in respect of that supply. […] where a utility provider charges a customer for its services and
includes in that charge an amount in respect of a Public Service Obligation (PSO) levy, that levy is part of the
consideration that the service provider receives for the supply and is chargeable to VAT.”
5the supplier, generators receive support through the price specified in the Power Purchase
Agreement (PPA)7.
2.2 Legislation Governing the PSO Levy
Electricity Regulation Act 1999
Section 39 of the Electricity Regulation Act 1999, as amended (“the Act”), gives the Minister
the power to direct, by order, the CRU to impose obligations on holders of licences or
authorisations in relation to security of supply, environmental protection and use of indigenous
energy sources, including the collection of a levy from final customers. In accordance with
Schedule 2 of the Act, the calculated PSO levy is allocated annually across three categories
of electricity customer (i.e. Domestic Accounts, Small Accounts & Medium-Large Accounts)8
based on the maximum demand in respect of each category, as a proportion of the sum of
the three maximum demand figures. The attribution of the maximum demand in respect of
each category of electricity account is carried out by the DSO for each PSO year, in
accordance with Section 39 (5A) (b) of the Act. CER/17/0739 provides further details.
The 2002 Order
The Electricity Regulation Act 1999 (Public Service Obligations) Order 2002 (Statutory
Instrument No. 217 of 2002) (as amended) (“the 2002 Order”) sets out more detail in relation
to issues such as:
• PSO Calculations
• Duties of suppliers
• Duties of the DSO
• Duties of the TSO
• Duties of final customers
• Recovery of contract debt
The 2002 Order has been amended by subsequent S.I.s to provide for the recovery of costs
under the PSO for such schemes. As of February 2020, the Order also requires the CRU to
oblige the TSO to administer a competition, established by the Minister, to ensure the
6
Under PSO support schemes such as REFIT, this electricity is procured via Power Purchase Agreements (PPAs)
that suppliers (also referred to as off-takers) enter into with electricity generators.
9
Decision on ESB Networks’ Updated PSO Levy Cost Allocation Methodology.
6availability of renewable, sustainable or alternative forms of energy, namely through RESS
auctions.
2.3 State Aid Notifications
The Government is required to notify the terms of each support scheme under the PSO to the
European Commission and obtain approval. The original State Aid Notification of November
2000 sets out the broad areas that may be covered by the PSO as listed in Section 39 of the
Act. These include security of supply through the use of indigenous fuel sources, as well as
environmental protection. Since the original notification, various Government support
schemes that are funded by the PSO have been notified to the EU Commission and have
received state aid clearance.
73. Key assumptions
3.1 Benchmark price
The benchmark price is an average of the forecast wholesale market price of electricity over
the relevant PSO year. It is used by the CRU to calculate the forecast market revenue of
generation plants supported under the PSO for the relevant PSO year, based on their
estimated generation. This forecast market revenue is subtracted from the guaranteed
revenue of the supported plants in order to determine the amount to be paid via the PSO levy.
The lower the benchmark price, the higher the top up required from the PSO levy and vice
versa.
The benchmark price was calculated using a PLEXOS model of the SEM (SEM-20-004).For
clarity, this SEM model has been applied to the entire PSO year from 1 October 2021 to 30
September 2022. Any difference due to the use of this model between the benchmark price
applied here and actual wholesale prices under the revised SEM trading arrangements, will
be captured in the R-factor for the 2021/22 PSO year, when calculating the 2022/23 PSO
levy.
For the purpose of calculating the PSO levy contained in this Proposed Decision Paper, a
forecast benchmark price of €81.07/MWh has been used. The exchange rates and forward
fuel and carbon prices used in modelling the 2021/22 PSO year are from 7 May 2021, with
the main determinant of the benchmark price being the forward fuel prices. It is envisaged
that there will be a change to forward fuel prices and therefore to the benchmark price before
the decision paper containing the final PSO levy is published (by 1 August 2021).
3.2 Capacity payment
The Final Capacity Auction Results 2021/2022 T-1 are available on the SEMO website10. The
CRU has used the results of this auction to determine capacity revenue remunerated to
generators for the purpose of the 2021/22 PSO calculation.
