Darragh O'Brien (Dublin Fingal East, Fianna Fail)

For the information of the House, Committee Stage of the Environment (Miscellaneous Provisions) Bill 2025 is starting at 3.30 p.m. The Minister of State, Deputy Dillon, will come in after I have spoken. Officials will take note of matters raised by all Deputies here and we will respond. It is outside my control as the committee meeting was scheduled by the committee.

Since 2022, we have seen significant increases in the prices that households and businesses pay for energy. This has come alongside general inflation at levels not experienced in recent times. Domestic energy prices and cost-of-living pressures remain matters of serious concern.

The Government is acutely aware of the challenges that households continue to face in meeting the costs and remains fully committed to supporting those most at risk.

The Government takes this matter very seriously and has made a number of important commitments in respect of addressing the continued high cost of energy and, indeed, we have implemented some measures already. This is evident in the programme for Government which acknowledges the increased energy cost pressures on households and businesses and commits to bringing forward measures to help contain energy costs.

Today, I will outline some of the key drivers of energy prices as well as the steps that the Government has taken to support households to meet these costs. I will also set out the actions being taken to protect Irish consumers over the longer-term, by making critical investments in renewable energy, in our electricity grid and, importantly, in energy efficiency.

The pressures we face are not unique to Ireland. Rising energy costs have been seen across Europe since the economic recovery from the pandemic and Russia's illegal invasion of Ukraine in early 2022. The invasion introduced huge volatility into the wholesale gas market, which directly led to higher prices paid by households and businesses across Europe for electricity. There remains a strong correlation between wholesale gas and wholesale electricity prices, as gas remains an important source of fuel in the electricity generation mix. Wholesale prices have stabilised and fallen since then but remain elevated compared to the pre-pandemic averages. In line with rising wholesale prices since the post-pandemic recovery, accelerated by the war in Ukraine, household electricity and gas bills rose significantly in 2022 and have remained elevated since.

The electricity and gas retail markets in Ireland operate within a European Union regulatory regime wherein electricity and gas prices are commercial and liberalised. The position of successive Governments has been that competitive energy markets result in greater choice for consumers and businesses in terms of suppliers, products and prices. CRU ended its regulation of retail prices in the electricity market in 2011 and in the gas market in 2014. Price setting by electricity suppliers, including standing charges, is therefore a commercial and operational matter for the companies concerned.

Each such company has its own approach to pricing decisions over time, in accordance with factors such as their overall company strategic direction and developments in their cost base. The latest data from Eurostat shows that, in nominal terms, Ireland ranked fifth for electricity prices and eighth for household gas prices among European countries in the first half of 2025. When adjusting for purchasing power parity Ireland is mid-table in terms of energy affordability with the 12th highest electricity prices among the EU 27. Retail prices are influenced by several factors which must be borne in mind, including wholesale energy prices, system operation costs and supplier hedging. In Ireland, our reliance on imported fossil fuels, specifically gas, for electricity generation, has been a long-standing driver of higher energy costs. Furthermore, our location as an island on the periphery of Europe and our low-density and widely dispersed population also influence prices.

Regarding hedging, suppliers in Ireland were shown to have taken a prudent approach to hedging which had the benefit of protecting final customers from the very worst effects of the wholesale price crisis. Conversely, hedging limits the ability of suppliers to reduce prices immediately in line with wholesale price shifts. The International Energy Agency has observed that retail prices in Ireland have not adjusted at a comparable pace to the decline in wholesale prices, with the energy component of retail prices remaining up to three times that of wholesale prices. That is the margin to which I referred.

While the CRU has carried out extensive monitoring of the Irish retail energy market before, during and in the aftermath of the energy crisis and found no evidence of market failure, the findings of the IEA renewables report underline the importance of progressing the programme for Government commitment to "commission an independent review into the speed and level of passthrough from wholesale prices to retail prices, with an additional assessment of the overall price dynamics and an overall focus on the competitiveness of the Irish economy".

It is in this context that I have requested that the CRU lead the independent review of the relationship between wholesale and retail energy prices. This review will build on the work of previous CRU reports and investigations from 2017, 2023 and 2024 by reviewing the competitiveness of Irish retail energy markets, examining supplier costs, including hedging and pricing practices, and providing comparative price analysis with other EU member states. It will also identify any issues affecting the speed or scale of passthrough from wholesale to retail costs, assess whether any further measures are warranted to enhance market responsiveness to wholesale price changes and make recommendations to ensure that the benefits of lower wholesale prices are felt by both households and businesses.

