Thursday, 21 September 2023
Energy (Windfall Gains in the Energy Sector) (Cap on Market Revenues) Bill 2023: Second Stage
I move: "That the Bill be now read a Second Time."
I am pleased to address the House on the Second Stage of the Energy (Windfall Gains in the Energy Sector) (Cap on Market Revenues) Bill 2023. As Deputies are aware, the Russian invasion of Ukraine in early 2022 led to exceptionally high energy prices. Although wholesale prices have reduced in recent months, they are still significantly above their long-term average and household gas and electricity bills are still nearly double what they were two years ago. The Government is aware of the impact these increased energy costs have had on households and businesses and has introduced numerous supports to offset their financial effect. The Government implemented a €2.4 billion package of supports during 2022 and a package of once-off measures worth €2.5 billion was included in budget 2023.
Significant action has also been taken at EU level. Council Regulation 2022/1854 on an emergency intervention to address high energy prices came into force in October 2022 and provided for a mandatory temporary solidarity contribution on fossil fuel production and refining and a cap on market revenues of certain electricity generators that earned unexpected surplus profits due to unforeseen circumstances. The first part of the regulation, which provides for the temporary solidarity contribution, has been enacted and was commenced on 2 August this year. Now we must implement the cap on market revenues which is also provided for in the regulation.
The main purpose of this Bill is to cap market revenues gained by energy companies operating within the State and provide for the redistribution of the collected funds back to consumers. It does this by implementing a cap of €120 per MWh on electricity produced from renewable sources, namely, wind, solar and hydropower. In addition, a variable cap, of at least €180, is applied to coal, oil, peat and biomass fuels. On the basis of economic appraisal conducted by my Department, I would like to note that these cap levels strike the balance of capturing excess revenue in the sector while maintaining positive investment signals. Applications of caps below these levels may risk Ireland’s success in securing the investment needed to meet our climate targets.
It is important to add that the market cap will not apply to wind, hydropower or solar energy projects which make difference payments to the public service obligation for surplus revenues above the relevant auction strike price under the renewable electricity support schemes, as these revenues are already capped.
The cap on market revenues will apply for the period from December 2022 to June 2023. The Council regulation does not provide scope to extend the cap on market revenues prior to this period. In addition, a recent review by the European Commission concluded that a prolongation of the market cap measures is neither indicated nor desirable.
The Bill and the EU regulation on which it is based are designed to provide assistance for domestic consumers who have experienced extremely high electricity prices. The proceeds raised by the cap will be used to support electricity consumers with their electricity bills. While the precise disbursement of the proceeds will be subject to a future Government decision, it will be taken in accordance with the requirements set out in Article 10 of the Council regulation.
The Commission for Regulation of Utilities, CRU, the independent energy regulator, is designated as the competent authority in the Bill. It will administer the market cap with the assistance of EirGrid, which will be the collection agent and will manage the collection of proceeds.
Before outlining the provisions of the Bill, I would like to speak on a number of key points relating to the development of the legislation which provide a context for the delay in its publication. Both this Bill and the Energy (Windfall Gains in the Energy Sector) (Temporary Solidarity Contribution) Act are complex and novel measures which required considerable engagement with a number of stakeholders such as the Commission for Regulation of Utilities, EirGrid and the Office of the Parliamentary Counsel. As a result, a Government decision was taken in June 2023 to split the Bill so as to allow time to find solutions to the complex legal issues which were present. The decision to split the Bill will not impact on the amount of proceeds ultimately collected from the cap on market revenue as the applicable timeframes for this measure will be the same as per the Council regulation.
I will provide a brief overview of the most important measures the Bill addresses before discussing them in more detail. This Bill contains four Parts and 33 sections, which I will shortly outline. Two Acts are referred to, the Companies Act 2014 and the Electricity Regulation Act 1999, with no amendment required to any existing legislation.
The main purpose of the Bill is to fulfil Ireland’s obligations under the EU Council regulation through the introduction of a cap on the revenues of specific electricity generators operating within the State and provide for the redistribution of the collected funds back to consumers. The cap on market revenues will apply to non-gas electricity generators with a capacity of 1 MW or more as follows, with three separate caps for different energy sources. A cap of €120 per MWh will apply for renewable fuel sources, which are wind, solar and hydro-powered generators, with a higher cap of €180 applied to geothermal energy and electricity generated from waste. A variable cap is provided for energy sources with variable cost structures such as biomass, coal, peat and petroleum.
In the case that electricity suppliers can demonstrate that revenues in excess of the cap are already being passed on through lower prices to final consumers, those revenues will not be subject to the cap. The cap on market revenue will apply to revenue generated from December 2022 until June 2023, inclusive, as set out in the Council regulation.
The Bill also provides for the methodology for calculating the revenues to which the various caps apply and takes account of hedging arrangements, different charging systems, power purchase agreements and the various contractual obligations, all of which form an important part of the trade of electricity within the market.
The Bill goes on to outline the procedures which participants in the energy market must follow in making their returns to the Commission for Regulation of Utilities, the process for the collection of funds and the use of these funds. It concludes with standard provisions relating to offences, penalties and data security with regard to information sharing. The Bill provides powers to the Commission for Regulation of Utilities to carry out all of these functions in an efficient manner, in accordance with the Council regulation.
I will now give a more detailed overview of the Bill and each of its four Parts. Part 1 contains standard legislative provisions that cover the Short Title of the Bill, its commencement, definitions of terms used in the Bill and a standard provision enabling the expenses of the Minister to be paid out of moneys provided by the Oireachtas.
The interpretation section, section 2, outlines 48 different terms, including definitions for the different markets in which electricity is traded, technical terms such as "generating unit", "installed capacity", "metered quantity" and "power purchase agreement" and reference to the terms "producer", "intermediary" and "trader", as well as terms relating to both the distribution system and transmission system. This first Part also provides for the power of the Minister for the Environment, Climate and Communications to prescribe regulations and schemes and concludes with a provision outlining the administrative aspects of the Bill concerning notices.
Part 2 provides for the calculation of the market cap, the return of information to the competent authority and the payment of money which is due. I will describe each chapter of this Part in detail as this is the most complex Part of the legislation. This Part is divided into 19 sections which are divided into three chapters. I will now outline these.
Chapter 1 begins by describing the relevant parties who will be liable to make a payment under the Act, as well as the specific fuel sources to which the Act applies. These sections are followed by sections 8, 9 and 10 which provide detailed and technical information concerning the calculations required to determine the level of revenue due under the cap.
Sections 11 and 12 differentiate between the preliminary surplus revenue and adjusted surplus revenue. The first is calculated as the monthly revenue minus the capped revenue. However, the second, the adjusted surplus revenue, takes account of various gains or losses from hedges, power purchase agreements, contracts for difference payments and monies paid to or received from traders’ hedging arrangements. This adjusted surplus revenue represents the amount for which an entity is liable to pay in respect of the market cap. Section 13(4) allows for some parties to include adjustments to the preliminary surplus if they can show benefits have been transferred to end consumers.
Chapter 2 of Part 2 details the returns which are required to be provided as well as giving the competent authority the power to request such information if it is not forthcoming. The returns must contain all relevant information, such as the type and number of fuel sources used, allowable costs of production, market revenue and the level of market cap, as well as the relevant person’s assessment of both preliminary surplus revenue and adjusted surplus revenue and any other relevant information regarding hedging arrangements or other documents that may be prescribed. This chapter concludes with section 19, which describes the appeals process and provides for the making of an appeal against a determination of the competent authority in the High Court.
Chapter 3, the final chapter of Part 2, details the payment of due funds, additional charges for late payments and the fact that interest will apply to these outstanding funds, which is provided for in sections 20, 21 and 22, respectively. The final two sections of Part 2 outline the requirement to maintain adequate records relating to the making of a return and states that failure to do this is an offence.
Finally, section 24 provides that the competent authority may enter and inspect premises as required to confirm that returns provided are accurate, a task in which the Garda can provide assistance, if required.
Part 3 outlines the market cap fund which will be where all amounts paid under chapter 3 are deposited. The first section describes the establishment of the fund and the second, section 26, details the accounting obligations, provides that the National Treasury Management Agency may perform this function and concludes, in section 26(6), with a provision that the Minister is required to provide copies of the accounts to the Houses of the Oireachtas.
The final two sections of this Part, sections 27 and 28, detail the use of funds raised. These can be used to set up schemes which fulfil the criteria set out in Article 10 of the Council regulation which requires that they benefit final electricity consumers. The fund may also be used for refunding overpayments to energy producers, intermediaries and traders, if required.
The final Part, Part 4, distinguishes the offences and penalties which apply for providing false or misleading information to the collection agent or the competent authority, as well as offences, outlined in section 30, relating to failure to make a return within the specified period, failure to maintain correct records, obstruction of an inspection and breaching a provision of a scheme outlined in section 28. The penalties for such offences include a fine or imprisonment for six months or, if convicted on indictment, the person in question could face a prison term of five years or a fine of almost €127,000, which is covered in section 30.
The subsequent section, section 31, outlines how the competent authority can carry out prosecutions in this regard and section 32 states that an organisation can be held liable for an offence committed by a member of that organisation.
The final section of Part 4, which concerns information sharing, outlines that both the competent authority and the collection agent can share information, including, names, data on market participation, commercial information and technical information concerning system connectivity. All information sharing will be subject to GDPR. I commend the Bill to the House and I look forward to the debate.
I extend my condolences to the family, friends, colleagues and supporters of Councillor Damien O'Reilly. I attended his funeral in Dunboyne this morning. He was 40 years of age. It is dreadfully sad. He was a great public representative and staff member in the Houses of the Oireachtas too. I extend by deepest condolences on behalf of my party and, I am sure, colleagues in the Houses too.
I am pleased to finally have the opportunity to speak on this legislation and that it has been introduced. It is incredible that it has taken this long to get us here. The delay would be unacceptable in normal circumstances but in the context of today's surging and enduring cost-of-living crisis, it is shocking. As it stands, Ireland has some of the most expensive energy prices in Europe. The average energy bill is now over €2,000. Even the European Central Bank has pointed out that we are completely out of line with other EU member states. Prices are falling steadily all over Europe. Despite some small decreases, on the whole, prices remain stubbornly high here. Energy poverty affects approximately one in three people in Ireland. That is completely unacceptable in an economy that is supposedly booming. The reality is that only very few are reaping the benefits of economic growth. The majority are left out in the cold.
The Society of St. Vincent de Paul recently told the Joint Committee on Environment and Climate Action that it has seen a 40% increase in requests relating to energy in 2022, which rose to a staggering 50% in 2023. Moreover, Irish living standards have already fallen further behind other European countries. This decline is a continuation of a downward trend since Fine Gael came into power almost a decade ago. In fact, we are now in the bottom half of the European league table. How does the Government expect to turn this around if it delays and dodges all the actions necessary to provide urgent relief to households? I remind the Government that these are not just figures. This is the devastating reality for millions of ordinary workers and families who are crippled under the strain of astronomical bills and have to manage rip-off prices of energy and food in the face of increasing mortgage payments and rents.
The EU regulation was intended to be an emergency measure and introduced in a sufficiently timely manner when it was agreed in October last year. Does 11 months feel sufficiently timely to the Minister of State? Does it feel like this Government is acting like it is an emergency? I would say it absolutely does not.
When challenged on these sky-high energy bills, the Government points to the war in Ukraine and claims it is out of its hands. The fact is that Ireland is an outlier when it comes to our bloated energy bills. After 11 months, almost a year of dragging its feet, we may finally see the introduction of this measure. The first draft of this Bill was introduced in March. We completed pre-legislative scrutiny in May. Almost a month later, out of nowhere, the Minister, Deputy Ryan, announced that he was splitting the Bill in two. As we entered the summer recess, all we had was a weak scheme for the temporary solidarity contribution. The legislation for the cap on market revenues, the measure which had, if appropriately drafted, the potential to address profits when they were at their peak in 2022, was nowhere to be seen. In fact, this Bill was only published on the last day of August.