10
Final Capacity Auction Results 2021/2022 T-2 Capacity Auction
84. Proposed 2021/22 PSO levy
4.1 Total levy cost and generation capacity supported
The total PSO levy for the 2021/22 year, calculated based on the benchmark price and
capacity payment assumptions described in Section 3, is €285.60 million. A high-level
breakdown of the 2021/22 PSO levy into its components is shown in Table 4.1.
Total PSO
Generation Forecast Cost R-Factor
support
Component Capacity 2021/22 (€ 2019/20
2021/22
Supported (MW) million) (€ million)
(€ million)
Renewables 4,455 €60.8 €233.6 €294.4
Peat €0.0 -€1.98 -€1.98
PSO CfDs - - - -€1.2
Admin - - - €0.9
Rebate - - - -€6.5
Total 4,455.2 €60.77 €231.63 €285.60
Table 4.1: Breakdown of annual proposed PSO levy Costs
Additionally, Figure 4.1 provides an annual breakdown of the total PSO levy since 2011-12
and presents the overall trend in the cost of the PSO.
Figure 4.1: Breakdown of total proposed PSO levy.
94.2. Drivers of year on year change
The proposed PSO levy for 2021/22 of €285.60 million represents a decrease of €107.53
million (27.4%) on the 2020/21 levy of €393.13 million. A number of drivers are contributing
to this increase, principally the increase in the 2021/22 PSO Benchmark Price to €81.07/MWh
relative to the 2020/21 Benchmark Price of €53.66/MWh.
Downward Drivers of the 2021/22 PSO Levy
i. Higher Indicative Benchmark Price:
The forecast benchmark price of €81.07/MWh is higher than the benchmark price of
€53.66/MWh used in calculating the 2020/21 PSO levy. This acts to decrease the ex-
ante payments made to PSO supported plants in the 2021/22 PSO year by
approximately €284.91 million. This is because the higher forecast market revenue
decreases the amount required from the PSO levy to compensate suppliers up to the
guaranteed rates that they are obliged to pay to PSO supported generators.
ii. Rebate: €6.46 million of rebate is estimated to paid back into the 2021/22 PSO. The
majority of these monies (€6.08 million) relate to PSO payments that were withheld
from suppliers, by EirGrid, in the 2020/21 PSO year in accordance with the CRU’s
PSO withholding mechanism. A smaller portion of these monies (€0.38 million) relates
to RESS 1 Bid Bonds that have been drawn down by EirGrid, upon instruction by
DECC. These monies will reduce the 2021/22 PSO levy.
iii. Negative Ex-Ante RESS Payments:
Unlike the REFIT schemes, RESS projects can owe monies back to the PSO levy, in
the event where a project’s Strike Price is less that the market price. The CRU’s
2021/22 indicative benchmark price of €81.07 is higher than the Strike Price of a
number of RESS units that have made ex-ante submissions to the 2021/22 PSO levy.
Based on the CRU’s current indicative 2021/22 PSO levy projection, a number of
these projects will owe monies to the PSO levy ex-ante in the 2021/22 PSO year. As
a result, the 2021/22 net ex-ante payments under the RESS scheme are negative
€1.55 million.
The most significant upward driver of the 2021/22 indicative PSO levy is the increase in the
2019/20 R-factor relative to the 2018/19 R-factor included in the 2020/21 PSO levy, which is
detailed further below.
10Upward Drivers on the 2021/22 PSO Levy
i. Increase in Positive R-factor: The calculation of the PSO levy requires an ex-ante
estimation of the monies recoverable in a given PSO year by suppliers plus the
calculation of the monies that should have been recovered by such parties two PSO
years ago (in this instance 2019/20). This latter calculation is referred to as the “R-
factor”.
A 2019/20 R-factor of €231.63 million is being included in the 2021/22 PSO levy
calculation. The 2019/20 R-factor accounts for the difference between the PSO
monies paid suppliers in the 2019/20 year, calculated ex-ante, and the actual PSO
monies owed to suppliers 2019/20 PSO year, certified ex-post. The R-factor for the
2019/20 PSO year is positive meaning suppliers under recovered in the 2019/20 PSO
year. This positive 2019/20 R-factor of €231.63 million constitutes a net increase of
€151.09 million in comparison to the 2018/19 R-factor of €80.54 million. This is a
significant upward driver in the 2021/22 proposed PSO levy.