As Minister, I have engaged with individual suppliers to gain a detailed understanding of measures they will introduce to support households this winter. This included a round of meetings with the largest energy suppliers on this topic. Each of those suppliers committed to ensuring that hardship funds and focused measures are in place for any customers who may find themselves in difficulty over the winter months.

A suite of measures was introduced in recent years to help households and businesses deal with the rising cost of energy. This included €1,500 in electricity credits to all households through the electricity costs emergency benefit scheme and that cost €3.3 billion. This universal measure provided valuable on-bill support to nearly 2.3 million households, taking many out of arrears completely and preventing others from becoming more indebted. Further financial support was provided through the reduction in VAT on electricity from 13.5% to 9%.

This is in addition to one-off increases to certain social welfare recipients such as those in receipt of the fuel allowance, pensioners, working families, carers, those living with disabilities and those in receipt of child benefit. The SEAI has invested significant resources into enhancing existing support schemes which businesses can avail of. These include longer-standing schemes such as excellence in energy efficient design and the support scheme for energy audits, introduced in 2021, as well as the new SME scheme, the business energy upgrades scheme, introduced November 2024. The accelerated capital allowances scheme is a tax incentive that encourages businesses to purchase equipment that are highly energy efficient and thus make significant savings on energy costs and reduce carbon emissions. The accelerated capital allowances scheme for energy-efficient equipment is extended until 31 December 2030, encouraging investment in low-emission technology among businesses.

As part of budget 2026, the Government has also provided significant targeted support to those people who most require help with their energy costs. From January, the fuel allowance will be increased by €5 per week to €38 per week, supporting over 450,000 households who most require Government assistance to meet their energy costs. To directly support working families, the fuel allowance is now being extended to recipients of the working family payment. This will benefit over 43,000 families and will be a significant measure in protecting children, in particular, who are experiencing energy poverty. This measure will be paid from March next year, and backdated to January.

In addition, from September 2026, those who move from disability allowance or blind pension to employment will be able to retain their fuel allowance for five years. Additional needs payments are available for people who have essential expenses, which they cannot meet from their own resources, including people who face difficulties in meeting fuel bills. Also, a heating supplement may be paid to people who have exceptional heating costs due to ill health, infirmity or a medical condition and are unable to meet those costs out of household income. Heating supplement is not restricted to the fuel season and can be paid throughout the full year. As Deputies will know, the reduced VAT rate of 9% currently applied to gas and electricity has also been extended for the lifetime of this Government. This will reduce household energy costs by up to €100 per annum at a cost of €254 million per annum.

The programme for Government has committed to continuing to allocate revenue raised by the carbon tax towards the funding of social welfare measures, agri-environmental schemes and retrofitting. This is an important commitment to ensure we protect the most vulnerable throughout the clean energy transition. As of budget 2026, the Government has allocated over €4.2 billion in carbon tax revenue for this purpose since 2020. ESRI analysis consistently shows that lower income deciles are better off as a result of the social protection measures funded by the increased carbon tax.

Each year, the Commission for Regulation of Utilities carries out a review on the effectiveness of customer protection measures over the past winter, as well as deciding the measures to be retained for the forthcoming winter. The additional protection measures originally identified by the CRU in 2022 have been monitored with data and feedback sought by the regulator from customer representative groups, network operators and suppliers, to fully understand the impact for all customer groups, and really importantly, for those vulnerable customers.

For this winter period, 2025-26, some of the key measures that will remain in place are as follows: the debt repayment level on pay-as-you-go meters will remain at a maximum level of 15%. Suppliers will be required to continue to automatically place customers with a financial hardship meter on the most economic tariff available. Energy suppliers will be required to actively promote the vulnerable customer register and the protections it offers, promote how customers can have a nominated representative to manage their account, and how customers can sign up for level payment plans. Additional requirements have been outlined for suppliers when engaging with indebted customers who may benefit from entering a repayment plan, due to increased levels of customers not being able to complete repayment plans in the previous year. The disconnection moratorium for registered vulnerable customers will remain in place from 1 of November 2025 to 31 of March 2026. The winter disconnection moratorium for all other domestic customers will be in place from 8 December 2025 to 16 January next year. The customer protections are complemented by the supplier energy engage code, which provides a further level of security for domestic electricity and gas customers. This code encourages customers, who are having difficulty in paying a bill, to engage with their supplier regarding the management of their debt. Under this code, suppliers will not disconnect customers who engage with them and must provide every opportunity to customers to avoid disconnection.