The Minister tells us that the reason for these delays is the apparent complexity of the legislation. Is the Government telling us that it failed to do what 20 other European countries have already done because it was too difficult for it? Surely not. Other EU countries were straight off the starting blocks while Fianna Fáil, Fine Gael and the Green Party seemingly sat twiddling their thumbs. Whether due to gross negligence or incompetence, this Government seems content to let ordinary workers and families continue to suffer. After all of that, one would think this Government would at least get the Bill right. However, it has disappointed us all yet again because what it has produced is overdue, weak and incomplete legislation. Shockingly, the Government's Bill fails at what should be its most basic function. It failed to address profits when they were at their peak in 2022. These obscene, eye-watering profits will remain untouched. Let us not forget that energy companies earned this revenue off the back of a devastating war in Europe, an unprecedented global pandemic and a crushing cost-of-living crisis. Ordinary people suffer while private interests profit.
What is the Government's excuse this time? It says it cannot introduce retrospective measures. That argument simply does not stand up. First, this measure is already retrospective, given that it is September and it will be applied from December to June this year. Second, other EU countries, including Greece, France and Belgium, applied it retrospectively. This Government acts like its hands are tied but, as the experience of other EU members shows, there is a better, fairer way.
To add insult to injury, as a result of all the delay and the refusal to apply the measure in a way that is most effective, nearly €2 billion in potential revenue will be lost. It is revenue that could have been used to help families with the spiralling cost of energy. Estimates have been revised down from €1.9 billion when it was first announced to now somewhere between €280 million and €600 million. This becomes all the more frustrating when we consider that these figures do not even include the potential revenue that could be earned by extending the measure beyond June, as many other EU states have done. Austria, the Czech Republic, Finland, France, Luxembourg, Poland, Portugal, Slovenia and Spain will all apply the measure until 31 December 2023. In Slovakia, the measure will be in place until 31 December 2024. Other EU member states stand firmly in the corner of the hard-pressed citizens but that is not the case in Ireland.
Other EU member states also have more stringent measures in place for the rate at which the cap is set. France, for example, has set the cap at €100 per MWh for wind, solar and nuclear. We are told that €120 is fine for Ireland. Perhaps the Minister will tell us what the refit price is. The State has already assessed what a reasonable profit is for energy companies. Perhaps some light should be shone on that. We can then compare where €120 per MWh stands.
Yet another glaring gap in this legislation is the fact that it gives zero detail on how this revenue will be spent. There is, therefore, no guarantee that the Government will use the revenues to provide the urgent and necessary relief that hard-pressed businesses, families and workers need. Can the Minister of State commit that revenues earned will be applied to reduce the burden on ordinary families and workers due to sky-high energy bills? Why should companies be allowed to make exorbitant profits off the back of ordinary workers and families? How can the Government justify this?
The fact is that Ireland continues to have some of the highest energy prices in Europe, which are falling far more slowly here than they are all over the eurozone.
The Government will almost certainly argue that it is simply doing what was provided for under the regulation and its hands are tied. This spin is far from the truth, however. The Commission made it explicitly clear that member states have the flexibility to decide on how to apply the windfall measure. Other EU member states can implement the cap on market revenues and the temporary solidarity contribution in diverse ways. This is exactly what they have done.
This Government can and should do more. It is clear that chaos reigns in the energy markets while the Government sits on its hands prevaricating and making false promises. All the while, ordinary workers and families suffer. The reality is the Government never wanted a windfall tax in the first place. As late as August last year, the Minister, Deputy Donohoe, made clear the Government's opposition to any tax on windfall profits. This Government has continually resisted calls from Sinn Féin and others in the Opposition to introduce extensive measures. It only moved because the EU did so a whole. In reality, it has always been determined to protect the profits of powerful energy companies, prioritising them over the needs of ordinary workers and families. Despite the fact there have been growing concerns over anticompetitive behaviour and profiteering in the energy market, the Government has also failed to equip the Commission for Regulation of Utilities with regulatory teeth to ensure that it is fit for purpose.
In truth, we have an energy system that is a basket case. We have a crisis in our energy system. We are burning more coal than ever and renewables delivery has fallen off the edge of a cliff. Let us look at the renewable electricity support scheme, RESS, 3 auction results next week, which will give us an indication of where renewables are under Fianna Fáil, Fine Gael and the Green Party. We have a regulator that is oblivious to the issue of rip-off energy prices and the Government is exactly the same. We have the risk of blackouts and brownouts. EirGrid is struggling to deliver back-up generation capacity on time and on budget. We have the McCarthy report that nobody has seen but which we should see, and data centres are being rolled out to beat the band. It is completely unacceptable and it has to change.
Deputy O'Reilly is to come. She will probably be here, but if she is not I will continue on.
Sinn Féin and I, and my colleague, Deputy O'Rourke, have been warning this Government since October 2021 – two years ago – that our electricity pricing system was broken and that high gas prices were leading to skyrocketing prices for wind energy companies. At each stage, the responses from various Ministers were dismissive and often condescending. At the same time, the Government was blocking proposed reforms at EU level. The Government eventually found itself in a minority of states that still thought electricity generating company profits should be protected at the expense of households. When the Government realised that reforms were unavoidable, its approach became to do as little as possible as slowly as possible. That is why we are here in September 2023, two years later, and only now seeing legislation. It is quite shocking.
I welcome this legislation but it is important to put what it is, and how long it has taken to get here, in context. While the problems were obvious as far back as 2021, the real bumper profits flowed in 2022. Under this so-called windfall gains Bill, the bumper profits of electricity companies will include all those record profits made last year. This Government made the conscious choice to let energy companies keep all their windfall profits from 2021 and 2022, as well as most from this year. These profits were extracted at great pain to workers, families, businesses, schools and community centres. The Government is intentionally shutting the gate long after the horse has bolted. This can only be explained by a desire to protect bumper profits for electricity generating companies. The Government cannot claim it was not aware of this. It cannot claim even now that it does not have other options. The Government, like that of Spain, could have introduced, and can still do so, a real windfall tax on the profits of electricity companies alongside this market cap.
It is important to understand this is not just a story about corporate greed. The first thing to say is that we have a very complex electricity pricing system. Privatising the electricity system was complicated. It is like trying to privatise roads. The Government had to come up with a convoluted system that is completely counterintuitive. The simple point is that the system was broken when gas prices spiked and it required government intervention to fix. This Government stood idly by in the face of repeated warnings from Sinn Féin. In the budget in a couple of weeks’ time, we will hear the Government make the claim that it is economically and financially responsible when nothing could be further from the truth. It placed our economy in danger by allowing electricity companies to push households and businesses to the brink. At the same time, it missed out on €1 billion in potential revenue. This measure will only recoup a small fraction of the profits made.
This Bill will be celebrated by energy companies. It locks their profits in for 2022 and allows them to keep most of their windfall profits for this year. On 7 March, the Taoiseach stated that the Government would apply a windfall tax to electricity companies for their profits in 2022. This was repeated by the Minister, Deputy Harris, in May. This falsehood was an attempt to dress this legislation up as something it is not.
I welcome that the Government is finally taking a limited form of action but I believe the electorate will judge the Government harshly for how it has handled the cost of energy crisis and the price that ordinary people throughout this country have paid for the Government not acting sooner on this. It is quite shocking. We see the levels of energy poverty and energy deprivation. People have never worked harder in this country yet deprivation continues to rise. Energy deprivation is one of the drivers of that. It is disgraceful when we could have done what so many other countries did, as mentioned by my colleague, Deputy O'Rourke. This is not rocket science. It has been done in other countries. That is why we truly need a change of direction. We cannot keep tweaking around the edges of a thing that is so fundamentally wrong in terms of a government failing to protect its citizens from something as basic as the cold and providing energy for people at a reasonable price, when there was no need whatsoever for us to be in that situation in the first place.
It was the equivalent of calling Michael J. Fox "chicken" all right. I realise that.
The points have been very well laid out by my colleagues. What we are talking about is "too little too late". We have constantly been told about what could and could not be done, but it took until when the European Commission and the European Union were willing to look at windfall taxes. There are examples right across Europe of those that have introduced windfall taxes that kick in at a much lower level of profit, which means a bigger dividend for the State. We know all the other alternatives that could have been looked at where windfall tax could have been kept at a certain level of honesty, if we had looked at price capping and all those other issues. At times, the conversation in the Chamber is one-liners and it is not absolutely clear.
Anybody who is operating a constituency office, or is hitting doors or whatever, has probably seen plenty of people's bills for costs they cannot afford. Those people's biggest issue, particularly anybody who travelled abroad, and a number of business people who had been in Spain, Portugal or many other countries approached me, is that they were aware of bills in those countries coming down and we were the last on the line. It must be the case that the energy companies here were not exactly at the races as regards introducing hedging.
That is where we are. Deputy O’Rourke also spoke, as we all do, about wind power and the opportunities we have to almost be a superpower in that. We all want to see that. We all want to see a move away from fossil fuels. We want to see Ireland being a major driver in changing the entire European energy setup. The big fear regarding RESS 3 is that we will not have enough players looking to get in, because of all the other issues that have not been dealt with by the Government. At the end of the day, the buck stops with it. There are planning issues and all those other ancillary issues. We have all seen the benefits, particularly across parts of Scandinavia, where states invested in their own energy future. They were able to get a dividend back for the people in the state. We want to see a huge number of companies coming in here. We want to see both onshore and offshore wind. We need to make sure that there is a community dividend but beyond that, I would like to see a State dividend.
At this point, we are looking at measures that are too little, come too late, are not for long enough and are not for big enough money. The fact is that people out there, beyond this Leinster House campus, are showing everyone in here bills they cannot pay. We all have heard of people who have put in applications. We had hoped this would have put serious pressure on energy companies, rather than the pressure being on the people who cannot afford their bills. At times, we need to look for social welfare payments and other measures to bridge that gap but that is just not a workable system. Once again, Deputy Conway-Walsh put it very well when she said the energy companies will be very happy with this but the people will not be. It is not enough and it needs to be revisited.
We in the Labour Party welcome this Bill. Exorbitant revenues and profits have been taken in by energy companies over the past number of years, while more and more people have been plunged into energy poverty. Coupled with the broader cost-of-living crisis in the areas of housing and grocery prices, the situation has been dire for far too many people. All the while, the cash kept rolling in for energy companies. It has taken nearly two years for the Government to take serious and meaningful action since the Labour Party was the first to call for a windfall tax on energy profits to support people, as bills were on the rise. In the past 12 months, following our motion on the cost of living in January of last year, Shell reported $40 billion in profits, while BP’s profits have doubled. Likewise, profits soared at ESB and Centrica, the owner of Bord Gáis, while revenue at the Corrib gas field - which we in the Labour Party called on to be temporarily nationalised - rose considerably.
A report by the Society of St. Vincent de Paul earlier this year showed that 377,000 people were unable to adequately heat their homes last year. Compare this with the figure of 166,000 in 2021, and the scale of the harm caused by the energy crisis becomes abundantly clear. More than double the number of people could not properly keep themselves warm. An additional 98,000 people went without heating entirely. That is a catastrophe. The Government responded by dithering around the edges and handing out tokenistic energy credits and fuel allowance increases which, to be fair, were welcomed by hard-pressed people and families in the short term. An emergency situation, of course, requires immediate interventions. Yet, they were easily a get-out-of-jail-free card for energy companies and they failed to get to the root of the issue, namely, the gross and excessive profits being taken in by those companies.