4.3. Allocation of Costs
The cost of the PSO levy is allocated across three categories of customer – Domestic, Small
Commercial (MIC < 30kVA) and Medium/Large Commercial (MIC ≥ 30kVA). The peak
demand associated with each category is based on standard load profiles, metered data and
forecast demand data, which is determined by ESB Networks. The cost of the PSO levy is
then allocated in proportion to the ratio of these demand peaks.
For the 2021/22 PSO year, ESB Networks have updated their PSO cost allocation model,
using the most recent customer forecasts available. The CRU notes that ESB Networks
model contains indicative projections for the 2021/22 PSO levy year. ESB Networks’ final
2021/22 PSO Cost Allocation Model will be submitted to the CRU in July 2021, prior to the
publication of the CRU’s 2021/22 PSO Decision Paper.
The proportion of the proposed PSO levy of €285.60 million to be allocated to each of the
three customer categories are presented in Table 2 (these are the indicative costs for the
PSO levy year 1 October 2021 to 30 September 2022).
11Monthly Levy Monthly Levy Decrease
PSO Customer Category
Amount (2020/21) Amount (2021/22) (%)
Domestic €6.52 / customer €4.60 / customer -29%
Small commercial
€21.41 / customer €15.35 / customer -28%
(MIC < 30 kVA)
Medium/Large commercial
€2.78 / kVa €1.78 / kVa -36%
(MIC ≥ 30 kVA)
Table 4.2: Cost of proposed 2021/22 levy by customer category
One of the factors influencing the scale of the percentage decrease in the 2021/22 PSO levy
(across PSO customer categories) is the share of peak demand applied to each category of
customer for this period, as outlined below.
• Domestic Customers: For 2021/22, the updated forecast demand data resulted in an
decreased percentage allocation (-0.5%) of the total PSO levy to Domestic
Customers. In 2021/22 domestic customers accounts for 41.8% of peak demand,
compared to 42.3% in the 2020/21 PSO year. This decreases their share in the PSO
levy relative to other PSO customer categories.
• Small Commercial Customers: For 2021/22, the updated forecast demand data
resulted in an increase in percentage allocation (0.9%) of the total PSO levy allocated
to Small Commercial Customers. In 2021/22 Small Commercial Customers account
for 11.2% of peak demand, compared to 10.2% in the 2020/21 PSO year. This
reduces their increase in the PSO levy relative to Domestic Customers.
• Medium & Large Commercial Customers: For 2021/22, the updated forecast demand
data resulted in a slightly decreased percentage allocation (-0.4%) of the total PSO
levy to Medium & Large Customers. In 2021/22 Medium & Large Customers account
for 47.1% of peak demand, compared to 47.5% in the 2020/21 PSO year. This
decreases their share in the PSO levy relative to other PSO customer categories.
Another factor which impacts the year-on-year percentage change (across customer
categories) is the variation in the total number of customers for the Domestic and Small
Commercial categories and the total non-domestic Maximum Import Capacity (MIC) for the
Medium & Large Commercial category for 2021/22. The cost attributed to each category is
apportioned to the number of customers in the Domestic and Small Commercial and the MIC
for Medium & Large customers and determines the annual charge kVA.
12ESB Networks’ Indicative 2021/22 PSO Cost Allocation Model estimates that the number of
Domestic Customers in the 2021/22 PSO year will increase by 1.9% when compared to their
2020/21 model. The number of Small Commercial customers is expected to increase by
10.2%. The Medium and Large customer category is expected to also see an increase with
non-domestic MIC increasing by 12.3%. Further detail on the calculation of the cost allocation
is provided in Appendix 1 of this Proposed Decision Paper.
The allocation of the total 2021/22 PSO levy between customer categories s is based on ESB
Networks’ Indicative 2021/22 PSO Cost Allocation Model. The CRU notes that due to the
ongoing economic uncertainty resulting from the COVID-19 pandemic, ESB Networks’
Indicative PSO Cost Allocation Model should be caveated, as the customer number and peak
demand estimates for the forthcoming 2021/22 PSO year may change when ESB Networks
submit the final 2021/22 PSO Cost Allocation Model to the CRU in July 2021, prior to the
publication of the CRU’s 2021/22 PSO Decision Paper.
