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

I thank Deputies for their contributions today. I particularly thank all the parties, comprising virtually every party, and many Independents who have welcomed the Bill. The Bill is to be welcomed because it is to recoup excess income that was received by these energy-generating companies as a result of the war in Ukraine.

There is significant financial pressure on households and businesses as a result of continued high energy prices. The Government is aware of this and, as previously stated, has introduced a range of measures and supports. The Bill provides for the redistribution of collective proceeds from windfall gains via schemes in accordance with the European Council regulation. It has the aim of providing relief to energy consumers for the financial pressure that they have experienced recently as a result of high energy prices.

As I stated earlier in this debate, these proceeds will be collected via a market cap of €120 per MWh on electricity generated via renewable sources and a cap of €180 per MWh on energy gained from fossil fuels. The cap will also apply to revenue generated between December 2022 and June 2023, inclusive, as these are the dates set out in the Council regulation. I am confident that the legislation before the House today will provide for a fair collection of proceeds of the windfall gains that were seen in the electricity sector.

I would like to take the opportunity to respond to some of the questions raised by Deputies in this session. A general theme was that while the Bill is to be welcomed, it is too little, too late. Although Deputy Bruton pointed out that €1.6 billion in energy credits were paid out over the last 18 months, that is in fact only a fraction of what was paid out. I calculate that approximately €5 billion was paid out to consumers over the last two years in electricity and energy supports.

How will the money that is raised from this windfall levy be spent? It is to be ring-fenced. The European Union regulation states that the money must be ring-fenced for electricity consumers. This Bill provides for the collection agent to establish, administer and maintain a fund, to be known as the market cap fund. Into this will go the proceeds from the cap on market revenues to be retained. The Minister for the Environment, Climate and Communications will work with the Minister for Public Expenditure, National Development Plan Delivery and Reform to decide on the use of proceeds gained from the cap on market revenues. However, they must be used to support final electricity consumers in order to comply with Article 10 of the Council regulation. Consultation with relevant Departments will be undertaken prior to any such decision being taken. The summary is that the money is ring-fenced, has to go to electricity consumers, and the decision will be made after this Bill is passed.

A number of Deputies asked why we have done the least possible, including Deputies Boyd Barrett and Catherine Connolly. In other words, they asked why we would set a higher cap than every other country in Europe. In fact, this is untrue. There was significant diversity in the approach to the implementation of the market cap across the European Union. While some countries, such as France and Spain, have chosen slightly lower caps than us for renewable energy, others, such as Denmark, Belgium, Sweden and Austria, have chosen caps at higher levels. Several member states, like us, have chosen different caps for different generation technologies. We had to appraise the policy options with a structured, multi-criteria analysis. The caps chosen in this Bill are deemed appropriate to capture the windfall gains while maintaining positive investment signals. We are trying to transform our entire electricity system. We need offshore renewable investment, solar farms and a stable investment environment so that people choose Ireland as a country to come into. We have taken a more punitive approach to companies than most countries, which is borne out by the statistics.

Deputy Gino Kenny, from People Before Profit, welcomed the legislation but lamented that a law is needed to make these companies return money to their consumers. If the companies wish to return money to the consumers, they may. If they do, they do not have to return it to the State. That is provided for in the Bill. I agree that it is a pity we have to do this, but we have to do it. Deputy Kenny also recommended the nationalisation of the electricity system. I would point out that our electricity system is substantially nationalised already. EirGrid, ESB Networks, Electric Ireland, Bord na Móna and Coillte own the distribution system, the transmission system, parts of the electricity retail system and large portions of the electricity generation system.

Deputy O'Dowd pointed out the benefits of solar, said we should be doing more on solar and said it is not right that it could cost €40,000 or €50,000 for a householder to get involved in solar energy. In fact, it only takes approximately €8,000 to install an entire solar system. Some 30,000 householders have taken that up so far, with twice as many this year as last year. There are four reasons that they are doing it. They do not need planning permission anymore, there is zero VAT, there are generous grants, and they can sell their power back to the grid when they are not at home. For those reasons, we have applications for solar power pouring in and one does not need to have €40,000 or €50,000.

