Ossian Smyth (Dún Laoghaire, Green Party) | Oireachtas source

I sincerely thank the Social Democrats for bringing this motion forward. It is very welcome to see a constructive set of proposals around a very serious problem that is facing us all. I am happy to see that. It is a form of constructive opposition. When I look at the motion I see that the Government agrees with most of what is in it. I will first address some specific questions that were raised by some Deputies.

Deputies O'Callaghan and Harkin asked about the timeline on windfall taxes. The windfall divides into two types of tax, the first being a solidarity charge, called a solidarity contribution, which applies to organisations that own oil and gas reserves. The idea of this charge is that it will be levied on excess profits from the extraction of oil and gas, and that it would be applied according to the profits that are made. Ireland has decided to levy this at a rate of 75%, which I believe is one of the highest, if not the highest, in the EU. I believe that some other countries went for a 30% rate while we decided on a 75% tax on excess profits on the extraction of oil and gas. The Deputies have asked when this would apply. It applies for the years 2022 and 2023. In other words, it does apply retrospectively to last year's profits. We must know what those profits are before we can levy the tax, so we must wait for the company accounts and so on before we can levy that contribution.

The other half of the windfall taxes is the cap on revenues of non-gas electricity generation. For example, this could be a wind farm that finds it is able to sell electricity at 20 cent or 30 cent per unit whereas previously it had only been selling it at 10 cent per unit, and yet its costs had not changed whatsoever. Or, if a company managed to obtain a really unjustified profit that could be traced back to a war it is not a very noble way of making money and therefore we have decided to limit those profits. The guidance we got from the EU was that we could, for example, sell it at 18 cent a unit as the maximum price that a non-gas electricity generator could charge for the electricity it produces. Rather than set that at 18 cent the Government has decided to set it at 12 cent for the maximum amount they can charge. Again, this is a much more stringent approach than most of the EU. In some contributions from Deputies they felt that our ambition was not far enough or that we were not implementing windfall taxes to the extent that other countries were. I genuinely believe that in both of those cases having a 75% tax on excess profits of oil and gas and setting a maximum price for non-electricity generators to sell electricity at 12 cent represents an ambitious approach. To those Deputies who are worried that the money would be spent elsewhere, the money has been legally ring-fenced by the EU.

One question arose from Deputy Whitmore around whether Ireland is in contravention of the regulation from the Commission. I can confirm that we are not. We have been in contact with the Commission about this. The Government decision to implement this was taken on 22 November 2022.

Deputy Canney worried that we are moving too fast on the electrification of the economy and that oil boilers and gas boilers should not be banned. They are not banned yet although I expect that the public sector will not be reinstalling oil and gas boilers as soon as possible. Why should one arm of the State be paying to retrofit heat pumps and remove oil and gas boilers, and cementing that, while at the same time another arm of the State is still installing them? Clearly, we must have some sense there. At the same time I take Deputy Canney's points on his concern that we must have a just transition, that we must help people to move along, that we need to bring people with us, and that we need to make sure we are not putting people into difficulty as we move. At the same time, I believe it would be wrong to say that we are moving too quickly.

Deputy Pringle is worried that subsidies could support high prices and he pointed out that with electricity credit and so on there is a chance that adding money into the system can result in companies obtaining excess profits. The Deputy is absolutely right to be worried about that. We have to make sure that our interventions do not lead to excess profits and are not just snapped up by companies. That is the real fear with setting a cap on the price of electricity sold to consumers rather than a cap on the price that electricity generators can sell their electricity. They are different kinds of caps. Consider the example in Germany where the consumer price cap has, so far, cost them €80 billion. The problem with this is that it does nothing to limit the profits of the companies that are generating electricity. In Ireland the majority of the gas that comes into the country is imported. We are reliant on the overseas supply and the foreign price of gas. If we impose a cap on companies that are selling electricity to the consumer in Ireland, which is generated with imported gas, then we will have to subsidise them in order to allow them to continue to do that. The subsidies could be huge and it provides no incentive to reduce profits. We do, however, have control over the oil and any gas fields that are in Ireland, and we have control over any body generating electricity within the State. We can impose caps on how much they charge to sell and we can avoid the possibility of them making excess profits.

The implementation details on the windfall charges are likely to be legislated for in the coming weeks. I expect the revenue from that will be in the hundreds of millions of euro. Previously, there were higher estimates of how much money could be brought in by a windfall tax. They were just based on higher future prices for gas and oil. As the price of wholesale gas has gone down the estimates for how much money will be brought in by windfall charge went down. It will still be in the hundreds of millions of euro. It will be significant and it will be ring-fenced.

The Government, of course, is deeply aware and concerned by the pressure on people and business in Ireland among unprecedented high energy prices. It is a priority for the Government to provide supports to alleviate this. Intensive work is being undertaken and will continue to be undertaken to address the challenges faced by consumers.

The Government is examining a wide range of future supports for consumers. This includes the evaluation of price caps. We are not ruling out anything, including price caps, in the approach we intend to take. We are examining what is possible and trying to make sure that we do not end up subsidising companies.

Energy market developments are monitored, and Departments are working to support households and businesses to meet their energy costs. As previously outlined, the Government introduced a suite of measures worth €2.4 billion in 2022 to assist households with their energy costs, and budget 2023 provided for a further €2.5 billion in one-off measures to support households with the rising cost of living. I will not go through all of them, as there are at least ten.

In April and May 2022, 99% of eligible domestic electricity accounts were credited with the electricity costs emergency benefit payment. One more of those payments is due next month. The number of domestic electricity accounts in receipt of the first credit is 2.15 million, which means that 99.1% of all eligible customers have now had the credit applied to their account.

The Government has also increased funding for supports such as the fuel allowance, reducing VAT on gas and electricity bills, reduced excise duty on petrol and diesel and a total allocation of €267 million, of which €202 million is carbon tax receipts, to the Sustainable Energy Authority of Ireland residential and community retrofit schemes in 2022.

The energy poverty action plan, published in December 2022 in response to rising energy prices, sets out a range of near- and medium-term income, social protection and consumer protection support measures. This plan provides for the establishment of a €10 million fund to further support people in, or at risk of, energy poverty in 2023.

There is also a provision in the plan to legislate to extend the definition of vulnerable customer to include financial vulnerability, which will extend the protection against disconnection for non-payment of account for a longer period over the winter.

The Government has expressed strong views within the EU on the Energy Charter Treaty, ECT, and continues to reserve the option to support a co-ordinated EU withdrawal from the Energy Charter Treaty if it is not modernised to align with the Paris Agreement, address concerns about the ECT's dispute resolution mechanism and support the international effort to decarbonise electricity systems and promote more renewable energy.

The Government will implement Council Regulation (EU) 2022/1854, which seeks to address the windfall gains in the energy sector by collecting excess revenues from those companies that have unexpectedly benefited from the high prices and to redistribute the revenues to alleviate pressure on affected energy consumers. The proceeds from the implementation of this Council regulation, including the temporary solidarity contribution and the cap on market revenues of non-gas electricity generators, will go towards financial supports to households and companies heavily affected by soaring energy prices. It may also be used to help support investment in areas such as renewable energy.

The Government has provided, and will continue to provide, supports to people and businesses affected by the unprecedented high energy costs.

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