4.4. True PSO Levy Cost
Each year the PSO levy consists of a combination of estimated ex-ante payments for the PSO
year ahead, and an R-factor correcting for PSO payments made in the PSO year two years
previous. An estimate of the “true” cost of PSO support in each previous PSO year may be
calculated by taking ex-ante payments made in a specific PSO year and adding the R-factor
for that period that was subsequently calculated ex-post (e.g. the “true” cost of PSO support
in the 2019/20 PSO year may be calculated by combining ex-ante PSO payments in that
period with the 2019/20 R-factor subsequently calculated for that year for inclusion in the
2021/22 PSO levy). Figure 2 displays a comparison of the “true” cost of the PSO levy and the
actual PSO levy in recent years.
13Figure 4.2: Comparison of “true” and actual PSO levy costs11.
The CRU notes that the actual 2018/19 and 2019/20 PSO levies were relatively low and not
reflective of the “true” cost of the government subsidy to renewable generators in those given
PSO years. This was due to significant negative R-factors being applied in the calculation of
the PSO levy in both years. As detailed in Figure 2, the true cost of the 2018/19 PSO levy
was €404 million. This is much greater than the actual 2018/19 PSO levy of €209 million.
Similarly true cost of the 2019/20 PSO levy was €596 million. This is much greater than the
2019/20 PSO levy of €176 million.
Over the past few years, and as illustrated in Figure 2, the “true” cost of the PSO Levy has
been trending upwards as the portion of our power generation capacity supported by the levy
has increased and as Ireland pursues its target of 70% renewable generation by 2030. There
is an underlying variability in the cost of the levy as both market prices and level of generation
will vary from year to year. When the “true” cost of the PSO levy is compared to the actual
PSO levy, it is apparent that this variability is exacerbated by the inherent challenges in
forecasting future prices and levels of renewable generation, and then correcting for actual
results.
As indicated in Section 2.1, PSO levy payments are calculated on the basis of estimated
generation and estimated wholesale electricity market prices for the year ahead. These
payments are then corrected for ex-post through the R-factor. In Q1 2021, the CRU consulted
on options for managing PSO volatility (CRU/21/017). The CRU notes that due to the ex-ante
11
The true cost of the 2020/21 PSO levy is not detailed in Figure 3 as the true 2020/21 R-factor cannot be
calculated until after the 2020/21 PSO year has ended.
14nature of the PSO levy and given that wholesale electricity market prices and generation from
renewables fluctuate from year to year, it will only be possible to improve upon certain aspects
of the PSO levy calculation to mitigate against year on year volatility, and that it is not feasible
to remove the risk of volatility occurring in the PSO levy completely. A decision on this
consultation paper will be published later in 2021.
155. Cost breakdown of proposed levy
5.1. Overview of support schemes
The CRU received 55 ex-ante supplier submissions for the 2021/22 PSO levy year,
comprising 300 generation projects.12 The PSO covers various subsidy schemes designed
by the Irish Government. Table 3 provides a breakdown, by support scheme and technology
type, the support rate that generators will receive under the 2021/22 PSO levy. Indicative
REFIT Support Rates for the last 9 months of the forthcoming PSO period are calculated by
indexing the REFIT Reference Price for the first 3 months of the forthcoming period (as
published by DECC) to an estimate of CPI for the current calendar year. For the 2021/22
indicative PSO levy calculation, the CRU is applying the Irish Central Bank’s latest 2021 HICP
inflation13 estimate of 0.8%.
2021 support rates 2022 Indicative support rates
Support Scheme & Technology
(€/MWh) (€/MWh)
AER
Wind 46.00 46.00
RESS 114
Solar Strike Price 72.92 72.92
All Technology Strike Price 74.08 74.08
Community 104.15 104.15
REFIT 1 (Suppliers also Paid Balancing Payment)
Biomass 89.66 90.38
Hydro 89.66 90.38
Landfill 87.17 87.87
Large Wind 70.98 71.55
Small Wind 73.47 74.06
REFIT 2 (Suppliers also Paid Balancing Payment)
Hydro 89.66 90.38
Landfill 87.17 87.87
Large Wind 70.98 71.55
Small Wind 73.47 74.06
REFIT 3 (Suppliers also Paid Balancing Payment)
AD CHP > 500 kWe 139.07 140.18
AD CHP ≤ 500 kWe 160.47 161.75
AD (non-CHP) ≤ 500kWe 117.68 118.62
AD (non-CHP) > 500kWe 106.98 107.83
Biomass CHP ≤ 1500 kWe 149.77 150.97
Biomass CHP > 1500kWe 128.37 129.40
Other Biomass Combustion 90.93 91.66
Table 5.1: Breakdown of PSO support rates15
12
For 2021/22, 55 ex-ante supplier submissions were received in relation to 300 generation projects.