The Government has taken an almost passive approach to dealing with the energy crisis and introducing actual fundamental solutions. We were glad it finally implemented the windfall tax before the summer recess but that should have been done months before then. So, too, should this portion of the Bill to cap market revenues have been implemented sooner. We were told initially that the delay to these two measures being brought forward was due to the Government waiting for European Council regulations to inform its response to the extraordinary profits being made. That regulation was published last October. It was not until March that the general scheme of this Bill was published. It took eight months for us to even debate the windfall tax formally and now, nearly a year later, we are debating the cap on revenues. When we look across Europe, we can see that our neighbours have been much quicker in dealing with the energy crisis and implementing both aspects of the Council regulation. We are one of only two countries in the EU that have not implemented some kind of retail price regulation. The Government has shown a total lack of urgency in responding to this crisis. What it has shown, however, is that it does not completely comprehend the scale of the struggle people are experiencing. Its lack of urgency is endemic; it has shown this when responding to the crisis in housing, the crisis in health and the climate crisis.
All of that said, we in the Labour Party are glad that we are now finally seeing action on implementing a cap revenues of energy companies. It is a measure for which we are in total support, albeit we would have liked to have seen action on it a lot sooner, I have said. However, the need for the provisions of this Bill exposes design flaws in the energy market and while I am conscious that we are talking about a European competency here, it is a point worth making nonetheless.
We can all agree now that we need to see a decoupling of energy prices from the prices of natural gas. I note that the President of the European Commission, Ursula von der Leyen, has said something to that effect as well. There is broad consensus now that we need to fundamentally reform the energy market. That is a welcome development but it is incumbent on us now to keep the pressure on the EU to follow through on it. There are two primary reasons, as far as I can see, that underscore the importance of decoupling the energy market. The first relates to Europe's reliance on Russian natural gas. We saw the hike in wholesale prices of gas that meant the prices of all energy sources rose as a result of Russia’s brutal and illegal invasion of Ukraine. It did not cause the energy crisis, because prices were already rising considerably, but it undoubtedly exacerbated it. We in the European community simply cannot leave ourselves so exposed to an aggressive, despotic and morally bankrupt leader such as Putin. That is abundantly clear. As long as Europe is so reliant on Russia for energy, Putin can threaten us with pulling the plug. We need to decouple gas from other energy sources so that we can make those alternative sources, particularly renewables, more accessible to households.
This brings me to the second point. Tying the energy prices to the price of gas is acting as a barrier to transitioning towards greener energy. Renewable energy is cheaper to produce, but because the price is coupled with the price of gas, the production costs are not reflected in the price customers pay. If we want to make green energy like solar or wind energy the default, then it needs to be more accessible to people, as well as needing to be the cheapest option available. That is possible, and the first step is getting there by decoupling the price of green energy from that of gas. Indeed, that is in and of itself a design flaw in the European energy market. It is a self-imposed obstacle to creating a green energy market and a green economy. Tearing down that obstacle is an important step and, as I have said, I am glad there is broad agreement on that. It is imperative, however, that at the same time we build up the necessary infrastructure to insulate us in the future. As far as I am concerned, we cannot talk about energy without talking about the climate crisis. The two issues are inseparable. We cannot approach any measure dealing with the cost-of-living and energy crises without seriously considering the implications they will have for meeting our climate and emissions reduction targets. We need to go far further and quicker in giving significant investment to green energy sources like solar, heat capture and wind.
We have all known for years that we can be a world leader in wind energy production. Our offshore potential is the envy of Europe, but we are failing to live up to that potential. If we are to meet the target in the climate action plan of 5 GW by 2030, we need to move more rapidly in investing in offshore infrastructure and considerably scaling up our capacity. The same can be said for solar energy generation. We are seeing more and more houses where solar panels are installed on their roofs. The Sustainable Energy Authority of Ireland, SEAI, grants that have been made available for those who wish to install solar panels have been a welcome measure and we need to see more of that. We want to see as many people as possible installing solar panels and I believe there is a genuine desire among the population to do so. We need to capitalise on this and be more ambitious. Further investment in this area should be made to bring down installation prices in order that solar panels can be made even more accessible as at present, even with the grants available, many of those who may wish to have them installed remain locked out due to the cost.
The bottom line, however, is that the Government is failing to build up the necessary infrastructure to get us through the energy crisis and protect us into the future. We are now facing another winter that will no doubt see more piecemeal measures that do not address the fundamental issues. Those measures would be fine if they were short-term emergency measures but it appears they are now the default. They are something for the Government to point at in order to get them out of Dodge City for failing to give the green transition the considerable attention it warrants. We know the technology is there and we have the resources. All that is missing is the political will. There has been a lack of political will to really grasp the nettle and take the radical action that is required.
I accept that we need to support those who are struggling most with the energy crisis. That, of course, must be our priority, but we need to see more ambition and investment in our green energy infrastructure.
I will finish with a direct appeal to the Government. When it brings forward its emergency supports in the forthcoming budget to alleviate some of the pressure on households facing into another bleak winter, we need to see a proper targeting of those supports. The energy crisis and the cost-of-living crisis, more broadly, does discriminate. It affects some far more than it affects others. We had a situation last year where credits were being given to people who were effectively isolated from the cost-of-living crisis. For the most part, high-income households were not struggling to keep up with bills. Those funds could have been used to much greater effect by targeting them towards those who really needed it. Virtually all research shows that the best way to prevent families and households falling into energy poverty is through targeted supports. The Government must be proactive in administering supports. It cannot take the same lazy approach as last year's budget, with universal payments, because those harmed by the cost-of-living crisis need the greatest level of support possible. We simply cannot have another winter in which households cannot keep themselves warm.
As we are all aware, from the young family just starting out, to the pensioner who has given so much to this country, the escalating cost of living and surging energy prices are being felt right across the board. With back-to-school costs and winter approaching, many feel like there is no end to the financial strain. The hard-working people in my communities, especially in areas like Lucan, Clondalkin, Palmerstown, Saggart, Rathcoole, Newcastle and Citywest are caught in an endless, relentless squeeze. Their earnings are falling behind an-ever rising tide of expenses. I know this because people in my community are struggling with everyday expenses and with maintaining their home and their family. That is why I wholeheartedly endorse this Bill, to keep the pressure on the energy companies and ensure that their excessive profiteering does not go unchecked, and that the interests of ordinary Irish people are safeguarded.
As we discuss this Bill we must not lose sight of the windfall gains that have been accrued by energy companies, and the compelling need to reinvest these resources back into our local communities. Under Fine Gael and this Government's leadership, we have made remarkable progress in lightening the burden for households. In recent weeks we have witnessed some price reductions by energy companies: Electric Ireland by 10%, Bord Gáis by 15%, Energia by 15% and Flogas by 30%. I thank An Taoiseach, Deputy Varadkar, for working with the energy companies to achieve this and to keep the pressure on them when it is needed to make sure that we are reducing household bills for people.
I am proud to be part of a government that provided €600 worth of credits for energy that have helped so many families this year. Between the reduction in VAT on electricity and gas and these energy credits, we are reaffirming our commitment to support Irish households through this cost-of-living crisis. I remember the positive response from many constituents when this measure was announced last year and I commend the Government on making it happen, and on doing so swiftly.
An Taoiseach and the Government are working to put money directly back into the pockets of people in communities across Ireland. They are doing that through initiatives like the energy credit. While these steps have provided vital assistance to many, they alone do not address the underlying issue. Energy companies are still exploiting the war in Ukraine to bolster their profits. It is deeply troubling to think that these companies are continuing to profit at the expense of people in our communities. The recent decrease in electricity prices is a welcome step in the right direction, but more can and should be done. We must therefore focus on long-term solutions to make electricity more affordable for everyone. The disheartening reality is that despite Electric Ireland being a semi-State company, it is providing a lower decrease of 10% compared to Energia's decrease to customers of 15%. This raises the crucial example of the Government setting the right example. An elderly constituent, an 82-year old woman in my area, faced a bill from Electric Ireland of almost €1,000. Stories like that resonate with countless others in my area and across the nation. People say they feel abandoned on the issue. I commend the Minister, Deputy Eamon Ryan, on requesting the report published today by the Commission for Regulation of Utilities on how energy prices are set and on how energy companies protect vulnerable customers. That is really important. I appreciate the report's findings, which confirmed that no indication of market failure within the retail sector or among vulnerable customer has taken place. That underscores the effectiveness of Government pressure and its ability to influence energy companies in a positive direction. However, that same report does show a 53% increase in the number of customers registered as vulnerable for electricity, which shows how the cost of living continues to deeply impact families right across the country. It reinforces the reality that the days of 2020 and 2021, when energy prices were at their lowest, are not likely to return for a long time. While there has been a 40% reduction in wholesale electricity prices from last year's really high levels, the Central Bank's warning that energy prices are out of line with the rest of Europe resonates with everybody. We are all wondering why. Following the decline in wholesale electricity rates, energy companies must now pass along savings to their customers.
If we were to channel a significant proportion of these windfall gains directly into the heart of communities it would begin to make a really significant change to people's lives. I firmly believe that these funds should be earmarked to alleviate the cost of living and to bolster organisations that provide a safety net for our households. I refer to organisations like food banks in areas like north Clondalkin, branches of the Society of St. Vincent de Paul right across the country, schools and community centres and the invaluable resource of family resource centres. Strides have been made, but it is imperative that the core essence of this Bill, which is to provide financial support to households and businesses affected by energy prices, becomes a reality. The impact of our energy sector on the daily lives of the people I represent in Lucan, Clondalkin, Palmerstown, Newcastle, Saggart, Rathcoole and Citywest cannot be overstated. The windfall gains must be ring-fenced to directly alleviate the cost of living for these families and to support invaluable community organisations, especially if the proposed proceeds from the cap on market revenues range from €80 million to €150 million. The true test of this Bill lies in whether it genuinely eases the pressure on people.
I commend the recent cuts in energy costs by energy companies. I welcome the aim of this Bill to give families support; families who are struggling to pay their electricity bills. I welcome in particular all the long-term actions that we as a Government have brought in to alleviate the cost of living for struggling families. I am sure we will all agree that it is essential that we channel these windfall gains from the energy sector into our local communities and into our household budgets in order that families can see the impact.
I am glad to get the opportunity to speak on this Stage of the Bill. I do not want to sound rude or anything like that, because I know the Minister of State is a very mild-mannered Minister, but it really is about time that we had this Bill.
I also want to say that there is something perverse about the term "windfall" being associated with the provision of energy, which is an essential service, when the users of those services are paying penal prices for it, just to keep the light and heat on in their homes and businesses. Everyone knows that we are in an emergency situation, and that we have long been in an emergency situation. That is, everybody except the Government, which from the outset, has been way too lax, and way too late in addressing this bonkers bonanza for providers. That is all while people in Celbridge, Naas and Leixlip are afraid to put on the heat and the light. That is the case even in a town called "Prosperous".
This Bill has taken far too long and does not do enough for the people who have been hammered by shocking energy prices, while wholesale gas prices have fallen back to where they were in late 2021. This too-little-too-late approach exposes the warped priorities of this Government. It is a case of profit first and the people and their essential needs an extremely poor second. Some 19 countries managed to introduce the windfall tax before we did. Some 19 governments saw how energy prices were crucifying working families and they made it their priority to give them a hand. The Government is first up when it comes to guaranteeing bankers' bonuses, but when it comes to a windfall tax on vast profits on what are essential services for the people, it is last, and even when it comes, the Bill just does not seem to go far enough. It does not address the period of peak profits.
The Minister of State should not say to us: "We would love to, but we couldn't." The Government could but it did not, by failing to tax on time and not making it retrospective when it did introduce the measure. Other governments managed to do it, so we could have done it too. Other governments found a way because they had the will to do it. The EU has given us a lot of flexibility, which I am sure the Minister of State will admit.
It has given huge discretion but the Government is choosing to protect the exorbitant profits made on the essentials of heat and light instead of protecting and giving a bit of human comfort and political dignity to the people who use these essential services and depend on them for living every day. This Bill has to do vastly more to make it vastly better.
