Mary Butler (Waterford, Fianna Fail) | Oireachtas source

I welcome this debate and I thank colleagues from all sides for their contributions.

The Government accepts consumers are currently facing volatility in energy prices due in particular to a spike in international gas and oil prices. We know over the coming winter they will be faced with higher energy costs as suppliers and energy companies seek to recoup their energy outlays.

Current market expectations on energy commodities, particularly gas, indicate that wholesale gas prices will remain high during the winter months and fall from later in 2022 onwards. Beyond the winter season, EU forward contracts anticipate a reduction in the current wholesale gas prices. This is welcome news. A reduction cannot come soon enough but we should not be complacent. Markets are volatile and the optimum policy is to move away from fossil fuel dependency and the unpredictability of international commodity markets. That is what the Government is doing.

The programme for Government sets a clear pathway towards less reliance on fossil fuel across every sector of society. It specifically contains a commitment to end the issuing of new licences for the exploration and extraction of gas. This is on the same basis as the decision taken in 2019 by the previous Government relating to oil exploration and extraction. Therefore, continuing gas exploration would be inconsistent with the Government's ambition to decarbonise the economy by 2050.

I turn to Government policy in this area. Electricity and gas markets are commercial, liberalised and competitive in line with EU policy. The position of successive Governments for almost 20 years has been that competitive energy markets result in greater choice for consumers and businesses in terms of suppliers, products and prices and support competition to drive down prices. Within this overall competitive framework, the best long-term policy is to support households with their energy costs through energy efficiency measures, with the Government providing a total retrofit budget in excess of €280 million this year. We will also continue the development of renewable electricity and enable Ireland to reach EU renewable energy targets and our own national energy and climate target of delivering at least 80% of renewable electricity by 2030. We will also continue with measures such as the EU emissions trading scheme and the carbon tax as providing incentives to switch to cheaper renewables and lower carbon energy sources. These measures provide essential economic signals to support the energy transition away from fossil fuels.

Carbon pricing is an essential element of any credible plan to decarbonise the economy while supporting those most directly affected. This includes allocating the revenues received to fund those availing of social welfare, home retrofits and sustainable farming methodologies. We must also promote further electricity interconnection both to the EU and the UK and further integrate Ireland with the EU internal energy market.

The Government welcomes the European Commission's toolbox and the Commission's ongoing work and is carefully monitoring the situation. It already has in place many of the measures proposed by the Commission. In pursuing our objectives of decarbonisation while supporting those who are vulnerable, our collective efforts have led, for example, to over 143,000 homes receiving free upgrades under the better energy warmer homes scheme. In the first six months of 2021, the average value of the energy efficiency measures provided per household was approximately €17,100. Strong growth in wind power has had a major impact on energy production costs and is key to achieving our greenhouse gas emission reductions and further electricity interconnection to both the UK and France is under way.

I will now outline the regulatory regime in which we operate. Operating within an overall EU framework, the independent regulator, the Commission for Regulation of Utilities, CRU, has a wide range of economic and customer protection functions. In particular I mention the CRU's role in promoting switching and smart metering, both of which offer immediate benefits to consumers. The CRU has certified three price comparison websites, which are bonkers.ie, switcher.ieand powertoswitch.ieto assist consumers in switching. Even if they do not switch, customers should engage with their supplier to avail of the best offer available. This is because switching, whether it is switching supplier or to a lower cost product with an existing supplier, makes the supports go further in meeting costs.

Switching supplier could save a customer consuming the average amount of energy up to €240 on an annual electricity bill, €408 on combined annual electricity and gas bills and €238 for an average annual gas bill. This is based on a comparison made on 9 November 2021 using a CRU-accredited comparison website. Based on CRU data, active customers who switched supplier or renegotiated with their current supplier every year for the past four years could have saved €704 on gas, €1,097 on electricity or €1,696 on their dual fuel costs. A recent CRU survey indicates over half of electricity and gas consumers have switched supplier at least once.

The programme for Government commits to ensuring the energy efficiency potential of smart meters is realised and that all mechanical electricity meters are replaced by 2024. The smart meter upgrade led by the CRU is a meter replacement programme to modern, smart-ready technology. New generation electricity meters are being rolled out across Europe and internationally and when the programme completes in Ireland in 2024, all domestic and business premises will have a new modern meter installed.

Of significant importance is the Government's commitment to helping households with their energy costs, particularly Iow-income households and those in danger of energy poverty. The Government is acutely aware of the impact on households of increasing energy costs and its primary response is to increase funding for the social welfare system to counter rising costs of living, of which energy costs are one of the biggest drivers. To directly address this, budget 2022 increased the weekly rate of the fuel allowance by €5 to €33. This increase was applied from the week of 11 October, meaning the recipients of fuel allowance this year will receive €932. The fuel allowance has a budget of €292 million for the upcoming season to pay an estimated 400,000 households. As everybody knows, people in receipt of the fuel allowance can get it on a weekly basis or twice yearly.

Increases to the qualified child payment and the living alone allowance and an increase to the income threshold for the working family payment have also been announced.

The total cost of these interventions is projected at €146 million in 2022. This will be funded by the additional carbon tax funds of €105 million that has been allocated to the Department of Social Protection, with the remaining €41 million cost met by the Exchequer. This is in addition to adjustments to basic welfare and pension rates. Adjustments to income tax bands have also been introduced, primarily to cater for the cost-of-living increases driven, in part, by energy prices.

The household benefits package includes allowances towards covering electricity or gas costs. Recipients, the majority of whom are pensioners, are paid €35 per month. The Department of Social Protection will spend approximately €195 million this year on the household benefits package for over 47,000 customers. Targeted supports provided under the supplementary welfare allowance scheme, exceptional needs payment and urgent needs payments may be made to help to meet essential once-off costs which an applicant is unable to cover from their own resources. In addition, under the supplementary welfare allowance scheme, a special heating supplement may be paid to assist people in certain circumstances who have special heating needs.

I reiterate that supports are in place to assist with household and business energy costs. Moreover, our regulatory framework underpins a competitive market in which consumers can make considerable savings. That framework also provides protections to consumers through the Commission for the Regulation of Utilities. Furthermore, the Government has provided additional social welfare supports in the budget to protect the most vulnerable against fuel price increases. I welcome this debate and thank Deputies from all sides of the House for their contributions.

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