There are a number of longer-term actions we need to take as well. The energy crisis required Government to act decisively to shield households and businesses from unprecedented price hikes. The energy transition poses a different challenge to Government. The transition towards an electrified and low-carbon economy will be of huge long-term benefit to the economy, and really importantly to society, and is aimed at providing secure, sustainable and affordable energy for generations to come. The energy transition requires unprecedented levels of investment in renewable and conventional generation capacity as well as network infrastructure. This requires a shift in policy approach from crisis measures to enduring solutions, including significant investment in energy infrastructure coupled with targeted supports for the most vulnerable, which tackle the root causes of energy poverty. The Government is working at speed to roll out more renewable energy infrastructure, both onshore and offshore, wind and solar. This is already helping to bring down the cost of electricity and is the long-term solution to high energy bills.

In July this year, we approved a landmark €3.5 billion investment in Ireland's electricity grid infrastructure to the end of the decade as part of the national development plan. This represents the largest single investment in the country's electricity network in its history. This transformative investment will strengthen Ireland's energy security, support economic growth and accelerate our transition to renewable energy. The investment will see €1.5 billion allocated to ESB Networks and €2 billion to EirGrid, enabling both companies to significantly increase capital investment to expand our onshore and offshore electricity transmission and distribution network infrastructure. We have had that debate and that legislation has been signed into law.

The Electricity (Supply) (Amendment) Act 2025 was progressed as a matter of priority to allow that €1.5 billion equity to which I referred, to be made to ESB Networks by the end of the year. The Act also increases the statutory borrowing limit of the ESB from €12 billion to €17 billion. This Act ensures ESB Networks is sufficiently financed to begin delivering on the ambitious onshore grid investment programme next year. The overall ESB Networks investment plan, under what is called price review 6, will see delivery of over 500 capital projects, including 181 km of new overhead lines, 319 km of new underground cables, nearly 70 new and upgraded substations right across the country and over 50,000 pole replacements. The Government equity injection into the ESB will support the strength of its balance sheet and assist in maintaining the excellent credit rating it enjoys. This will ensure the ESB can borrow at the most competitive interest rates, which ultimately lowers the impact of network charges on customer bills. Delivery of electricity grid infrastructure is a priority for this Government. My Department is currently reviewing grid delivery oversight and will ensure the equity investment is appropriately legally documented, with enhanced Government expectations of the ESB in relation to project governance, reporting and delivery. The mechanism for making the €2 billion investment in EirGrid will be agreed and legislated for separately next year in 2026. This investment will be allocated over the next five years to support EirGrid access the capital markets and fund its investment program.

We are continuing to make significant investments to improve the energy efficiency of our built environment. Since 2019, almost €1.5 billion has been invested in SEAI schemes, supporting over 220,000 home energy upgrades, including almost 74,000 B2s and over 29,500 fully funded upgrades for households under the warmer homes scheme. A record capital allocation has been made available through the budget of 2026. That is €558 million for SEAI residential and community energy upgrade schemes, including the solar PV scheme, to support the delivery of the national retrofit plan. That is an €89 million increase on Exchequer funding in the budget allocation. It means that more funding than ever will be available to homes to make them warmer, healthier, more comfortable and less expensive to heat. Analysis carried out by the Department and the SEAI indicates that a household can save between €750 and €1,120 per year by installing a deep package of efficiency measures. Government is also continuing to invest significant resources into support schemes for business, including the excellence in energy efficiency design, EXCEED, and the support scheme for energy audits, as well as the business energy upgrades schemes that were introduced in November 2024 to support SMEs to undertake energy upgrades. Supporting these schemes will be critical to the achievement of Ireland's 2030 public sector energy efficiency targets, which are mandated in the energy efficiency directive. My Department has also established the heat and built environment task force to accelerate and drive delivery in relation to retrofitting, renewable heat, district heat and decarbonisation of the building stock.