We welcome this Bill and the opportunity to have a debate on it today. Over the past few years, we have seen the impact and huge community and societal cost of the prices. There have been record energy prices for consumers, and record levels of energy poverty and disconnections. At the same time, along with the incredible impact on our communities and individuals, there have been record profits for energy companies. That is a clear illustration that our energy market is not robust enough to deal with external shocks such as Ukraine. It is not just Ukraine that has caused these record issues; there are many other factors, including those within our ability to pre-empt or to try to mitigate. We have a very insecure system that is quite isolated from the rest of Europe and because of that, we may need to look at it with a different lens from what would be applied to more standard markets or energy systems across Europe. There is an opportunity at this point, when we are making shifts in our energy system and moving away from traditional fossil fuels to a more electrified energy system and market, to look at how our energy markets are regulated. I understand that is part of the EU discussions but I hope this Government is strongly participating in those discussions and ensuring that an islanded and isolated system like ours gets full recognition at a European level so that we have a market that works for people and consumers, rather than for companies, as is the current situation.
My discussion today will focus on the Bill and the regulations. I hope some of the things I mention will be taken into account as we go through this legislative process. There are a few issues which could be addressed and broadened out; the scope of the Bill is too narrow. If you look at the EU directive and the regulations, there was an opportunity to expand on what this Bill could have achieved. I highlight the timeframe. The regulations and the Bill relate to the period from December 2022 to June 2023, which is a very short timeframe. Even within the EU regulation, it repeatedly references how the electricity markets and very high prices were observed since September 2021. It also discusses extreme and lasting price increases observed since February 2022. The six-month period that the EU and this Bill reference is not long enough. Energy prices have been rising since early 2021. There has been an impact on people since that time and prices are still incredibly high. Therefore, this Bill will not do anything to cap or pull back some of the profits companies will make on the prices people are facing and being hit with at the moment. I am not sure if it is in the remit of the Government to extend that period but I think there is some flexibility within the EU regulation because it references that there are ways of derogating from Union rules. I ask the Government to seek advice to see whether that six-month period can be extended. It would be very worthwhile. We must make sure no company profits on the back of a war and the exploitation of ordinary consumers when it comes to electricity prices. Energy is an absolute necessity for life. It is not something people can do without. It is important that we do not see any excess profits on the back of people's suffering in that regard.
I spoke earlier about our energy market and other ways in which these high prices could have been addressed. I note that a range of tools and measures could have been implemented. This windfall tax is one of them, which is welcome. If you look at all the other European countries, retail price regulation was open to us, as was wholesale price regulation and the mandate to state-owned firms. A lot of different measures were open to Ireland under the EU rules, including ones we did not apply. Ireland and Finland were the only two countries of all the European countries not to bring in retail price regulation. Countries like France and Spain had wholesale price regulation. Other options were open to the Government to try to assist. The Government could and should have investigated and examined those options to see whether it could have brought in something that would help.
Also mentioned in the regulation is the requirement that member states should endeavour to reduce their total gross electricity consumption from all consumers. That is part of this regulation and, essentially, a condition of it. It is one area this Government has failed to address. When I talk about reducing energy consumption, I am not talking about individual homeowners because the pricing did that for many people. There has been a great reduction in electricity use and emissions from the residential sector, but there has been no curb or aim to control the electricity consumption of large energy users such as data centres. One area we have never really gotten to the bottom of is the level of pressure placed on prices by energy and electricity demand from large data users. It is supply and demand. The more the demand for a service like electricity, the higher the price. The Government should look into that. I sought clarity on this issue from the Commission for Regulation of Utilities, CRU, and various Departments but it does not seem to be under investigation. It is important that we look at the impact of data centres, not just on energy consumption and emissions but also on pricing because it impacts and is often paid for by residential homes.
Ring-fencing is not included in the Bill but it is important that it should be. The funds and money from this windfall tax should be ring-fenced. It should be in the legislation that they must be ring-fenced and used in a targeted fashion, as per the regulation. The EU regulation states that the money should be collected and directed towards those most impacted. The Government has not got that targeting right. It has not targeted the supports enough. I have repeatedly spoken in this Chamber and elsewhere about the number of holiday homes that received €600 or €800 credit as a result of the scheme. It is an absolute waste of taxpayers' money and it is important that whatever money is taken in through this measure be directed to those who need it most.
Deputy Jennifer Whitmore: We welcome this Bill and the opportunity to have a debate on it today. What we have seen over the past couple of years is the impact and huge community and societal cost to the prices we have seen. there have been record energy prices for consumers, record levels of energy povery record levels of disocnnections. At the same time, as that was happening and that incredible impact on our communities and individuals, there have also been record profits for energy companioes. That is a clear illustration that the energy market is not robust enough to deal with external shocks, such as Ukraine. It is not just Ukraine that is causing these record issues for peope; therea re many other factors and ones that are within our ability to pre-empt or try to mitigate against. We have a very insecure energy system and it is quite isolated from the rest of Europe and beacuse of that, we may need to look at it with a differene lens than would be applied to the more standard markets across Europe or the energy systems.
That should be in the legislation. The targeting of it should also be spelled out in the legislation.
An element of the Bill I welcome and was interested to see is that the hedging element from these companies will be notified to the CRU as the competent authority. That is welcome but I ask that it not be limited to the Bill and this period in time. It is important that the CRU has the ongoing ability to examine, monitor and investigate the hedging and contractual arrangements. This week, the Central Bank stated Irish prices are out of line because energy companies are failing to transfer reductions to consumers. Those hedging practices need to be monitored. The CRU is best placed to do that and the fact it has been given the powers under the Bill is welcome. It needs to be in place not as an emergency measure or power given to the CRU but as a standard monitoring power it has and uses all the time.
There is a need for transparency. Nowhere in the Bill is there an indication that the profits being made by various companies will be made public. There needs to be reporting on that and it needs to be publicly available because every person who has paid really high electricity and other energy prices in the past two years should be entitled to know which companies were profiting. That information should be publicly available. That is an important aspect of what the Bill could achieve. I ask the Minister of State to look into that.
I welcome the Bill. It is important that the Government is moving on it. It could be stronger, more robust and better future-proofed. I would welcome a discussion with the Minister on that. I hope he can take some of my suggestions on board.
Like others, I very much welcome the Bill. It is appropriate and timely, however, that I address issues of which Ministers are aware, particularly in the Department of the Minister of State, Deputy Ossian Smyth, but on which they have not acted. The most obvious injustice and inequality is that full-time residents of mobile homes are locked out from the excellent €600 to €800 of electricity credits. That support is being denied to those who are most vulnerable and in need. Everybody in this House and all the fat cats and millionaires in the country get the credit but the most vulnerable of cohorts do not and will not under the present Minister, who refuses to deal with the issue. I have raised it with the Taoiseach, the Tánaiste and the Minister, Deputy Eamon Ryan, and I am raising it now with the Minister of State, Deputy Smyth. I have raised the matter under freedom of information. It is now before the Office of the Information Commissioner. What the hell is going on in the Department that it cannot find a way to ensure those who are full-time residents in mobile homes can get this money? They can prove they are full-time residents and have their pensions at that address and so on. They cannot get it because the Department will not see a way to give it to them. It will tell them to go the community welfare officer. If they go to the community welfare officer, they will have to prove they have an engagement with the ESB. They do not have engagement with the ESB because they do not have a meter. It is supplied by the owner of the site. I am very unhappy with this response and I will continue to embarrass and to raise it here with every Minister in the Department, the Taoiseach and the Tánaiste until something is done for these vulnerable people. Many of them are in poor health. They may not have long to live as many of them are of advanced years. Some of them had very tough lives. They are identifiable and real and they are in my constituency and I will continue to stand up for them. There is at least one other Deputy in the House who has submitted a request under freedom of information. The Deputy in question, who is in Kildare, can name himself later on if he wishes to do so. He is the only other person in this Dáil to have raised the issue. I cannot understand why in the name of God you guys in power - the Ministers and the officials - cannot do something about it.
We have been talking a lot about energy companies having to do this or that but what are we doing about them? What is the Government doing about them? The ESB proudly states on its website that it is a vertically integrated company that controls the generation, transmission and distribution of electricity. It is all-powerful, unfettered and out of control. Although it is a State company, the Government has refused to tackle it on the issue of the vertical integration of that company. How come EirGrid has the use of the transmission but not the ownership of it? What are the costs associated with having a vertically integrated company? It means the ESB controls everything. This Government and previous Governments have not tackled it on that matter. In other countries, the generation, transmission and distribution of energy is separated out, but not here. It does not look like it will happen any time soon. We need to step up to the mark. I am not on the energy committee but those who are, whether in government or opposition, should bring in the ESB and ask it to tell the committee three things it can do as a company to further reduce the cost to homeowners. They should bring in other energy companies or those who supply energy to the grid, such as Bord na Móna, and ask them to explain how their profits are greater than ever before. I welcome the increased profits at Bord na Móna but the fact is the chief executive of that company has a car which cost almost €130,000 and he also has other taxable benefits. I am not saying that is his fault - it is not - but the company policy is obscene. It is an insult to the people of this country, who are put to the wall under the cost-of-living and energy crises, to have to face these issues.
We need to make State companies accountable. NewERA was supposed to do that. Once upon a time, I was the Minister of State with responsibility for NewERA. It did not happen because the Government could not agree on what needed to happen there. We need to control State companies - not to run them, but to control them - make them more accountable and examine their operations to make them accountable to this House in a transparent and obvious way. Until we do so, they will continue to run riot over us all and do what they like.
The Bill is good and it is welcome. I agree that it has come late in the day, but it is there and people will welcome it. We are heading into a tough winter, however. The weather has been particularly mixed up to now. God knows how many poor people will suffer even more greatly if we face a very cold winter. Let us get our act together.
I speak to many people who wish to improve their homes. Every person to whom I speak would like to have greater energy efficiency. They ask me whether they can get a grant for solar panels. One cannot get a grant for them. It is a joke. A person has to spend €40,000 or €50,000 doing up his or her home with energy refits. The Government needs to make common sense of its policies. It needs to make sure that every homeowner in this country can put solar panels in their home if it is appropriate and if the house has the right orientation. The Department must ensure such people get a loan, if needed, at a very low percentage rate of 1% or 2%. The Minister, Deputy Ryan, told me before the summer that it was on its way. I have not heard whether it has arrived but it has not come as yet. It is time for the Government to get the finger out and do the business for the people. That is what it was elected to do. I am very unhappy with the lack of determination and conviction to bring about the change we all want but which is not there at the moment.
I welcome the opportunity to speak on the Bill, but it is back to closing the stable door after the horse has bolted. The Bill is a bit late.
Given the effect of energy poverty we in Sinn Féin have called for this windfall tax for a long time. I will give the Minister of State, Deputy Smyth, the story of a gentleman I know personally who went on radio and had no problem saying it. He works in pharma, has a semi-detached house, has a family and he has a car that he needs to get to work. He is struggling with energy bills. He actually had to borrow €100 from his daughter. That was his story on energy poverty. They are not the people we often talk about here who would be the less well off. This is also about the squeezed middle who are suffering. In my number of years in the House the problem we have with this Government and previous governments is that we seem to be more of a reactive society than a proactive society. We could see this coming two years ago. Previous speakers spoke about how other European countries reacted a lot faster than Ireland. Reference was also made to massive profits. We call this a windfall gains tax but at the end of the day it is taxpayers' money in that we would be giving back what was paid. We overpaid with extortionate prices for energy.
I also want to raise geothermal heating and why it is not being explored. I would say it is the cheapest energy on the planet. It must be 20-odd years ago that I put it in a house. It is the big two-inch heavy gauge coil buried about one metre underground, filled up with water and into a small pump. It is put underground in the same way as under-floor heating. In the winter the ground underneath is hot and it heats a home very cheaply. In the summer the ground is freezing underneath and cools the house. It is simple. There are other ways of doing this and making it easier and we should be looking at that.