Deputy Berry requested that we have a national contingency planning service. He acknowledged that the national security analysis centre exists. We have our two existing intelligence services under the gardaí and Department of Defence, but we also have the Office of Emergency Planning. We used its premises during the negotiations to form a Government some years ago. It recently assisted with the development of planning for an emergency cyberattack on the national power systems. At that exercise, agencies across the State participated in planning for that type of attack. That type of gaming exercise, which the Deputy would be familiar with from the world of defence, will continue to happen. That links in with the national risk register, which is approved by the Cabinet every year. It is a national list of the most dangerous risks facing the country, including things like pandemics and war.

Deputy Berry also asked for more pricing control by the Commission for Regulation of Utilities, CRU, similar to the form of pricing that is operated by the national taxi regulator. It is a more interventionist approach to pricing. I was disappointed when I saw electricity retailers raising their standing charges during the recent rise in wholesale gas prices. I do not think that was acceptable at all or understandable. I would also like to see a more interventionist approach. I know that the Minister, Deputy Ryan, has received reports, which have been published today, from the CRU relating to the hedging strategies of the companies. I think further work is going to be done on this. I have met the CRU to discuss this.

Deputy Berry emphasised the simplicity of the electricity credit scheme, which we used in the last two years, and asked for the possibility of a waiver for those who do not need it. This will all be decided in the context of the current budget. I have been working on this since before the summer and would like to see that aspect addressed as well.

Deputy Berry also asked about estimates of income from this windfall levy. Between this Bill and the previous Act, which affected fossil fuel generators, we expect to bring in between €300 million and €600 million. If this Bill is passed, I expect it will bring in between €80 million and €150 million.

When is that money coming in? It has to be declared and filed by 30 November and has to be paid by 30 December, according to the legislation.

Deputy Bruton said he would like to see a redesign of the electricity market at EU level to move away from pricing based on the highest marginal cost. If he makes a proposal on that basis, I am willing to look at it. That applies to every Deputy in the House. I am willing to look at any proposals they have.

Deputy Bruton asked how a generator can legally pass on profits to the consumer, as there is a legal separation between profits from the generation industry and profits from the retail industry and one is not allowed to cross-subsidise the other. It is a good question. In fact, this levy applies not just to generators but also to intermediaries, which deal directly with final consumers, so it is possible for intermediaries to compensate their final consumers and thus reduce their bill under this levy.

Deputy Bruton also asked for the publication of the energy security review, which is imminent and very close to happening.

Deputy Joan Collins said she fears data centres will gobble up our new renewable energy capacity. I understand that fear. According to our new data centre policy published last year, new data centres are only permitted where there is new and additional renewable energy capacity sufficient to fully supply the electricity needs of those data centres. They have to be additional to what was planned already. They also have to have their own back-up power. By having their own back-up power, they contribute to the security of supply of the grid. A number of hurdles are required in order to bring in a data centre. It goes far beyond planning permission. I note that conditions are attached within the planning conditions that relate to the rules we brought in last year on data centres, which include the need for additional renewable energy generation capacity to attach specifically to data centres through power purchase agreements, PPAs.

Deputy Connolly lamented the complex nature of the legislation and the complex language used. As institutions become more expert in what they do, they tend to use more jargon and it becomes difficult to interpret what they mean. The simpler we can make legislation, the better. I was able to follow it when I read it. Deputy Connolly is a barrister so I expect she was better able to follow it than I was.

Regarding Deputy Connolly's point about electricity demand reduction measures in the EU Council regulation, we implemented measures last winter to reduce electricity consumption. We published these online on gov.ie. We successfully hit our mandatory target to reduce consumption at peak times.

Deputy Connolly also asked whether the CRU has enough in-house expert advice to carry out its function. It has procured the relevant expertise it needed to implement this regulation.

I acknowledge the significant work of the Attorney General, his officials and industry stakeholders. They worked with my Department to draft this important legislation, which is complex. I also extend appreciation to the Joint Committee on Environment and Climate Action, which conducted pre-legislative scrutiny of the general scheme of the Bill earlier this year. Its recommendations were published in May and were considered throughout the drafting process of the Bill. I thank all Deputies for their interest. I look forward to discussing the Bill and answering questions in further detail on Committee Stage.

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