13
Central Bank of Ireland - Q2 2021 Economic Bulletin.
14
Average prices from RESS 1 Auction Results.
15
Under the REFIT Schemes a Balancing Payment is paid to suppliers in addition to their REFIT “top up” payment.
16Table 5.2 provides a breakdown, by support scheme, of the capacity supported and the ex-
ante cost estimates covered under the proposed levy for 2021/22. The individual support
schemes will be discussed in more detail in the sections that follow.
Ex-ante Ex-ante Capacity
Capacity
PSO PSO supported
Support Scheme % supported %
payment payment in
& Technology Change in 2020/21 Change
2020/21 2021/22 2021/22
(MW)
(€ million) (€ million) (MW)
AER
Wind €1.40 €0.06 -96% 25.2 26.4 5%
Sub-total €1.40 €0.06 25.2 26.4
Peat
Lough Ree -€3.00 - N/A - - N/A
West Offaly -€3.00 - N/A - - N/A
RESS 1
Sub-total -€1.55 675.9
REFIT 1
Biomass €2.24 €1.51 -32% 18.2 18.2 0%
Hydro €0.21 €0.14 -37% 1.6 1.6 0%
Landfill €3.23 €1.93 -40% 17.6 17.6 0%
Large Wind €97.20 €35.28 -64% 1248.7 1204.2 -4%
Small Wind €10.79 €4.70 -56% 121.6 122.5 1%
Sub-total €113.68 €43.55 1407.7 1364.1
REFIT 2
Hydro €0.04 €0.03 -26% 1.4 0.5 -63%
Landfill €2.57 €1.10 -57% 12.9 12.9 0%
Large Wind €185.62 €1.75 -99% 2187.5 2121.7 -3%
Small Wind €12.02 €1.21 -90% 125.3 125.5 0%
Sub-total €200.24 €4.09 2327.1 2260.6
REFIT 3
AD CHP > 500 kWe €4.52 €1.52 -66% 5.1 6.1 19%
AD CHP ≤ 500 kWe €4.03 €2.90 -10% 6.1 6.2 2%
AD (non-CHP) ≤ 500kWe €0.15 €0.00 - 0.5 0.0 -100%
AD (non-CHP) > 500kWe €0.00 €0.00 - 0.0 0.0 -
Biomass CHP ≤ 1500
€1.38 €0.94 -32% 1.6 1.6 0%
kWe
Biomass CHP >
€3.86 €0.00 - 7.6 7.6 0%
1500kWe
Biomass Energy Crops €0.00 €0.00 - 0.0 0.0 -
Other Biomass
€26.37 €9.26 -65% 110.4 106.8 -3%
Combustion
Sub-total €40.31 €14.61 131.3 128.2
Total REFIT €354.22 €62.25 -82% 3866.02 3752.916 -3%
Total €349.62 €60.76 -83% 3891.2 4455.2 14%
Table 5.2: Breakdown of ex-ante PSO payment and capacity supported in 2021/22 by support scheme.
16
A number of minor capacity corrections have contributed to the difference between the capacity supported
in the 2021/22 figures in Table 5.2, and those shown in Table 4 in the CRU’s 2020/21 PSO Decision Paper.
REFIT 1 support has also ended for one Large Wind project in receipt of PSO support (Sorne Wind Ltd -
1/5/051).
17AERs
The technologies supported historically under the 15-year AER schemes included onshore
and offshore wind energy, small-scale hydropower, combined heat and power (CHP),
biomass (landfill gas), biomass-CHP and biomass-anaerobic digestion. Since the AER was
launched in 1995, six AER competitions have been held. The AER scheme is closed to new
entrants and the only remaining technologies actively supported under this scheme are
onshore and offshore wind energy. There is 1 project remaining under the AER scheme, with
support for the last project due to terminate at the end of 2021.
The plants involved contract with Electric Ireland (ESB’s supply entity), which is then entitled
to compensation from the PSO levy if the revenue it receives for selling the electricity is less
than what it paid the renewable generators. Similarly, Electric Ireland returns money to the
PSO in the event of over-compensation. The ex-ante PSO amount proposed for the 2021/22
PSO year for the AER schemes is €64,000.