Reference was also made to people struggling and going to the social welfare officer. Another thing happening at the moment is that social welfare officers are not being replaced. We do not have a social welfare officer in Midleton now. That would cover Midleton, Cobh, Carrigtwohill, Youghal, Killeagh, Castlemartyr and the surrounding areas. Where does one go to then when one is struggling? It is a database now and it is paperwork. It goes into a divisional office and some fella who has never met a person, does not know what they are like or what they are struggling with, will make a decision on whether he can help that person or not with energy costs. We are still quite possibly facing a tsunami of very difficult times if we get a bad winter this year. I do welcome that we are discussing this. It is not too often that we say this but things are turning in a more proactive way today. When I look at people's situations - and I listen to the elderly more so - they are absolutely terrified to leave the heating on.
I would love to know how much a 40 kg bag of smokeless coal actually costs to produce. When we see them advertised at three bags for €100 there is something wrong with the energy crisis in this country.
People Before Profit welcomes this legislation but it is beyond me why it has taken so long to bring it to this juncture. Why do we have to put legislation forward to compel energy companies to give money back? In the last number of years, and well beyond, the companies have been seriously profiteering from the energy crisis. People's bills have borne this out. Ordinary people are struggling with huge energy bills that are completely out of sync in relation to their income. People are really struggling. They must make a choice and may have no alternative between heating their home or eating. In the past years many people have been left with that kind of choice while we also have the immoral situation of energy companies making vast amounts of money on people's misery. How was this allowed to happen? On what grounds was this allowed to happen is open for debate.
Over the past decades the liberalisation and the deregulation of energy in Ireland has not worked. Energy costs 25 years ago in relation to bills were actually much cheaper in Ireland than in any other European country. There was no competition: the ESB was the monolith and it was a very good company. Now we have regulation and we have competition. Has it brought more efficiency? No it has not. Has it brought prices down? No, it is doing the opposite. Now we have a situation where a number of companies have made absolutely vast amounts of money and particularly in the last number of years.
Windfall taxes in their complexity are probably a once-off measure. They do not look retrospectively at the vast amounts of money these companies have made. This is where it draws its weakness. We must look at the details around how much money can be expelled from a windfall tax. I am sure these companies now have their accountants ready to go to see how they can get out of some of the loopholes around paying this tax.
One of the other substantial aspects we need to talk about is how energy companies are planned in this country. Ideologically I believe that public services such as energy should be nationalised. There should be no competition and they should be there for the public good. They should look at the situation around renewables, being completely environmentally friendly, and also being accessible to the public. Now, however, we have the opposite of that. The bigger question here is around the nationalisation of energy companies. In other countries we can see a different model rather than the capitalist model of competition all the time. A model of nationalisation is a better and more efficient system than what we have at the moment.
The Bill is welcome but it is very late in the day. Again, the devil is in the detail and how much money we can expel from these companies. There should not be a need for legislation on it in this House in the first place. These companies should not be in a situation where they are making excessive profits. They actually should give the money back because it is our money at the end of the day. They should be compelled to give this money back rather than having to use emergency legislation like this.
This Bill is better than nothing but it is too little and too late to address the cost-of-living misery and the energy poverty that has been inflicted on huge swathes of our population since the cost-of-living crisis took off. I believe it was People Before Profit that put the first cost-of-living motion to the Dáil at the outset of the crisis in October 2021, which looked for measures to be taken to control the price of energy. The Government resisted. It was only when the European Union finally acknowledged that profiteering was going on that the Government began to soften up to the idea that some sort of windfall tax might be acceptable. Prior to that, up to the point when some of us were screaming for measures to be taken on the profiteering of these energy companies, the Government was finding excuses around the need not to interfere with the market. It was the usual mantra about not interfering with the market.
We need to understand what that has meant in human terms over the last couple of years. The Economic and Social Research Institute, not a left wing think tank, did a report on energy poverty, published in the middle of last year, which suggested that 29% of people in this country are suffering energy poverty. We need to understand what energy poverty means. It means that people do not turn on the heating or the hot water, to the extent that it is detrimental to their health. Older people, vulnerable people, and less well-off people are shivering in the cold but terrified to turn on the electricity, to turn on the heating, or to use the water because they might not be able to pay the bills. That is what all of this is about. It happened at the same time the energy companies internationally and domestically here in Ireland were enjoying a profit bonanza. It was an absolutely unprecedented extraordinary profit bonanza.
When the figures for 2021 came out and showed the ESB had recorded profits in that year of €679 million, our jaws all dropped. That was a major increase over what had been seen previously. When 2022 came along, these already staggering profits jumped to €847 million, all while tens of thousands of people, or nearly 30% of the population, were suffering energy poverty. Even those not suffering from energy poverty are crippled with extraordinarily high bills. It gets worse in 2023. In the first six months of the year, the ESB recorded a profit of €676 million. In other words, in the first six months of this year the ESB recorded a profit pretty much equivalent to what it enjoyed in the entire year in 2021, which already represented an extraordinary increase on previous profits. Therefore, we are talking about an absolutely enormous profit bonanza. I have referred only to the ESB, the State-owned company, but other private companies are seeing similar increases.
Internationally, utterly sickening profits are being made by BP, for example, which made nearly €7 billion in profit in the second quarter of 2022. This was the second highest quarterly profit in its history. BP, Shell and Total all made billions. Between April 2022 and June 2022, Shell recorded a profit of nearly €10 billion. You could not make this stuff up. The shareholders in these companies are enjoying a bonanza of dividends and getting richer as people shiver with the cold and are terrified to turn on the heating and hot water. It is important to say – this is relevant to the detail of the Bill – that this was profiteering on top of profiteering that could have occurred only because of the EU demand for so-called liberalisation of the energy market from the 1990s, which our Government so enthusiastically went along with.
Liberalisation, or competition, according to the mantra used to justify it at the time, was to benefit the consumer and lead to lower prices. This was the ideological claptrap used to justify privatisation or the liberalisation of the energy market. The public was to benefit, but what was the reality? In Europe between 1994, when liberalisation began, and 2014, which was even before the recent cost-of-living crisis and the Ukraine war, average consumer electricity prices in the EU 15 increased by 40%. In Ireland, however, the figure far exceeded this. A 40% increase after liberalisation, which was supposed to benefit the consumer, is shocking enough but in the same period in Ireland the prices increased by – guess what – 267%. A measure that was supposed to reduce prices saw them increase by 267%, long before the war in Ukraine hit. The liberalisation allows those concerned to pile profiteering on top of profiteering because there is no control over them when they decide to benefit from the crisis. It is a classic instance of what Naomi Klein called the "shock doctrine" - never let a good crisis pass you by when you can exploit it to make profit at the expense of ordinary people. That is what the energy companies have done.
The prepay energy sector in this country is dominated by three multimillionaires and one billionaire, the richest of whom has a personal wealth of €8 billion, which must have increased dramatically over the past two years while ordinary people were suffering. The Government, faced with this naked, brazen profiteering resulting from the disastrous ideologically driven decision to liberalise the markets, dragged its heels. It found excuses for doing nothing for the past two years while ordinary people have suffered. Finally, when it was dragged kicking and screaming, it came up with this Bill. What does this Bill do? It picks out a window for the cap on market revenues between December of last year and June of this year. The window basically covers six months of price-hiking that has gone on for more than two years. It is better than nothing to tax the extraordinary super-profits but it is for only six months.
The other element of the Bill is the temporary solidarity contribution. Correct me if I am wrong but although the Bill covers 2022 and 2023, it applies only when profit is 20% above the baseline figure for the four previous years. That is my understanding of it and the Minister can correct me if I am wrong. What does it mean? It means the Government is allowing for 20% super-profits in the period of the cost-of-living crisis. Only when those super-profits are achieved will there be some tax imposed on anything above the 20%. How much of the ESB profit in the period I have mentioned, which was up 30% on the previous year, will actually be captured? Given that the company was already hiking prices for the previous two decades and crippling people with higher and higher energy prices every year, and then took advantage of the war in Ukraine and the cost-of-living crisis to jack up prices further, why would we not wish to capture every single cent of surplus or excess profit to alleviate the cost-of-living misery being suffered by ordinary people? I do not see why we should allow the energy companies 20% above the baseline of the previous four years before the temporary solidarity contribution kicks in. We will have to trawl over the detail of this when we get to the next Stage, but it seems as if the Government has done the least possible to capture these super, staggering, obscene windfall profits, which have been generated at the cost of the many people affected by considerable misery, hardship, suffering, worry and so on.
We should not be imposing windfall taxes on energy companies alone. Surely we should be doing the same to the banks, given the profit bonanza they have enjoyed as a result of the interest rate hikes, which are crippling tens of thousands of mortgage holders while the bank shareholders are making a fortune. The latter have hit the jackpot at the expense of mortgage holders. Therefore, one person's cost-of-living misery, whereby he or she may not be able make the mortgage repayments for his or her home, is another person's bank share dividend bonanza. The poor are literally getting poorer while some are getting richer.
Looking at these two aspects of the cost-of-living crisis – there is a lot more we could talk about – and at its evolution by way of the so-called liberalisation of energy markets, the inescapable conclusion one has to draw is that we have to take energy back under full public control and reinstate the break-even principle by which the ESB operated until its liberalisation in 2001, although liberalisation began earlier to some degree. It should operate on a not-for-profit basis, its main motivation being to deliver affordable energy for people in the interest of our society and fairness and not in the interest of making profit and the so-called market.
Energy companies made huge profits on the backs of ordinary hardworking people and families. The Government allowed this to happen. It stood idly by while Europe moved ahead to bring in windfall taxes. I welcome the Bill, but as others have said, it is too little, too late and not enough. Ordinary people have suffered. The question now is whether the Government will finally grasp the straw and bring in a proper windfall tax. These companies have profiteered on the backs of ordinary people, some of whom are the most vulnerable in society. People are terrified looking at the winter ahead. Will they be able to pay their bills? What will they be able to do to keep the gas on and their homes warm?
The Government is finally bringing in a windfall tax. It refused to listen to Sinn Féin and others in the Opposition who made common sense proposals. Instead it insisted on sitting on its hands. That cost us €1 billion. When I think of that money and how the Government allowed the energy companies to take the profits and laugh all the way to the bank, I think that €1 billion could have been spent on people and services. Does the Government think that those who profited last year on the backs of ordinary people look at this windfall tax with fear? They know they just got out of jail. They cannot believe their luck, that the Government is so pro-profit over pro-people.
The Government has claimed that the money raised from this tax will be put towards retrofitting homes. The reality is that the targets are too low. The funding is inadequate. I deal with families and people living in houses and flats in Cork city, who have lived without insulation for decades - not years, but decades - in Noonan's Road, Sarsfield Road, Baker's Road, Glentrasna, Farranee and Mayfield. Those people have not had any retrofitting and their energy bills have gone through the roof because the heating is going out the windows and up through the ceilings. I spoke to a lady last week who is 78 years of age. She lives in Barretts Buildings in Gurranebraher. She has coats and blankets by the door for the winter. That is what she is looking at. She is 78 years old. Where is the money? Officials at Cork City Council and other local authorities tell me that the funding the Government is supplying is not enough to carry out retrofitting. Due to inflation in the construction industry and in the cost of materials, it only meets half the cost.
If the Government is serious, it will bring in a proper windfall tax and support local authorities that want to bring in retrofitting, make homes warmer and drive down people's costs.
I thank the Minister of State for his detailed opening statement. I welcome the opportunity to make some comments and contribute to this debate on the windfall gains in the energy sector. Like my colleagues, I certainly welcome the content of this Bill, but also like my colleagues and like the Minister of State, I recognise how belated it is. The war in Ukraine began 18 months ago and we are only now commencing the Second Stage of this Bill. That is a major issue as most of the damage has been done at this stage.