In June 2025, a cross-government national energy affordability task force, which I chair, was established to identify, assess and implement measures that will enhance energy affordability for households and businesses, while delivering key renewable commitments and protecting security of supply and economic stability. The task force membership includes representatives of various Departments and crucial energy sector stakeholders. The first report of the task force was recently published and included measures for consideration to support customers in budget 2026. The report is available and has been published. Further analysis will now be carried out in order to inform the energy affordability action plan, which will include recommendations for structural reforms to benefit consumers in the medium and longer term. This will be a crucial part of Government's work to improve competitiveness and will complement the development of a whole-of-government action plan on competitiveness and productivity. This plan will also include a broad review of cost drivers in the energy sector and will address energy poverty, including work from the energy poverty steering group. Specific engagement and measures to support those most at risk of energy poverty will also be a key feature of the energy affordability action plan. The task force will soon commence a consultation to ensure the action plan is informed by public input, as well as further stakeholder engagement. The plan itself will be published next year. The work of the task force reflects a firm commitment to move towards long-term sustainable solutions to energy cost pressures, including through greater targeting of resources towards those most in need, and exploring the best way to fund necessary investments in energy infrastructure. Effective ways of defining, measuring and tracking energy poverty are absolutely essential for designing sound policy responses. Currently, the measurement of energy poverty in Ireland is based on the level of expenditure on energy by a household. Households spending above 10% of total income on their energy needs, excluding energy for transport, are counted in the current measurement of energy poverty. Using this metric, it is estimated that, in 2022, the share of households that could risk energy poverty had risen to 29.4%.

However, this measure does not account for the energy efficiency of homes and does not identify households most acutely affected by rising energy costs. Neither does it capture the extent to which households may restrict their energy consumption due to cost concerns. For that reason, the Government is providing funding to examine whether existing supports are well targeted towards those who are at risk of energy poverty and the impact of those supports on the level of energy poverty. Amongst other things, this research will propose a metric for measuring energy poverty that combines expenditure and energy efficiency and metrics to measure changes in the trend of fuel energy poverty regarding the number of households and its severity. This research programme is due for completion in 2026. The results will be considered as part of the work of the national energy affordability task force and will be part of the budget discussions for next year.

I appreciate the opportunity to discuss the challenges and reaffirm mine and the Government's commitment to taking action to help households and businesses across Ireland with energy costs and to building a clean energy future. I am looking forward to hearing contributions from Deputies across the House.

The critical area for us in relation to grid is delivery on the capital programme. This will be the largest investment the State has ever made in electricity infrastructure. It is badly needed so we can ensure more clean, green, renewable energy that we have control over, as well as more storage capacity, more distribution capacity and more generation capacity, is brought onstream.

Last year over 40% of our electricity was generated through renewables. That is a good thing. We are projecting well into the high 60% or early 70% by the end of the decade. We need an energy grid that supports businesses and households. We need to be acutely aware of those struggling to pay their energy bills. It is absolutely correct and prudent to target measures at those households and individuals. I have already mentioned what we have expanded there. The permanent change, effectively, in the VAT rate is also significant but we need to deliver projects like the North-South interconnector. That project alone will reduce household bills by an average of €100 per annum. It is badly needed from an all-island, all-Ireland electricity network perspective. It is one of the critical capital schemes we need to deliver over the period of 2026 to 2030. The changes we have made and are making with regard to planning will underpin the critical infrastructure we need. Deputies can be assured the work will continue with regard to the national energy affordability task force, looking at structural measures within our energy system.

The challenges we face are not unique to Ireland. They are challenges right across Europe and the developed world. I have put the issue of energy affordability front and centre at Energy Council meetings at EU level and as recently as the COP conference in Belém, Brazil.

As I mentioned and as Deputy Daly will know, the Environmental (Miscellaneous Provisions) Bill is on Committee Stage, which I will have to attend around 3.30 p.m. The Minister of State, Deputy Dillon, will come in shortly and take the rest of the debate. We will note each contribution Members make. The scheduling of the committee meeting and of this debate was outside of my control and I cannot be in two places at once, unfortunately.

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