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

I move: "That the Bill be now read a Second Time."

As we are only too well aware, energy prices have continued to rise to unprecedented levels. The Government is keenly aware of the impact this is having on consumers and the need to take action at scale. Therefore, I commend the Electricity Costs (Domestic Electricity Accounts) Emergency Measures and Miscellaneous Provisions Bill 2022 to the House.

I will open the debate by setting the context for the action to be taken on foot of this Bill, which will establish an electricity costs emergency benefit scheme II, under which a total of €550 will be paid to domestic electricity accounts in three payments between November this year and March next year. The House will be familiar with these issues, particularly in light of the first electricity costs emergency benefit scheme, which was enacted earlier this year. It is important to take this opportunity to set out the complex situation we find ourselves in with regard to energy costs and wider pressures on the cost of living. I will also describe the sections of the Bill in detail, and, in regard to its main provisions, set out some background on why they are needed for the operation of the scheme. My overarching message today is that while the scheme this Bill will establish is just one of a suite of measures, it is critical that it be put in place in order that payments can begin from 1 November. I seek Deputies' support to achieve that. I will first outline the main factors affecting electricity prices in Ireland. Second, I will provide an overview of the domestic response to rising electricity and gas prices. As colleagues will be well aware, addressing the huge cost-of-living pressures on our citizens was the focus of budget 2023. Third, I will outline the provisions in the Bill.

I now turn to the first point, namely, factors affecting Irish electricity prices. The most immediate factor affecting electricity prices in Ireland is sustained high international gas prices, with the unprecedented increases and volatility continuing as a result of the Russian invasion of Ukraine. This, in turn, has led to increases in energy bills, given the link between the wholesale price of gas and electricity prices. It is a matter of serious concern to the Government that rising electricity and gas prices caused by these international conditions are putting increasing pressure on consumers, particularly those in a more vulnerable economic position and at risk of energy poverty. That is why the Minister, Deputy Eamon Ryan, has been meeting with electricity and gas suppliers to convey a clear message as to the critical importance of doing everything possible to support financially vulnerable energy customers.

It is important to say that all European markets are experiencing these price increases. While Ireland has its own specific circumstances, the rise in energy costs is not unique to us. In response to rising electricity and gas prices in the EU, the European Commission has put in place a number of measures available to member states to mitigate the impact of energy price rises on households and businesses. The Energy Council agreed a Council regulation on an emergency intervention to address high energy prices at its meeting on 30 September this year. The new EU emergency market intervention regulation consists of three main measures. First is a mandatory 5% cut in electricity consumption during peak hours. This will require member states to identify the 10% of hours with the highest expected price and to take appropriate action to reduce demand during those hours. The overall target is a 10% cut in total electricity demand until 31 March 2023. Second is a temporary revenue cap on inframarginal electricity producers.

Power generation technologies with lower generation costs than natural gas, including renewables, nuclear, and lignite, will have their revenues capped. The surplus revenue will be collected by member states and used to help energy consumers reduce their bills. Third, there will be a temporary solidarity contribution on excess profits generated from activities in the fossil fuel sector. Member states agreed to set a mandatory temporary solidarity contribution on the profits of businesses active in the crude petroleum, natural gas, coal, and refinery sectors. Member states will use the proceeds from the solidarity contribution to provide financial support to households and companies and mitigate the effects of high retail electricity prices. Intensive work is now under way to implement these measures.

I will now turn to the Government's response and the part that this scheme plays within that response. In terms of the overall cost of living, it is vital to stress that a co-ordinated whole-of-government response is being followed and is essential in tackling this issue. The forthcoming energy poverty action plan will set out a range of measures to be implemented this winter, as well as key longer term measures to ensure that those least able to afford increased energy costs are supported and protected. This work is being undertaken by a steering group consisting of relevant Departments and Government agencies. This area of work also includes interactions with the NGO sector. In response to rising energy prices, the Government has already taken action throughout 2022 and has introduced a suite of measures worth €2.4 billion to assist households with their energy costs. Budget 2023 provides a further €2.5 billion in once-off measures for households. Budget 2023 provides a number of targeted measures, including: a €400 lump-sum payment to fuel allowance recipients; a €200 lump sum payment for pensioners and people with a disability getting the living alone increase; a €500 cost-of-living lump sum payment to all families getting the working family payment; double payment of child benefit to support all families with children; a €500 cost-of-living payment for people in receipt of the carer's support grant, which will be paid in November; and a €500 lump-sum cost-of-living disability support grant, which will be paid to all people in receipt of long-term disability payments.

