Addressing the Risk of Bad Debt to the PSO Levy

The Commission for Regulation of Utilities (CRU) is today, 18 December 2018, publishing a decision paper (CRU/18/260) regarding the risk of bad debt to the Public Service Obligation (PSO) scheme. This paper outlines the CRU’s decision to implement a “Withholding Mechanism” for addressing such risk of bad debt in the PSO levy and details how this process will be administered. While it is not possible for one mechanism to fully mitigate against all instances of bad debt in the PSO, the Withholding Mechanism will ensure that PSO payments will not be made to a supply company until the generation project from which they are to purchase electricity has reached the appropriate milestone thereby reducing the likelihood that a PSO payment is paid where no actual PSO costs are incurred. This measure applies with immediate effect, including submissions for the 2019/20 PSO period