Thursday, 16 December 2021
Ceisteanna Eile - Other Questions
96. To ask the Minister for Finance the proposals being considered by his Department to put in place reliefs to reduce energy bills considering the significant cost increases over recent months; and if he will make a statement on the matter. [62356/21]
The impact of recent increases in energy prices and the rising cost of utility bills are having an enormous impact on households and businesses. You only have to ask those who filled their car at the pumps or got a fill of oil for their home in recent weeks. What engagement is the Department of Finance having with utility companies and what can we do to address this for consumers?
I thank the Deputy for raising what is a very important and timely issue at present affecting every household in the country.
The final retail price of fuel is determined by a number of factors that include the costs of production, distribution, global market factors, international exchange rates, taxation, wholesale market contracts as well as individual retail pricing policies. The current spike in energy prices arises principally from the global recovery from the Covid-19 pandemic in conjunction with supply constraints and is being witnessed across the European Union and other countries.
Wholesale electricity prices both in Ireland and across Europe have risen substantially in 2021, with high international gas prices, low levels of wind, increasing carbon prices and a lingering 2020 winter.
As the Deputy will be aware, the Government approved the establishment of the electricity costs emergency benefit scheme under which a payment of €100 will be made to every domestic electricity customer as a once-off measure to mitigate the effects of the unprecedented rise in electricity prices on domestic electricity customers.
The Deputy will be aware work will commence on that early in the new year. It will require legislation. We look forward to the co-operation of the House on that issue so that people can get the value of this in the spring of next year.
It will run in conjunction with the fuel allowance, which runs from October right into April. There is cold weather in January, February, March and into April and it is important that extra €100 would be available, not only to the people who are on the fuel allowance but to everybody else in society who is experiencing the high cost of fuel. That will be a benefit. It is a once-off situation. I know of no other country in the world that is doing that. It is an excellent initiative. There is substantial funding available for that.
The discussions we are having with the sector are through the regulator. The ESB will provide the cheques directly to the individual suppliers which will credit every consumer's account. The people will get the benefit of that as early as possible in the new year.
I welcome the measures that have been introduced. Anything that helps should be prioritised. I welcome the tax and social welfare adjustments and the announcement this week in respect of the €100 credit for account holders. These are important to counter rising costs of living.
I still feel we need to do much more in the longer term. We have seen commentary in recent weeks that energy prices are the main driver of inflation at present. We have seen the road hauliers crying out for relief on fuel costs. Typical home energy costs and motoring costs have increased significantly. Since this time last year, the price of electricity, gas and other fuels has increased by 29%.
Home heating oil has skyrocketed by 71% in just 12 months. Petrol has gone up by 20% and diesel by 29%. All of these increases are having a major impact on households. I ask that we would develop a long-term approach for Ireland to insulate consumers from the volatility on international wholesale energy markets.
It is important to put on the record that all the measures I have just mentioned, especially regarding the fuel allowance for many hundreds of thousands of households around the country who benefit to the tune of €914 from October to next April, are funded through the carbon tax. Those who oppose the carbon tax are trying to reduce the Government's ability to assist those households. We must be consistent. If we want funding to help people with the rising costs of energy, we must raise it through a carbon tax. It is important that we have support in the House when it comes to raising the expenditure in order that we have the funds available to spend on those measures. People in receipt of the fuel allowance will get the €100 I have just mentioned as well.
The ESRI has shown in a recent report that if people shop around and change their electricity supplier, the average household can save more than €300 on its electricity bill per annum. I encourage people to shop around as an immediate way of getting a better price for electricity.
If we consider the number of people who on Government advice are now working from home, it is obvious that they are using more household energy, resulting in higher bills. Consumers are facing massive price hikes by utility companies. We have taken some first steps this week, but more needs to be done. With Christmas just around the corner, people are concerned about more money coming out of their pockets. Can we give any further subsidies? The situation is impacting those in particular who are on tight budgets and it is causing them massive hardship.
The initiatives we announced this week specifically refer to the increased costs of working from home. The Finance Bill included some new measures of support for people working from home. The previous scheme was very narrow, but we included a new scheme of statutory benefits in the Finance Bill that was passed in the House last night. There are benefits for people working from home in recognition of the extra costs involved.
In terms of people being able to afford the extra costs, an increase in the minimum wage is due shortly. Most people in the public sector and the vast majority of those working in private businesses will be given a pay increase in the coming year. That is in addition to the increase in the tax bands for people who are working, not to mention the increases to which I already referred on the social welfare side. People will have additional money in their hand to meet some of the additional costs that are arising this winter.
The point made by Deputy Dillon is valid. We are going to see increasing volatility in fossil fuel prices as we move to net zero. Would the Government consider some form of policy that would have a buffer in the tax take so that in times of sharp changes, either up or down, the State would maintain a steady upward drift in the price of fuel but would to some degree insulate people from the short-term volatility?
In fairness, I find myself agreeing with a lot of what has been said. We accept that we have difficulties at present with the energy crisis. We are going to have continuing difficulties and we must look at easing the pain as much as possible as we move towards a just transition.
I put on record my disappointment at the fact that the €100 mitigation offered to people has been put on the back burner – no pun intended. We need to move as quickly as possible. Even at this late stage, if at all possible, I request that we could get movement. I think we could all get agreement on that. This is not one of these offers that is made consistently at this time of year that we can meet next week. We are not talking about something that is beyond agreement and getting sorted. We need the type of long-term protections Deputy Bruton spoke about.
I understand the issue concerning having a buffer in place to address the volatility in prices, many of the causes of which are outside our control. The ESRI stated again this morning that it expects the inflation rate to peak by the end of the first quarter. I know that means we will continue to have rising prices, but as the year progresses, some of the issues that have emerged in terms of world supply and Covid will ease. I hope that will be some help.
In terms of a buffer, that is why we have carbon tax increases planned for the years ahead, in order that we have funding in place to help people, especially those on social welfare, who are the direct beneficiaries of the carbon tax measures we have in place.
We would love to be able to provide people with the €100 this side of Christmas. Many people pay by coin in meters and others are in apartment blocks and the bills might not be in their name. That takes a couple of weeks to sort out. We could not proceed with a scheme and leave those people out of it this side of Christmas and give it to the rest of us. A couple of weeks' work will be required in the new year and I know everybody will help to move the legislation swiftly through the Houses as soon as we come back.