It important to draw attention to the additional needs payment operated by the Department of Social Protection. This is a payment to help with expenses that a person cannot pay from his or her own weekly income, including increases in fuel and electricity costs. Furthermore, in light of current situation, the Commission for the Regulation of Utilities, CRU, has announced enhanced consumer protection measures for this winter. These include an extension to moratoriums on disconnections. Under the new measures, the moratorium has been extended from 1 December until 28 February, and for vulnerable customers, it has been extended from 1 October to 31 March. Extended debt repayment periods of up to 24 months have been introduced, along with a reduced debt burden on pay-as-you-go top-ups. New measures mean that debt repayment levels will reduce to 10%, from 25% previously, on pay-as-you-go customers top-up payments. For example, on a €20 top-up only €2 will go towards debt repayment, instead of €5. There is better value for those on financial hardship meters. Customers with a financial hardship meter will be put on the cheapest tariff available from their supplier. There will also be promotion of a vulnerable customer register. Electricity suppliers must actively promote the vulnerable customer register and the protection it offers

Solar photovoltaic, PV, panels convert energy from the sun into electricity, thereby reducing the amount of electricity a building draws from the national grid, and lowering electricity bills. Since 2018, the Sustainable Energy Authority of Ireland, SEAI, has supported the installation of domestic solar PV systems for over 12,000 homes. With demand for the domestic solar PV grant increasing significantly throughout the year, we expect that grant applications will exceed 12,000 in 2022 alone. I also understand that approximately 40,000 micro and small-scale generators have successfully registered for export and over 26,550 of this cohort have smart meters, which means they are already accruing the value of the clean export guarantee, CEG, tariff for their exported electricity.

Government is acutely aware of the importance of protecting jobs, in order to protect families, during this energy crisis. This has been key in the design of the new temporary business energy support scheme, TBESS, which will provide up to €10,000 per business per month until spring 2023 to help meet rising energy costs. The scheme will support eligible companies, covering 40% of the increase in their energy bills.

However, while this immediate action is taken to support our citizens to deal with the rise in the cost of living, it is critical that we do not lose sight of the bigger picture. I will now outline the long-term approach for Ireland, and in that context, the Government's energy efficiency and renewable energy measures are key. Government policy is driving investment in energy efficiency, investment in renewables, enhancing electricity interconnection and deepening the internal energy market. I will take energy efficiency as a particular example. Energy efficiency measures are not just essential to reduce emissions from our housing sector. They are also central to addressing the root causes of energy poverty, improving health and social inclusion outcomes, while at the same time contributing to decarbonisation. Alleviating energy poverty is a key consideration in the new national retrofit plan, which was published as part of the climate action plan last year. More generally, the Climate Action Plan 2021 commits to improving how energy poverty schemes target those most in need. As is clear from the supports in relation to energy efficiency and the specific measures introduced in budget 2023, the Government is committed to protecting the most vulnerable. As we transition away from fossil fuels and progressively decarbonise, we must ensure the way we decarbonise captures this unique opportunity to improve quality of life for all. Making our homes energy efficient not only means they are warmer, healthier and cheaper to run, but it also means we are taking concrete action on social deprivation that is sustainable and enduring.

A total of €244 million has been allocated for Sustainable Energy Authority of Ireland, SEAI, residential and community retrofit schemes and the solar PV scheme in 2022. Of this, €118 million has been allocated to energy poverty schemes. More than 4,500 homes will benefit from the free upgrades targeted at those in energy poverty this year. In addition, €85 million funding has been provided by the Minister for Housing, Local Government and Heritage for the local authority energy efficiency retrofit programme for this year. This means that of the total Government retrofit budget allocation of €329 million, approximately 60%, or €203 million, has been allocated to dedicated energy poverty schemes and local authority retrofits this year.