That leads me nicely to my first point, which is the lack of strategic foresight in Ireland. There have been three major black swan events in the past six or seven years. We have had Brexit, the pandemic and the war in Ukraine and there has been pretty much no early warning. No horizon scanning was done as we do not have a dedicated national intelligence service and that is exactly what a dedicated national intelligence service should be doing - scanning the horizon and providing this information, providing a threat assessment and ensuring legislation like this is either on the Statute Book or on ice ready to go so that when Putin pulls his trigger, we are in a position to pull ours and respond accordingly.
The Minister of State was in Helsinki last year and signed up Ireland to the Hybrid warfare centre. That is definitely a good thing. I ask him to use any influence he has during the remaining lifetime of this Government to look at establishing a proper national intelligence service. We have the National Security Analysis Centre, NSAC, which is basically three men in a shed. They are doing it as a part-time role. The Regional Group is solutions focused. The reason this Bill is so late - one and a half years behind time - is that no contingency planning was done. There was no threat identification. Yes, Putin's invasion of Ukraine was probably not preventable but it was entirely predictable. We had discussions in this House long before he crossed the start line noting it was going to happen. The is not unique to the energy sector. Let us look at the difficulties in refugee reception. Again, no contingency planning was done or at least no meaningful preparation was done. I ask the Minister of State to take that point on board.
One of the many advantages of being in the European Union is that we can benchmark ourselves against other EU countries. We have the most expensive electricity in the EU. Out of 27 countries, we are at the bottom of the class. We have to ask ourselves why that is the case. There are a number of failings. I know the boards of the energy companies are not here to defend themselves but they have a responsibility from an environmental, social and governance, ESG, point of view. They have completely failed from that perspective. We have heard a lot about hedging. Hedging strategies were used which means that wholesale prices have come down but the retail prices have not. That is the excuse we are getting at least. There is a wonderful American phrase: I've lost the part where this is my problem. The hedging strategy by these energy companies failed. Why are ordinary customers expected to foot the bill? I have seen no evidence of any reduction in the cost base of any of these energy companies. There has been no attempt to cut their costs so they would not have to pass on the excess prices to customers. I am not sure whether the Minister of State has visibility of what bonuses the senior executives and board members will receive and already received in 2022. It would be worth inquiring at least whether these people will still get their high bonuses for signing off on and implementing a failed hedging strategy. It is at least worth posing the question.
The second entity that may not have been working at an optimum level is the Commission for Regulation of Utilities, CRU. I welcome the additional powers it is being granted in this Bill - it is not before time - but I am not convinced the CRU used its existing powers to maximum effect, especially in the past 18 months. The taxi regulator in Dublin has tight control over the cost of taxi fares. Why can a similar principle not be used from a CRU point of view? If we have that tight control over what most people regard as an optional taxi fare, surely we should have tighter control over something that is life and death for many older people, the cost of heating their homes.
There is a third entity that could have worked harder on this. I think the Minister of State will accept this from a Government perspective. I do not want to indulge in bank bashing or anything like that. However, there was an issue in recent months that banks were not passing on the deposit rates they should have been. They were hauled in and in a matter of a couple of weeks, interest rates have at least started to rise - not as much as they should, but it is at least a start. I did not detect that same emphasis in the past 18 months on the energy companies. Greater control is definitely needed.
I want to focus on solutions. From a short term perspective, the electricity credit worked wonderfully last year. The €600 made a huge difference to the vast majority of households. It is likely it will be repeated in this budget and I hope it will be. The big takeaway I have from it is that it is exactly how Government support should be given, no red tape and preferably at source. It was not a bureaucratic monster. I compare that to the supports that were given to business for energy costs which were a bureaucratic monster. If electricity credits are to be announced in the budget in a few weeks' time, I ask they be extended to businesses as well as domestic customers. There has been some criticism of the universality of the electricity credit. It should be straightforward - the Minister of State has a tech background - to have a module on an energy company's website where the meter number can be tapped in and people can waive their right to the electricity credit.
There are many people who are comfortably well-off who would be happy to spend two minutes in front of a computer to do that. It is certainly worthwhile exploring and following up on that.
I will go back to the Commission for Regulation of Utilities for a minute. It is not just about electricity. Irish Water costs for businesses have gone through the roof in the last 12 months. I am not sure if the Minister of State has a constituency office but most of us here in the Chamber do. I suspect Irish Water costs for businesses have doubled over the last 12 months. It is okay for the likes of the Minister of State and me, who might get State funding for our constituency offices, but small family-owned businesses have to earn the money to pay Irish Water. More emphasis on this from the Commission for Regulation of Utilities is definitely needed.
There are short-term solutions, such as the electricity credit, for the budget that is around the corner. From an individual point of view, solar panels are working well in the country. You see them sprouting up on a lot of south facing roofs at the moment. I welcome the fact that VAT was reduced last year - long may that continue - but more can be done. We should be encouraging people to at least look at the option of installing solar panels wherever they have a south facing roof. It is making a very significant contribution in my constituency. One constituent told me that he actually looks forward to his electricity bill now because he has so many solar panels that he gets a cheque rather than an invoice. It helps from an energy security perspective, it keeps downward pressure on prices and it also helps this individual from a cash flow point of view and he needs that because he is an elderly gentleman.
I very much agree with the Minister of State's views on energy. We are completely aligned from a "cleaner" and "greener" point of view. However, I do not believe there is enough emphasis on the third part, that is, "cheaper". It should be cleaner, greener and cheaper. The Government and State entities need to maintain downward pressure insofar as possible. Increases in the cost of energy have massive knock-on effects on general inflation from the perspectives of food and transport so we should do everything we can from an energy point of view.
The last point I will raise relates to the State's level of ambition. I know we are looking at offshore wind, that there have been auctions and that four wind farms will probably start to be erected in 2026. I also know there is a certain amount of State involvement but the best way for the State to control the price of electricity is to be heavily involved in that sector. The Ceann Comhairle will know Poulaphouca, which is in our constituency. It was built decades ago by our grandparents' generation. An entire valley was flooded and an entire village was relocated. The project has been providing renewable energy to every generation since then. I am not sure our generation is matching the level of ambition of our grandparents. If there is such a viable investment opportunity off our coasts, why is the State not getting more involved? There is a school of thought that the new reserve currency on the planet is not the US dollar but the kilowatt hour. The cost of energy is only going to go up. We have a strategic investment fund and we are investing in companies all over the world but it is time for Ireland to invest in itself. I ask the Minister of State to look at this carefully to see if we can get the ESB more involved in these offshore wind farms, allowing us to keep control of prices and make sure we have cleaner, greener and cheaper energy for our people.
I have two last questions. Is there any estimate, even an estimated bracket, as to how much money the State hopes to recoup from this windfall Bill? Are we looking at €100 million or something more? We are now facing into our second winter of the Ukrainian conflict. Do we have any idea when this Bill will come into force? Those are my final two questions.
I welcome the introduction of this Bill. It is coming before us late in the day but it will help in clawing back some of the massive profits the energy providers have made. I understand that the estimated proceeds from the temporary solidarity contribution are in the range of €200 million to €450 million and that these proceeds can be put towards financial supports for households and businesses affected by high energy prices. As I have said, this is welcome but many small businesses have already closed. I know that for a fact in my constituency. Businesses could not sustain the energy costs. Like many Deputies, I was very aware of the situation and I raised it here on the floor of the Dáil, calling for the energy companies to be brought in. I did that a number of times during Leaders' Questions with the Taoiseach and the Tánaiste. I am glad there is some movement but it is deeply frustrating to see it so late in the day, when businesses that should still be operating are gone. They were also customers the energy companies could have had for the long term but, because they were so focused on short-term gain, greed got the better of them and they lost these customers.
It is also annoying to hear that some of this windfall may be diverted to support investment in areas such as renewable energy. I would like to see very clear detail and data on precisely what that means. The Bill is lacking in many respects. There are many gaps because it does not give detail with regard to what that means. For example, will it mean reducing the excessively burdensome cost of deep retrofits? Will it be used to reduce costs or increase grants in respect of the installation of solar panels on farms or other businesses? What exactly will these hundreds of millions be allocated to? Will it be taken from energy suppliers only to be given back to them by circular routes to support their renewable energy efforts?
People are fed up with these totally baffling levels of energy costs, even when recent reductions from some suppliers are taken into account. People are also angry that what we are talking about here is a very limited and short-term measure. Energy companies need to be brought before the Oireachtas committee to explain what they are doing and will do to support customers, not just in the short term but in the long term. I call on the Government to make sure they are brought in. That is the fairest way to proceed. Would it be better to send a signal to these suppliers that price gouging will no longer be tolerated and that, if they persist, measures such as the one we are introducing today will be a permanent or annual feature they will have to contend with?
Let us not fool ourselves here. While this measure will generate a few hundred million, the rise in excise duty will take in multiples of that as the scrapping of the lower rate of duty on fuels could add €10 to the cost of a tank of fuel. Before the recess, the Minister for Finance, Deputy McGrath, confirmed to me in reply to a parliamentary question that, in a full year, the additional receipts from the increases in excise duty of 21 cent per litre on petrol and diesel are estimated to amount to more than €700 million. I call on the Government to reduce excise duty and take that burden off ordinary families and motorists and our haulage sector, which does such great work in generating employment in rural counties, such as those comprising my constituency of Laois-Offaly, and is also keeping the cogs of our national economy and supply lines moving. I call on the Government to take that burden off and cut excise duty. The €700 million I mentioned is made up of €478 million over a full year, higher VAT receipts of €35 million for diesel and an extra €159 million, plus VAT of €35 million, for petrol.
While the Government makes a song and a dance about a windfall tax and coming down hard on energy providers, let no one be under any illusions; this is the same Government that is taking its own people to the hilt and using the same tactics it criticises the energy companies for using, that is, taking as much as possible, as fast as possible. The hypocrisy of this approach will not be lost on people, even if this Bill is a partial step in the right direction.
The Energy (Windfall Gains in the Energy Sector) (Cap on Market Revenues) Bill 2023 is about putting limits on how much money electricity producers can make, as required by a European Union rule from October 2022. This limit will affect certain types of electricity production and will cover the period from December 2022 until June 2023. People are concerned because it took our Government almost a year to make this law while other countries did so much faster. It is hoped this new tax will bring in a lot of money but we do not yet know exactly how much. High energy costs are a big problem for people and the money from this tax should go to help them. This is the second law of its kind and it should be in place soon, generating between €80 million and €150 million.
Companies will need to follow deadlines, declare and pay this tax.
Again, I will just go back to what I said earlier and ask the Minister of State, why it took this long? People have suffered severely in this country over the past year and a half with high energy costs and the Minister of State and the Government were like hurlers on the ditch. For all the world the Government was supporting the energy companies to make sure they kept up their mass profits, which are exorbitant and crucifying, while the ordinary mother and father working hard daily were getting bills that they could not pay. I have seen loads of situations where people came to me and they were getting extraordinary bills of between €700 and €1,000.
To be honest, I do question one thing, the smart meter. I could totally be out of order here. In a lot of houses where they have been put in, the bills have gone from being an ordinary bill of between €180 and €200 to between €700 and €900. That is an astonishing rise and I wonder is smart metering not that smart at all, or maybe it is a smart system. Long ago, people could go out to their meter box and have a look and see the wheel going around and if you turned off everything, the wheel would stop. One cannot see anything now. All people know is they get the bill every two months in the door and it scares the living daylights out of them. Businesses have gone to the wall because of the Government's inactivity up to now. People cannot afford to pay the energy bills and the businesses had to pull the plug and walk away, with some people after giving all their lives trying to build their business and put it in place. They are people of goodwill employing people, and their business has gone to the wall.