REFIT
The first Renewable Energy Feed-in-Tariff (REFIT 1) scheme was introduced in 2006,
followed by REFIT 2 and 3 in 2012. The REFIT schemes are designed to incentivise the
development of renewable electricity generation in order to help Ireland to meet its target of
40% of electricity coming from renewable sources by 2020. The technologies covered under
each scheme are summarised in Table 5.3.
Scheme REFIT 1 REFIT 2 REFIT 3
• AD (non CHP) > 500 kWe
• AD (non CHP) ≤ 500 kWe
• Biomass • AD CHP > 500 kWe
• Hydro •
• Hydro AD CHP ≤ 500 kWe
Technologies • Landfill •
• Landfill Biomass CHP ≤ 1500 kWe
supported • Large Wind •
• Large Wind Biomass CHP > 1500 kWe
• Small Wind •
• Small Wind Biomass Combustion (non-CHP)
➢ Energy Crops
➢ Other Biomass
Table 5.3: Technologies supported under the three REFIT schemes.
In contrast to the AER scheme, REFIT is open to all suppliers (not just Electric Ireland) to
contract with renewable generators. The compensation streams under the REFIT scheme are
paid to electricity suppliers in exchange for entering 15-year Power Purchase Agreements
(PPAs) with renewable electricity generators.
18The ex-ante PSO amount proposed for the 2021/22 PSO year for the REFIT schemes is
€62.25 million. This represents a decrease of €291.97 million (82.43%) from the €354.22
million of support for these contracts included in the 2020/21 PSO levy year. The REFIT
generation capacity supported under the PSO is in the 2021/22 PSO year is 3,752.9 MW.
Of the proposed payment for 2021/22 under REFIT 1, 92% is to wind generators. Under
REFIT 2, 72% is to wind generators. Under REFIT 3, 91% of the proposed payment for
2021/22 is to generators in the category Other Biomass Combustion.
RESS
The Renewable Electricity Support Scheme (RESS) is a new Government support scheme
for renewable generators in Ireland. The RESS scheme is funded through the PSO levy.
Under RESS, a competitive auction process is applied to determine the renewable projects
that are eligible to receive support. Under this scheme, renewable generators receive PSO
support up to a guaranteed Strike Price. The Strike Price of each generator in this scheme is
determined through an auction.
The first Renewable Electricity Support Scheme (RESS 1) auction took place in July 2020.
The 2021/22 PSO year is the first PSO year in which projects will be eligible for support under
the RESS 1 scheme. In accordance with Government policy, the CRU has accepted ex-ante
PSO submissions for RESS support in the 2021/22 PSO year from projects that were
successful in the RESS 1 auction. The CRU has received submissions from 41 RESS projects
that were successful in that auction. Submissions were received from suppliers for 36 Solar
project and 5 Onshore Wind projects.
A key difference between RESS and REFIT is that suppliers may owe money back to the
PSO levy in the event where market prices exceed a projects RESS Strike Price. The 2021/22
indicative Benchmark Price is higher than the RESS Strike Price for many of the RESS
submissions received. As a result, the net monies owed to suppliers under RESS in 2021/22
is negative €1.55 million.
Peat
PSO support for Lough Ree and West Offaly under the Peat PSO Scheme, expired at the
end of 2019. ESB have made an ex-post PSO submission for Environmental Provision costs
and Rates for the 2019/20 PSO year. The CRU is currently liaising with ESB to obtain further
information in relation to the ex-post costs claimed in this PSO year. These costs have been
included in the 2021/22 indicative PSO levy but may subsequently be removed pending
further consideration.
As part of the 2021/22 PSO Cycle, ESB have not made an ex-post submission for Dismantling
Costs or Just Transition costs for the 2019/20 PSO year.
19The CRU notes that during the 2020/21 PSO cycle, ESB made a PSO cost submission to the
CRU for Dismantling Costs of €10,599,000. The submitted Dismantling Costs were deemed
ineligible by the CRU and excluded from the 2020/21 PSO levy, as the CRU considered that
these are not provided for in the relevant State Aid Notification. Furthermore, ESB made peat
PSO cost submissions for Other Cost Items including Rates of €549,000 (which was
subsequently withdrawn by ESB for the 2020/21 PSO year), Environmental Provision Costs
of €9,684,000 and Just Transition Costs of €5,000,000. These costs were also excluded from
the CRU’s calculation of the 2020/21 PSO levy.