Budget 2023 also provides €337 million for SEAI residential and community energy upgrade schemes, including the solar PV scheme, for medically vulnerable electricity customers. Some €291 million of this allocation will come from carbon tax revenue, which is the highest ever allocation for these schemes. This will facilitate the delivery of home upgrades to 37,000 homes, including 6,000 free upgrades to those in energy poverty. A further €87 million has also been allocated for the local authority retrofit programme for next year. Additionally, the review of the national development plan, NDP, resulted in an unprecedented level of investment earmarked for retrofit. Indeed, €5 billion of additional carbon tax revenues have been allocated to support residential retrofit to 2030. This means that the overall allocation for residential retrofit will be approximately €8 billion to 2030.

My remaining remarks will be on the subject matter of the Bill. Notwithstanding other measures, the Government is determined to act quickly to help people further with these higher energy prices. The Bill provides for the establishment of a scheme for the purpose of making the electricity cost emergency benefit payments of €183.49 to domestic electricity accounts to be paid in November-December 2022, January-February 2023 and March-April 2023. The moneys for the scheme will be allocated by the Minister for the Environment, Climate and Communications, with the consent of the Minister for Public Expenditure and reform, out of moneys provided by the Oireachtas. This amount will not exceed €1.211 billion. This figure makes provision for 2.2 million domestic electricity accounts.

The CRU will provide oversight of the scheme and it will be operated by the distribution system operator, ESB Networks, and electricity suppliers. The mechanism by which the scheme will operate is as follows. The Minister for the Environment, Climate and Communications will provide, under regulations, for a date, to be known as the relevant date, on which the distribution system operator will calculate the total number of domestic electricity accounts in the State, on the basis of meter point registration numbers, MPRNs. The MPRN is the unique identifier for electricity meters and as such, must be used to ensure each €183.49 payment reaches each account. ESB Networks will notify the Minister of this number, and this will allow the estimation and necessary allocation of moneys for the scheme. On the effective dates for each payment period, which will also be set out in regulations, ESB Networks will notify each electricity supplier of the assigned MPRN for each domestic electricity account they supply. ESB Networks will also, on the effective dates, notify suppliers of the amount of money it will transfer to them for the purposes of the scheme. The Minister for the Environment, Climate and Communications will set out in regulations the payment periods within which ESB Networks will transfer the funds to suppliers for the sole purpose of making payments under the scheme. Following receipt of these funds, suppliers will then, within the payment periods set out in the Act, credit each domestic electricity account held with them on the effective date with a payment of €183.49.

The CRU, as independent regulator, will have oversight of the scheme. It will put in place administrative and operational arrangements to ensure that ESB Networks and suppliers perform their functions under the scheme.

The CRU, on the basis of its existing powers to issue directions and secure compliance by licence holders with their obligations, will ensure that ESB Networks and suppliers perform their functions under the Bill. Suppliers and ESB Networks are required to repay any monies received by them which have not been used for the purposes of the scheme.

The Bill also amends the National Oil Reserves Agency Act 2007 to provide for a reduction in the petroleum product levy, more commonly known as the National Oil Reserves Agency, NORA, levy. The NORA levy is a charge of 2 cent per litre applied to most petroleum products sold in the market for the purpose of funding the operations of NORA and the Climate Action Fund. The levy will now be reduced to a nominal amount, with the reduction to come into effect from 12 October and to remain in place until the end of February 2023. This levy reduction will offset the carbon tax increase on petrol and diesel road fuels, which will apply from 12 October. It should be noted that NORA has a significant financial reserve and that this temporary levy reduction will not impact its ability to carry out its functions in the event of the occurrence of an oil emergency.

Sections 10 and 11 are drafting amendments to section 34 of the Electricity Regulation Act 1999 and section 35 of the Electricity (Supply) Act 1927. These amendments make it clear that relevant market participants can enter into an agreement for connection to, or use of, the transmission or distribution systems and sell electricity or supply electricity for sale. These amendments are necessary in light of EU directive requirements and to facilitate CRU further in its implementation of the registration framework for relevant market participants.

I would now like to refer to some particular aspects of the scheme that will be of interest to Deputies more broadly. As Deputies may be aware already this scheme uses the same eligibility criteria as the electricity cost emergency benefit scheme enacted earlier this year. Under the previous electricity costs emergency benefit payment, a credit of €176.22, excluding VAT, was applied to all domestic electricity accounts through April, May and June 2022. Upon the scheme's conclusion on 30 June 2022, over 2.1 million domestic electricity accounts had received the payment with the value of these payments totalling almost €377 million. This means 99.36% of all eligible domestic electricity accounts had the credit applied. The use of the meter point registration number, MPRN, as the unique identifier ensured a broad reach and no application or means testing.

