Garret Ahearn (Fine Gael)
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This week the national fuel allowance scheme starts. It is a means-assessed payment. It will be paid for 28 weeks to an estimated 370,000 households across the country. Last winter a total of 16,284 households across Tipperary received fuel allowance through the scheme and they will automatically receive payments again this year, beginning yesterday. The scheme plays a vital role in ensuring families across my county of Tipperary have the security of knowing they will be able to pay their heating bills over the winter months. It will be especially important to people this year in the context of rising fuel costs globally. I encourage the Minister of State to factor this into account in the upcoming budget. In fairness the Minister for Social Protection, Deputy Humphreys, increased the weekly rate of payment by €3.50 in last year's budget. Over the last year, we have witnessed record increases in the prices of wholesale gas, coal, oil and carbon on European markets. Wholesale prices have rebounded since economies have started to recover from the initial stages of the Covid-19 pandemic. In addition, energy markets have experienced declining UK and European natural gas production and a reduction in gas supplies from Russia and the US have also contributed to record price increases.

The Minister for Transport, Deputy Ryan, has said that the electricity supply to Ireland will be tight for the next three to four years and that the big data centres which use an enormous amount of energy could not expect to be exempt from the national requirement to conserve energy in order to meet climate change commitments. There are also concerns that Ireland's electricity generating capacity could deter multinationals from investing in infrastructure such as data centres in Ireland. A piece by John Mulligan in the Irish Independent warned of just that. According to one source: "For the data centre sector, for any multinational investing in Ireland, they look immediately in terms of sites, at the availability of power, the availability of water and the availability of very robust data connections." The article noted, "Ireland is home to major data centres for multinationals including Amazon, Facebook, Google and Microsoft... A number of amber alerts have occurred in recent weeks, where electricity generators have been warned that any unexpected event could result in a failure to meet demand." The sustained rise in demand from such centres, which are energy intensive buildings that house computer systems for storing Internet and business data, was the same as adding 140,000 new households to the network in each of the last four years. EirGrid, the semi-State company that manages Ireland's electricity grid, has acknowledged that maintaining the balance between supply and demand has become increasingly challenging.

The problem is not going to go away and clearly going to get progressively worse. There could be rolling blackouts if steps are not taken to curb new centres. Has the Minister of State or the Minister, Deputy Ryan, been assured that the two power plants which have been offline for the last number of months will be back online for the winter period? The expected new data centres will be required to install on their own emergency generation as a condition of gaining a connection to the grid. EirGrid and the Commission for Regulation of Utilities, CRU, will publish capacity statements this week with their paths to manage demand. What does the Minister want to see in those statements to reassure him that we will not have power outages over the winter months?

Fuel allowance is means tested and there are some simple changes we could make in this year's budget to help the most vulnerable get through the winter months with the costs. The fuel allowance is based on age, income and social welfare payments. I give the example of a couple that contacted me recently. They were claiming a pension and she was on half-rate carer's allowance. Their income was €601 a week. Their cut-off was €575. They pay €140 on health insurance and the husband has dementia. If the means test was to rise for those claiming pensions, particularly those who also claim carer's allowance, it would dramatically help people of pensionable age. Fuel allowance is also a factor in eligibility for the warmer homes scheme. Many people of a pensionable age live in older homes with substandard insulation. Grants such as these would protect these homes.

Ossian Smyth (Dún Laoghaire, Green Party)
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I thank the Senator Ahearn for raising these important matters. Government fully accepts that recent electricity and gas price increases will not be welcomed in light of the current economic environment. Increases to wholesale energy prices following rises in international gas prices have been the principal driver of these increases which have been impacting across Europe and are not just an Irish phenomenon.

First, it is important to recognise that these are not Government decisions. Price regulation ended many years ago. Suppliers compete with each other on prices and set their own prices accordingly, as you would expect in a liberalised market. Second, the independent regulator, the Commission for Regulation of Utilities, CRU, has functions in relation to these matters, including consumer protection and monitoring the market more generally.