On 26 June 2020, the CRU wrote to DECC seeking confirmation as to whether the
aforementioned PSO costs are provided for under the relevant EU State Aid Notification, while
noting in detail the differing views between the CRU and ESB on this matter. In its response
to the CRU, the Department noted, inter-alia, the following: “it is for the CRU to determine the
amount of additional costs incurred by ESB in fulfilling its obligation under the PSO Order and
the Minister/Department cannot intervene in the process”.
In their 2019/20 ex-post submission, ESB maintained their position in relation to Dismantling
Costs and Just Transition Costs but have not claimed these costs for the 2019/20 PSO year.
Given DECC’s response to the CRU on this matter in 2020, the CRU’s position in relation to
the aforementioned cost items (Dismantling Costs and Just Transition costs) remains
unchanged.
Summary of Support Schemes
The breakdown by technology of total ex-ante PSO cost and generation supported under the
proposed 2021/22 PSO levy for AER, REFIT and RESS is shown in Figure 5.1, with similar
categories grouped together. As there are different support rates for the different
technologies, the breakdown by cost differs from the breakdown by generation supported.
20Figure 5.1: Breakdown of ex-ante cost and generation supported by technology type under the proposed
2021/22 PSO levy.
5.2. R-factor
The ex-ante estimate of costs associated with each of these schemes for 2021/22 constitutes
the main part of the total PSO levy. In addition, the settlement of the ex-ante estimate
component of the 2019/20 PSO levy, based on actual outturn costs and market revenues,
must be included. The 2019/20 R-factor, included in the 2021/22 PSO levy, accounts for the
difference between the costs and revenues estimated for 2019/20 ex-ante and the actual
costs and revenues for 2019/20 certified ex-post. Further detail on the methodology used in
calculating the R-factor can be found in CRU/20/013.
A positive R-factor of €231.63 million has been included in the calculation of the proposed
2021/22 PSO levy, due to an under-recovery of monies in the 2019/20 PSO year. The
breakdown of the R-factor by support scheme is shown in Table 5.4.
Component R-Factor 2019/20 (€ million)
REFIT €232.2
AER €1.5
Peat -€2.0
Total €231.63
Table 5.4: Breakdown of R-factor by support scheme
21The key reason for the positive 2019/20 R-factor is the difference between the 2019/20
estimated benchmark price calculated by the CRU and the actual market prices that occurred
in the 2019/20 PSO year. Average wholesale electricity prices in the 2019/20 PSO year were
approximately €36.41/MWh. An ex-ante benchmark price of €57.37/MWh was calculated for
the 2019/20 PSO year. The 2019/20 benchmark price was calculated using the CRU’s SEM
PLEXOS model.
The CRU observed a decrease in gas and coal commodity prices between those used to
model the 2019/20 benchmark price and actual market prices that occurred in the 2019/20
PSO year. Comparing the 2019/20 forecast commodity prices used to model the benchmark
price and actual 2019/20 commodity prices, on average, gas prices decreased by
approximately 51% and coal prices decreased by approximately 20%. The CRU observed an
decrease in carbon prices of 10% compared to those used to calculate the 2019/20
benchmark price.
Lower market prices resulted in PSO plants receiving less market revenue than anticipated.
The overestimation of the 2019/20 benchmark price (relative to the outturn price) resulted in
an under-recovery of revenues through the 2019/20 ex-ante payment. This under-recovery of
PSO payments will be remedied through the 2019/20 R-factor.17
Actual generation by REFIT supported plant for 2019/20 was 17.4% lower than the estimated
generation submitted for the period. In recent years, the CRU has observed significant
variance between estimated generation submitted by suppliers to the CRU and actual
generation submitted by suppliers’ ex-post. This has led to volatility in the PSO levy. In Q1
2021, the CRU consulted on options for addressing volatility of the PSO (CRU/21/017). A
decision paper in relation to this consultation will be published later in 2021.