I look at other areas where we have severe crises, like the early childcare sector. I accept that there are other factors involved in this. I attended a meeting in Cork recently. There is a crisis and there will be a peaceful protest next week that I fully support. Their doors are shutting all over the country because of costs and energy is certainly playing a big part in that. I will go as far as saying - and it is a different issue - that the Minister for Children, Equality, Disability, Integration and Youth, Deputy Roderic O'Gorman, has absolutely ignored all of their pleas for help to keep their doors open. These are private individuals. In some cases, many of the women are telling me they go to their husbands to keep the business going every week and they are taking out of his income and his job. I was listening to several statements of the Minister, Deputy O'Gorman, and he is oblivious to the childcare crisis at this present time. Why they cannot keep the door open is mainly due to energy costs and other costs. He has to resign as Minister or be fired because he does not understand the crisis that is there at the moment. He keeps dreaming of figures out there that are not reaching the people on the ground. That is one of the issues.
One also looks at nursing homes closing. Again, part of it is due to energy costs, costs they cannot survive with. I know one in Belgooly that is closing. It was announced about six to eight weeks ago that it is closing its doors. We need answers for the people out there and the loved ones inside. Yes, HIQA is one of the reasons but the other reasons why nursing homes are closing, they are telling us, are costs. With energy costs, they cannot afford to keep the door open. The Rural Independent Group made some submissions regarding energy costs, and one of the things we are very strong about is the VAT on solar panels and insulation products. If there are moneys coming from this, they should go towards making them VAT exempt. It is a hugely important issue because people cannot afford to insulate their homes. They want to insulate their homes because they do not want to be plugging in heaters or putting on the oil. The only way they can do that is to try and insulate their homes, and unfortunately the Government squeezes as much money as it can, in every way, shape and form, out of the people. I am asking the Minister of State that some of this money might go towards making solar panels and all insulation products VAT and tax exempt.
I must go back also to the cost of living for so many people. They are struggling at the present time and it is incredible to think that we had a mini-budget around two weeks ago. This was the mini-budget that this Government always told us we could never have. It went and had a mini-budget. The Government drove fuel costs through the roof. Businesses that are struggling and cannot pay electricity or energy bills were all hit with the 9% to 13.5% VAT increase. The Government had a mini-budget, and it did it outside of Dáil time so it could get away with, and it did. Well done to Fine Gael, Fianna Fáil and the Green Party. Well done. They caught the cafés, the restaurant owners, the publicans and the hoteliers. They were the people who were struggling already and could not pay the bills. The Government caught them, left, right and centre, with a VAT rate increase from 9% to 13.5%. That will not be forgotten because some of those businesses are going to the wall. They have gone or are going to the wall because of the Government's policies, and because of a greedy grab. If the Government does not catch the poor person that wants to grab a cup of tea or coffee in the morning, it will catch them at the filling station because it shoved up the price of fuel. That is the Fianna Fáil, Fine Gael and Green Party delivery to the people of this country. It is about hitting them every way they can to squeeze as much out of their pockets, so the Government can have a great budget day and blow about what a great deal it has done. However, it has squeezed the money out of their pocket in other ways.
People are well aware of what is going on out there, and I am more worried that some of this money the Government is going to get has to go back to the people out there who are suffering, or who have disabilities, and elderly people. They all need to have some bit of a break here. Last year, the Government gave some energy rebates. I do not think it has given anything this year, and people are still paying exorbitant fees.
There is an awful lot to be done here. It is astonishing that it took about a year and a half for the Government to decide that, well, it is time to wake up and do something. I ask the Minister of State to go further in doing something about it. I am asking for real delivery that goes back to the people who are finding it difficult to run their pubs, restaurants, cafés or whatever. It should go back to the elderly and people with disabilities to give some relief to them going forward.
It is ironic that the cartoon I have fell on the ground. It was sent to me by a friend of mine and it shows a fuel can saying:
Whoever said what goes up must come down wasn't talking about me.
It is ironic that everything in the Government's eyes goes up. Why? Because of inflation. Why does the Government love inflation? Because it means more revenue. How much extra revenue has the Government brought in with the inflation on fuel?
I believe - and we are talking about energy costs - that four 100 ton generators arrived into the port, and one of them is being fitted at the moment in Shannonbridge. I also believe there are three more going to be fitted in Shannonbridge shortly. Four 100 ton fossil fuel generators are coming in to Shannonbridge. Was that not running by itself before the Government decommissioned it? How much has it cost the State to decommission Shannonbridge, and how much is it costing to bring in four 100 ton fossil fuel generators to generate power? We have always heard about putting the cart before the horse. Well, the Government seems to be doing it a lot lately because in everything it seems to do, the cart is in front of the horse and now it is trying to make up ground.
The Government talks about the windfall tax. The Rural Independent Group and I have been talking to the Government about the windfall tax for the last 12 months to two years. It is ironic again that it is tax. I wonder where will the windfall tax be brought back into? The Government has put the custom and excise duty on fuel back up. It is back up now to 50 cent in every euro on petrol, and 46 cent in every litre of diesel. It is very easy to say where we are going to get these windfall taxes. The Government is taxing every person who is working or not working, including anyone who is trying to help the person who is working to let them go to work.
We spoke last night on mortgages. Over 20% of every person's mortgage in this country comes back to the Government in tax. On the building costs, it is 13.5%. On the fitting-out cost, it is 23%. PAYE and PRSI comes back to the Government in tax. These are the people who are building their own houses and not depending on the State for anything. What do we do? We say they have to borrow for the next 25 years, and we tell them to borrow an extra 20% for taxes. A €250,000 mortgage is €320,000 including tax that the Government is taking off them.
A couple who qualifies must pay between €12,000 and €13,000 in PRSI and PAYE contributions under their employment to qualify for the mortgage. When that is worked out over 25 years, it means €320,000 to build a house and not to be a burden on the State. Such people have borrowed a mortgage and 20% of that mortgage goes back to the Government in tax. These are people who are working. They have dependants. What does the Government do? It goes back on the excise duty and when people want to go to work, it wants more tax from them. Do not talk to me about a windfall tax.
Let us look at the nursing home situation. There are small and medium-sized private nursing homes. It costs 20% or 30% more to run a HSE nursing home than it does to run a private nursing home. That is okay; that is taxpayers' money that funds the extra amount required to run those public nursing homes. What happens? Small to medium-sized nursing homes, because of energy costs and everything else, are running at a loss. Any new nursing homes or small nursing homes that want to extend cannot do so because it does not make financial sense. That means enormous nursing homes will institutionalise people when they get older. Those people will not have homely nursing homes with 25 or 50 beds where we can visit our family members locally without having to travel long distances. If there were local nursing homes, the people in them would be in the environment in which they grew up, around their families and friends. Instead, the Government gives extra to its own nursing homes and less to somebody who is providing employment and nursing home care in our areas.
We come then to pyrite and mica. We discussed this issue in the House. The Government has come up with what it will do for people who are stuck with pyrite or mica. However, it would not allow the foundations to be evaluated. You cannot build a new house on old foundations. The foundation of this very Chamber is what we are supposed to build on but no, the Government says we have to go back to the older foundations. I go back to people who want to build their own homes, who have paid tax all their lives on everything from their food to the clothes on their backs and their shoes, and everything else. They have never been dependent on the State. The Government does not look after them. What did the Government do? It brought in another charge on concrete products. That means every person who wants to provide a roof over the heads of their families, without being dependent on the State, will now be charged more tax on a product they are delivering themselves.
The Minister and I will be okay, as will everyone else in this room. However, I worry deeply for my children and everyone else's children. I worry for the grandchildren to come because of what this Government, composed of Fianna Fáil, Fine Gael and the Green Party, has done. Two of those parties are supposed to be a part of rural Ireland. I have heard them mention rural Ireland recently but they never mentioned rural Ireland until we mentioned it. Rural Ireland will have a message for them at the next election.
I too worry about my grandchildren. I take a very different view from the last speaker. I believe, for example, that the State's decision to invest in broadband so that every family in the country will have access to high-speed broadband was a good decision for rural Ireland. We have seen the product of that already with increased remote working and new opportunities in rural villages. We will see in the future the delivery of remote health and educational services. There will be real transformation of the opportunities for people in rural Ireland. It is important that we seek to build on the infrastructures of the future rather than pretending we can remain doing the things we have always done.
That brings us to the question of how we manage energy and the climate challenge we face. We cannot pretend that global warming is not a reality. It is transforming the environment in which farmers have to work. We have seen weather events and the impact climate change is having is very real. In this House, having had the citizens' assembly report to us on climate change and biodiversity, we need to take a collective view of how we can manage the extraordinarily difficult energy transformation that must happen. The CRU has pointed out, as has the Minister of State, that 17 GW of new renewable capacity will be built in the years between now and 2030. That is an extraordinary transformation in our energy system. We need to prepare for that and to manage it in an effective way.
I welcome the report of the CRU today. It is interesting. All of us will have a kneejerk reaction and will ask why consumers are not seeing prices fall. However, the CRU, which is paid to do the detailed scrutiny, has stated it has not found evidence of windfall profits in the retail market sector and that the market is working fairly. It has committed to undertaking a review of the differences across Europe, which will be welcome, and to provide more transparent information in order that the debate in this House can be more informed as to what is actually happening in our energy market rather than pretending that when we see wholesale prices going one direction it should immediately be reflected at the pumps. As the CRU rightly states, hedging policies are put in place by companies to try to avoid the volatility. It has had access to the detailed hedging contracts of these companies. The review and conclusions on which this report is based reflect the CRU's scrutiny of what is happening.
I welcome this Bill. It is right that we are clawing back the profits that were made, in particular, by those working in the renewable sector, which contracted for prices at around €90 or €95 per MWh. Even in the Bill, they are being given a generous enough ceiling with €120 per MWh being the figure at which gains are clawed back. However, we need to leave space for the renewable sector to grow. I can understand why we are leaving a bit of flexibility in that regard.
We need to urge the redesign of the electricity market at EU level. I know work is going on and this measure only provides clawback to the end of June this year. We need to see a system at EU level whereby we set electricity prices not on the last supplier, the most marginal piece of generation equipment brought in to serve on any given day. That has locked us into gas prices, in particular, that have become very volatile. That will continue to be a volatile market. We need to move away from linking our electricity pricing to the most volatile element of the mix. The sooner we have that, the sooner we will not require these special measures. That said, this measure is particularly welcome.
One of the things that confuses people is that where generators make big profits, this Bill allows that if they pass on those savings to their consumers, the Government will not be clawing back. However, elsewhere, generators are prevented from cross-subsidising a retail arm. Generators that are making big profits cannot pass those profits on to reduce the cost to their consumers. That seems to be a bit of a contradiction. On the one hand, we are banning the use of profits to reduce consumer burdens while on the other hand, we are making a provision that where it happens, allowances will be made. There may be a bit of thinking about policy to be done in that regard.
The big issue that concerns people is how the Government will use this money. Under Article 10 of the directive, it will have to be ploughed back into energy users.
We need, and I think it is in line with the Minister's thinking, to try to come up with solutions that are more permanent, as well as the short-term relief we have been able to give. I welcome the short-term relief to energy bills that has been given. Listening to the debate we have just heard, you would not imagine that €1.6 billion has been spent by the Government on reducing household energy bills in the last 18 months. That is a truly staggering amount of money coming from the Exchequer, not to say it has not left high bills with people nonetheless. We need to try to move towards those more permanent solutions. I regret that the smart meters and the time-based use are not getting the pick-up they ought to. There are general data protection regulation, GDPR, obstacles preventing that and we need to find a way of making it more available to people. We need to look at enterprises that can make energy savings, like closing fridges and the many examples that are out there. We need to use this money creatively.
We need to see the energy security review. A decision was recently made and it was cited that the energy security review had not yet been published. We need to get that out there so that we have a clear understanding of the framework within which energy policy is to be pursued.
I will take about four minutes and Deputy Connolly will take whatever time she needs. I welcome the introduction of a cap on market revenues for energy companies, just as I welcomed the temporary solidarity contribution, but it comes far too late. The damage was done last winter. We all saw the obscene profits energy companies made while people were freezing in their homes because they could not afford to heat their homes.