Third, I will set out the long-standing policy on promoting competition in respect of these markets, and what Government is doing in regard to providing significant supports for household energy costs, both in terms of energy efficiency and welfare supports.

The most immediate factor affecting electricity prices in Ireland is the upward trend in international gas prices. In Europe wholesale natural gas prices have been on an upward curve since the second half of 2020. This feeds directly through to retail electricity prices as the wholesale price of electricity correlates strongly with the price of gas. To protect the most vulnerable, Government provides extensive supports for household energy costs via welfare schemes. Overall the Government envisages expenditure in excess of €700 million in 2021 on a number of measures to support households in meeting their energy costs. There are, for example, specific schemes aimed at those at risk of energy poverty, including the household benefits package and the fuel allowance. In addition, all the funds raised by increases in the carbon tax will be ring-fenced to protect those most exposed to higher fuel and energy costs. The best long long-term approach for Ireland to insulate consumers from volatility on international wholesale energy markets is to invest in energy efficiency and renewable energy and expand interconnection with European and neighbouring markets.

Turning to security of supply, the CRU also has statutory responsibility to monitor and take measures necessary to ensure the security of electricity supply in Ireland. It is assisted in its statutory role by EirGrid which is responsible for the day-to-day management of the electricity transmission system. The CRU has advised that it has identified specific challenges to ensuring electricity security of supply, which it is currently in the process of addressing. These challenges include lower than expected availability of some existing power stations; anticipated new power stations not being developed as planned; expected growth in demand for electricity, including due to the growth of data centres; and the expected closure of power stations that make up approximately 25% of conventional electricity generation capacity over the coming years.

A range of actions are being taken by the CRU and EirGrid to ensure security of electricity supply over the coming winter and the years ahead. The actions they are progressing include maximising the availability of future generation; developing new generation capacity, including temporary generation capacity in advance of winter 2022; making changes to the grid connection rules for data centres; and working with large energy consumers in order to, where possible, reduce their electricity demand during peak periods.

The Department of the Environment, Climate and Communications continues to work closely with the CRU and EirGrid to ensure security of electricity supply and minimise the risk of power cuts.

Garret Ahearn (Fine Gael)
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I thank the Minister, Deputy Smyth, for his response. From the negotiations and conversations the Government has had with the CRU, is the CRU confident in the briefings it has given Government that the power outages will not happen during the winter months? Is the Government absolutely sure? The Minister, Deputy Ryan, has spoken a number of times on this and has been very cautious in what he said and very hopeful that there will not be power outages but have we confidence that there will not be power outages? It is hugely worrying for families and for homes, but particularly for businesses. There are many businesses which might not have back-up systems available. Does the Government have a back-up in place? If power outages happen, as is possible, what happens on the back of that?

With regard to costs for people, is there a way that we could look at the public service obligation, PSO, levy that is on the bill everyone gets every two months?Some of that money goes into smart metering. Is there any way we could look at pausing that, potentially for the next number of months, because of the extreme rise in prices?

Pat Casey (Fianna Fail)
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The Minister of State has one minute to respond.

Ossian Smyth (Dún Laoghaire, Green Party)
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Specifically on those questions, the Commission for Regulation of Utilities, CRU, presented a list of risk factors, which I read them out. It also presented a prescription for a number of actions should be taken to mitigate this. It said that the risk of power outage is real but, with these mitigation measures, the cause for concern is far less. That is basically its option.

The public service obligation, PSO, levy is a compensating dampening factor. When gas prices or electricity prices rise, the PSO levy comes down, and vice versa. It should, therefore, have the effect of stabilising prices.

I thank the Senator for all of that and want to say that the Department of the Environment, Climate and Communications is supporting the CRU and EirGrid as they progress the actions necessary to ensure the continued secure supply of electricity. I understand this is a critical matter for the Government. Nobody wants to see power outages. All of the required mitigating measures will be taken. This is being treated with the utmost seriousness. There is a detailed plan and many actions are being taken to prevent this from happening.