5.3. PSO CfDs
PSO related Contract for Differences (CfDs) were offered by ESB Power Generation up to
the end of 2019 (see SEM-11-020 for further details). These were forward contracts for
dispatchable generation, supported under the Peat PSO Scheme. The total difference
payments resulting from these CFDs is €1.23 million owed by ESB Power Generation, to the
17
Refer to Appendix 2 for summary of the forecast commodity prices used in the calculation of the 2019/20
benchmark prices, relative to actual commodity prices in 2019/20.
22PSO levy. This reflects Day Ahead Market prices for the 2019/20 year that were lower on
average than the strike price.
5.4. PSO Monies Owed
In accordance with the PSO Invoicing and Collection Procedures, in the case were a supplier
has a net negative PSO payment, this amount is to be paid to the TSO (EirGrid) on a monthly
basis. The CRU notes that in the current 2020/21 PSO year, one supply company with a
negative PSO payment is not paying the monthly PSO amount invoiced to them by EirGrid.
The recovery of the PSO monies owed is currently being pursued by EirGrid (in accordance
with its statutory responsibilities) and is being monitored by the CRU.
Under the CRU’s indicative calculation of suppliers’ 2021/22 PSO payments, the are 13
supply companies that will owe monies back to the PSO levy in the 2021/22 PSO levy.
236. Next Steps
The final PSO levy for the 2021/22 year will be published by the CRU before the statutory
deadline of 1 August 2021. The figures reported in this Proposed Decision Paper are likely to
change before the final decision paper is published, principally for two reasons:
1. The forecast benchmark price is likely to change; and
2. The generation estimates used in the calculation may be amended on further review
of submissions by the CRU.
As noted in the CRU’s Notification to Suppliers: Submissions to the CRU for the 2021/22
Public Service Obligation (PSO) Levy (CRU/21/005), the CRU has in recent years published
an increasing amount of data in relation to its calculation of the PSO levy. The purpose of this
has been to increase transparency in the CRU’s calculation of the PSO levy.
The CRU will continue to publish this data alongside future PSO Decision Papers. To facilitate
further transparency in the calculation of the PSO levy, the CRU also intends publishing the
REFIT start dates and REFIT end dates for each PSO supported project that are provided by
the supplier (such dates will be subject to further review).
Where applicable, the CRU may also publish similar data in relation to its calculation of RESS
payments under the PSO.
24Appendix 1 – Allocation of 2021/22 PSO
Allocating 2021-22 PSO
% of PSO Total Mkt Cust Nos Total Non- Annual Charge Monthly Charge
Individual Individual Allocation Mid Year (excl PL domestic mkt
Peak Peak a/cs i.e. DG3) MICs
Monthly Charge
€m kVA € per €/kVA Monthly €
Cust
Domestic Profile 2,507,978 41.80% 119.39 2,163,091 55.19 4.60 € per Customer
Small Profile 667,027 11.12% 31.75 172,424 184.16 15.35 € per Customer
ie. non-domestic (excl PL)Appendix 2 – 2019/20 Benchmark
Price
The Benchmark price for the 2019/20 PSO Levy was €57.37. The actual average market price
was €36.41, which is approximately 37% lower than forecasted. The reason for this decrease
is due to the volatility of commodity prices in 2019, with reduced gas prices pushing down the
average market price. As can be seen from Table 1, commodity prices moved considerably in
2019. There was an average of 51% decrease in the price of gas, and a 10% increase in the
price of carbon credits.
Gas Price (p/Therm) Coal Price ($/Tonne) Carbon Credits (€/Tonne)
Forecast Actual % Change Forecast Actual % Change Forecast Actual % Change
Q4 19 45.40 31.92 -30% $ 57.93 $ 56.59 -2% € 26.38 € 24.85 -6%
Q1 20 53.30 24.88 -53% $ 61.60 $ 49.17 -20% € 26.73 € 22.75 -15%
Q2 20 44.54 12.99 -71% $ 64.53 $ 43.25 -33% € 26.68 € 21.21 -21%
Q3 20 43.56 21.24 -51% $ 66.10 $ 50.69 -23% € 26.68 € 27.36 3%
Average -51% -20% -10%
Table 1: Forecast versus actual commodity prices for PSO Benchmark Price.
Figure 1 below graphs the impact each commodity had on how the actual wholesale electricity
market price deviated from the forecasted benchmark price.
Figure 1: Impact of commodity volatilities on 2019/20 Benchmark Price
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