The scheme will apply to domestic electricity accounts using their unique MPRN to allow the payment to be credited to individual bills automatically without the need for application or approval, including pay-as-you-go meters. Therefore, the payments will help both bill pay and pay-as-you-go customers with their electricity costs.

The Government is aware that the need to use the MPRN as the identifier resulted in a small number of certain households not being able to access the payment. A particular cohort, since identified, includes approximately 1,000 Traveller households in certain local authority accommodation where the MPRN is registered to the local authority and supplies multiple households. This issue has been raised by Traveller organisations with the Department of Housing, Local Government and Heritage, given its responsibility for Traveller accommodation. The Department of the Environment, Climate and Communications is working with the Department of Housing, Local Government and Heritage on how best to reach such households with this support. While the majority of household tenants who rent their homes have their own electricity account, in anticipation of a small minority for whom electricity costs are not separate from overall rental costs, the Department of the Environment, Climate and Communications and the Department of Housing, Local Government and Heritage worked closely with the Residential Tenancies Board, RTB, on a public information campaign to ensure that tenants were aware of the scheme and entitlements and of mediation services available to tenants in the event landlords did not pass on the payment to tenants in these situations. The RTB has reported that contacts with them on this matter have been extremely low. These mediation services remain in place for the forthcoming scheme under this Act.

Furthermore, the Department of the Environment, Climate and Communications is also engaged with the Department of Social Protection to examine how this group could be further supported using existing social protection measures. As there is no data set identifying this cohort, and arrangements could vary with bills being split in potentially different ways, increasing awareness of entitlements under the additional needs payment scheme, which includes provision for help with household bills, may be the best way to support people who need support but cannot be reached with this scheme.

The scheme can only become operational following the passing of this underpinning legislation. As Deputies will appreciate, this emergency measures Bill aims to ensure that the credit can be made to domestic electricity accounts as soon as possible. The scheme will apply to domestic electricity accounts using the unique MPRN to allow the payment to be credited to bills. This does mean that premises, other than principal residences, such as holiday homes, with a domestic electricity account will be included in the scheme. The scheme uses the above single eligibility criteria to enable payments to be made next month. The scheme does not have additional eligibility criteria. For example, it is not means tested as the application of such criteria would override the automatic nature of the current scheme, require input from customers through formal applications and cross-checking by administrators, which would significantly delay the roll out of the payments. This scheme is not perfect but it does have a very wide reach and can be delivered quickly and, therefore, is firmly in the national interest.

I will provide a section-by-section summary of the Bill if I have time. There are 13 sections in the Bill. Section 1 is a standard provision which provides for definitions.

Section 2 provides for the establishment of the scheme. It provides the basis for the estimation of the amount required, as well as for the allocation of the monies for the scheme up to €1.211 billion by the Minister for the Environment, Climate and Communications, with the consent of the Minister for Public Expenditure and Reform.

Section 3 provides the legislative basis for the transfer by the Minister for the Environment, Climate and Communications, with the consent of the Minister for Public Expenditure and Reform, to the distribution system operator the moneys, up to €1.2111 billion, for the operation of the scheme. This will be paid to domestic accounts in three payments, each of €183.49, excluding VAT, in the November-December 2022, January-February 2023 and March-April 2023 billing periods.

Sections 4 and 5 provide for the functions of the distribution system operator and suppliers, respectively, for the purposes of the operation of the scheme.

Section 6 provides for the amendment of section 9 of the Electricity Regulation Act to create functions for the CRU including for the purposes of oversight of the functions of the distribution system operator and suppliers and to ensure that the administrative and operational arrangements necessary for the functioning of the scheme are in place.

Section 7 deals with an amendment to the Taxes Consolidation Act 1997. This amendment is to exempt the electricity costs emergency benefit payment from income tax. I would like to advise Deputies that a small drafting amendment will be required to this section on Committee Stage regarding the numbering of the section to be amended in the Taxes Consolidation Act.

Section 8 provides for the Minister of the Environment, Climate and Communications to make regulations, with the consent of the Minister for Public Expenditure and Reform, for the purposes of the Act.

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