Some one in three people live in energy poverty, and those companies made billions out of pushing people into poverty. This was the time that we needed this legislation, when we could do something about the blatant price gouging and profiteering that was going on. The Government has dragged its feet on this every step of the way, just like the Government has dragged its feet in every aspect of reacting to the climate crisis. In its latest synthesis report this spring, the Intergovernmental Panel on Climate Change, IPCC, put it simply, stating that we face a clear choice between fossil fuel profits or a livable future. So far, every time this Government has been asked that question it has answered "Profits". In the temporary solidarity contribution the Government was even allowing these companies to keep the 20% of excess profits they made from price gouging everybody, including the most vulnerable.
Where have we better seen this than in the Government's clear pandering to data centres? The Government has been hard at work in making Ireland a world leader in an economic activity that is one of the most destructive to the planet. It has been selling the public down the road, not just by the fact that these centres make it impossible for us to meet our climate targets, but in the massive strains they will put on our electricity production. Our last speaker made the point that the CRU said there will be an increase in the amount of gigawatts generated and that will support our grid. However, if the data centres keep getting built they will just gobble up those gigawatts over a period of time. Either way, it is the people of this country who pay the price, and everybody loses out in this increased destruction of the planet.
We need change in how we are facing down the climate crisis and we need real action, not targets that do not mean anything and that we have no intention of meeting. The Minister of State knows that the science is in. We need a fundamental shift in how we organise economic activity if we and our planet are going to survive this climate catastrophe. Capitalism's need for constant growth and profit is incompatible with a livable planet. There cannot be any more data centres, massive profits for fossil fuel and energy companies or missed targets. The only way we will all survive this is by a State response. We should nationalise these companies, socialise the consumption of energy and get rid of the profit motive that is, on one hand, pushing tens of thousands into poverty, and on the other hand, killing our planet and potentially everything on it. We need to tax these companies out of existence, not just for their price gouging and profiteering, but to save our planet. We need to nationalise them so we can have a proper State response to phasing out fossil fuels and moving to a renewable energy system. That needs to be done at EU or international level.
I support this Bill, I support capping market revenues and I support taxing back what these companies gouged out of people's pockets. However, it will all mean nothing if we do not implement fundamental change in how we organise our economy. If we do not do that, the horrors of climate breakdown that millions of people across the planet are experiencing, even now, will get us all. End this pandering to data centres and fossil fuels. Get out of the energy companies pockets and start acting on this climate crisis before it is too late.
I have been dealing with an elderly woman and I want to use that example to talk about how this impacts on people individually. She lives in ALONE older person's accommodation and she is facing an electricity bill of €1,250 that has accumulated since last September or October. She has had the Government credits and she lives frugally. She is not turning on her lights all of the time and she does not use central heating; she has another source of heating. However, she is now facing those arrears. This is an 82-year old woman on a pension and that is very difficult. We are looking into it and we are trying to support her and resolve the issue for her by making an agreement with the electricity company. These are the types of bills that some people are still facing, and they are entering into another winter when there will be huge pressure to heat their homes and keep people from freezing. That is a reality check for a lot of people who are facing these high electricity bills.
I welcome the opportunity to take part in the debate on the Energy (Windfall Gains in the Energy Sector) (Cap on Market Revenues) Bill 2023.
It is important to place it in context, as is usual. The following has been referred to many times today, using different figures but all amounting to the same message. As of November 2022, it was estimated that roughly 40% of households in Ireland were experiencing energy poverty. That was up from 29% in June 2022, in a matter of months. Let that figure sink in; some 40% of households in Ireland were experiencing energy poverty in one of the richest countries in the world. That makes any sort of rational person of average intelligence begin to think about what is wrong with our policies. What is it we need to do rather than fighting? I hear lots of Ministers talking about how much money they provided but it is taxpayers money. What do we need to do with those startling figures? I have a friend who works with the Society of St. Vincent de Paul on a voluntary basis, as they all do, and the stories you hear are shocking. There is something seriously wrong with our policies and inequity. We hear it every year from Social Justice Ireland, which goes to enormous trouble to highlight the good and the bad of each budget, and it begs us and appeals to us to do something different.
Here we are bringing in a Bill which I welcome, and you could not but welcome a Bill which seeks to cap the revenue for energy companies at a certain point. The Bill was published on 31 August. It is 36 pages long, with four parts and 33 sections. In the scheme of the Bills we get before us, it is relatively compact. Trying to understand it, as I made the point yesterday, is extremely difficult. I find it ironic that we have the National Adult Literacy Agency, NALA, appealing for plain English language, and yet in the Dáil we persist with this. I consider myself to be of average intelligence and I take the trouble to read documents as best I can, although not always. It is difficult to do so in this case.
Let me welcome the theme of the Bill on a general level. The Bill seeks to cap revenue above a certain threshold. There are two different prices and one is a variable rate, depending on the sources. I will come back on how that will be distributed. The mechanisms of that are difficult to understand. Before I go into some more of it, I want to say that the delay in bringing in this Bill is simply unacceptable. The directive is from last October and it is almost a year later and we are bringing in a Bill. I understand that we cannot have retrospective legislation but this legislation is retrospective, is it not? It is going back to a certain period of time but not to when the peak profits were made. Perhaps the Minister of State will explain to us how we can be retrospective to a certain extent, but not go back to when the peak profits were made.
One thing is the delay in our obligation to implement the regulation.
Of course, only one aspect of it was to cap the revenue to give that revenue to those who are suffering. I will come to that if I can and if I have time. I am concerned about the vagueness of how that is to be paid out and the enormous power given to the Minister under section 28 and other sections to devise schemes outside of the Oireachtas and without our supervision.
The other stated aim of the EU regulation was to reduce electricity demand. I do not see that reflected anywhere in the legislation. I do not know where it will be reflected. Data centres have been mentioned many times and a sterile debate that we need data centres and putting our hands up for data centres rather than an analysis of what functions they are actually performing, the energy they are consuming and that what cost to our energy security is. None of that is reflected in today's debate.
Of course, the cap only applies to non-gas generators, producers, intermediaries and retail entities that are listed. As I said, I am extremely concerned that it confers great powers on the Minister. There is a lot of "may" and no "shall". It is not clear to me how it is to be distributed. The agency collecting it will be EirGrid and the CRU will manage the records and the accounts. I understand at the moment the CRU outsources over 23% of its work on reports. What provisions is the Government making to insource expertise in order that the CRU will be up to the job of managing this very complex - I would say contorted - mechanism for bringing back some of the obscene profits that have been made on the backs of suffering people?
When I read all this stuff, I feel the same as I did with whatever the subject was yesterday. We are willing partners with the EU in saying there is no way that can we distort the market; that is neoliberalism. We cannot distort the market but we can distort people's lives over and over. We can drive them to the brink. We can increase prices so that 88,000 people went without energy in this very rich country, but we cannot distort the market. However, when the market fails, as it repeatedly does with housing and with what happened with our energy, we will come up with contorted solutions to ensure their profitability and take back a little bit. Even then we will not put "shall" into the legislation; we put in "may" give back to those people who have suffered the most, as opposed to "shall". We do not explain why it is not retrospective but it is retrospective to suit the Government.
We do not look at the ten recommendations of the pre-legislative scrutiny which was completed last May. As usual, I thank the Oireachtas Library and Research Service for the digest it produced to help us. The committee's report on pre-legislative scrutiny published in May had ten recommendations. According to the digest produced by the Oireachtas Library and Research Service, three are clearly reflected in the Bill, five are possibly reflected - or it is unclear whether they are reflected - and two are not reflected at all. After we go to the trouble of pre-legislative scrutiny and the committee goes to the trouble of making ten recommendations, neither the Minister nor the Department even give us a response to that.
Of the two recommendations not reflected in the legislation, one, which all of us on this side of the House are asking for, is that the legislation should be more prescriptive in targeting the revenues raised at the most vulnerable. I, more than anyone, understand that legislation cannot be too prescriptive but the amount of power left to the Minister without any oversight is simply unacceptable.
The second one that has been omitted is that consideration be given to extending the cap on market revenues retrospectively to include the months when the energy crisis was at its peak. That is a recommendation from the committee's pre-legislative scrutiny report and it has been ignored. Ireland is one of eight countries to apply the minimum timeline, whereas all the other countries have extended that. Indeed, the EU's regulation allows us great discretion as to how we implement that with our legislation on the ground. We have taken the most minimalist approach. Seven EU members, including Austria and Belgium, have extended the application period in some way, either retrospectively or by making it longer.
Regarding the review carried out by the EU, the Commission or whatever competent authority did it for it, did its review even before we introduced our legislation. I do not know how we participated in that review and perhaps the Minister of State might enlighten us. Unfortunately, I will be gone, but I will check the record of his speech to see if he has enlightened me as to how we participated in that review before our legislation was passed or if we learned from it.
There is a failure to distinguish large providers and community-owned renewable energy generators. This was also raised at pre-legislative scrutiny. I am doing my best to find out how many community-led energy projects we have in this country. This is tangential but it is related. Fair play to Galway City Council, which declared a decarbonized zone back in 2019. We have still done nothing about that decarbonized zone in Westside, which is theoretically brilliant. We have a biodiversity emergency and a climate emergency, and yet in 2023 the council is still waiting on the Department of Housing, Local Government and Heritage for something or other. I have had so many answers to questions that I cannot remember. That is just an example of the failure to take it seriously.
I might come back to this at the end. We need transformative action. As the previous speaker said, we need to be independent in the provision of our energy and it must be done on a non-profit basis. We seem to be going headlong on the road of the very model that has caused the existential threat we are facing with climate change. Of course, the vulnerable always suffer most. I would love to see the Minister of State and the Green Party make a difference - they will have my full support - regarding community models and community-owned energy production. We can do that.
Yesterday we were discussing local government in Limerick. We discussed the decimation of local authorities and the removal of power from them. In that context I read many reports by the Association of Irish Local Government, which represents councillors, and various academics. They went around the world and pointed to remunicipalisation. There is a process of taking utility companies back into public ownership in countries that are the paragons of capitalism. In Germany, Canada and various other countries they are taking them back because they are more effectively run publicly, albeit with the expertise from outside and albeit with paying the workers decent wages and salaries.
I have said that the additional burden on the CRU needs to be faced and I would like clarification on that. As a Deputy, the lack of vision is really worrying to me. I do not want to be here week after week finding holes in the Government's policies but I have no choice, given what we are facing. The two words "transformative change" have been thrown out so frequently that they have become meaningless. All the time under that umbrella of transformative change, we are pursuing the very same policies that have led to disaster, as I have said already. I have serious concerns about the Maritime Area Regulatory Authority, MARA, set up to oversee the further development of the oceans. We are following the same exploitative model that has got us into trouble.
There are international examples of publicly owned utilities. EDF in France is a publicly owned utility that competes on the market as I understand it. Statkraft in Norway is the largest generator of renewable energy in Europe and is owned by the Norwegian state. The Norwegians did the same thing with oil and they put money aside in a sovereign fund while we did the complete opposite and almost bowed down to the profit-making companies without taking anything back.
I am trying to get my head around why gas determines the price of the other energy providers.
As the most expensive, it determines and allows the other companies to make obscene profits. I will finish by saying that Deputy Bruton spoke about how we are not giving recognition to the amount of money given out by the Government. I pay tribute to the Government for the money it has paid out, with billions in packages. My difficulty is that they are all once-off, notwithstanding that they are worth billions, without any transformative action. Deputy Bruton referred to the €1.6 billion given to help people to pay their bills. The reason that had to be so big was that the Government was tardy in bringing in legislation that would take even a little bit of profit back from the energy companies that are making obscene profits. The taxpayer had to come up with the €1.6 billion and the other billions that have been paid out. While I welcome that, I deplore the slow action of the Government in dealing with the threat. The war in Ukraine has certainly contributed to this but, for a very long time, Deputies on this side of the House were pointing out that energy prices were rising and rising to no avail.
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.