Seanad debates
Wednesday, 19 April 2023
Nithe i dtosach suíonna - Commencement Matters
Energy Prices
10:30 am
Jerry Buttimer (Fine Gael)
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The Minister of State is very welcome.
Maria Byrne (Fine Gael)
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I thank the Minister of State for coming in to discuss this important issue. The cost of living, and particularly energy costs, is something I have picked up on from working with and visiting older people. I know a number of older people who have local authority homes changed over to electricity recently. One elderly lady who lives alone in a one-bedroom apartment with a kitchen-cum-sitting room received a bill for €750. That is a huge cost. Some of these people do not have the heating on all the time. This is about how we are addressing this issue. That particular lady was in fear of her next bill. My big concern is that some people did not put on their heating during the winter and instead suffered the cold.
While prices have started to come down a little bit, on the other hand we see energy companies making huge profits. There has to be a balance between those profits and the cost. As a Government, we should be doing something to support people. It is not just about older people, but it is about younger families as well.
I contacted some of the utility companies on people's behalf. One person was given a credit note for €300 because the company thought that it was a very high cost for somebody living alone. I am very grateful for that. However, not all the utility companies are as good at responding.
Families are also affected. If they have children playing sports, they are using showers every day. Running numerous showers and the other electrical appliances within the home drives up the bill. I look forward to hearing what the Minister of State has to say on how the Government is going to help to address this issue.
Ossian Smyth (Dún Laoghaire, Green Party)
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I thank the Senator for raising this topic. One of the most important things the Government does is trying to keep people, particularly elderly, warm in their homes in the winter. First, I will outline the regulatory regime which we operate. There have been movements in global price and this has impacted households and businesses in Ireland. I will then talk about the Government's response.
Responsibility for regulation of the electricity market is solely a matter for the Commission for the Regulation of Utilities, CRU, the independent regulator. The CRU was assigned responsibility for the regulation of the Irish electricity sector following the enactment of the Electricity Regulation Act 1999. It is a function of the CRU to regulate the electricity market. The CRU ceased price setting for electricity and gas in 2011 and 2014 and prices are now set by suppliers. The CRU is accountable to a committee of the Oireachtas and not to the Minister. Officials from the Department of the Environment, Climate and Communications have ongoing engagement with the CRU and the utility companies on the issue of prices, customer protections and related matters.
Russia's illegal invasion of Ukraine and the reductions in energy supplies to Europe have caused unprecedented energy price spikes in European households. In the aftermath of the Ukraine invasion, and peaking during August last year, wholesale gas spot prices were trading at 13 times their pre-pandemic level. This feeds directly into electricity prices paid by households and correlate strongly with the price of gas. Data supplied by the CRU indicates that estimated electricity and gas household bills are 67% and 80% higher, respectively, than in February of last year.
Due to high gas storage and warmer than normal winter conditions and policy efforts to reduce demand, wholesale gas prices have fallen dramatically and they are currently well below the peak values of last year. However, the wholesale price of gas is still about twice the level it was before the pandemic.
These huge increases in costs for consumers have caused real hardship for many people. This is most pronounced over the winter months when energy use is at its highest. That is why the Government has taken sustained action over the past year to support households and businesses to meet the cost of living challenges. Government has introduced considerable supports for households. There are specific measures to help people meet the cost of energy. These include lump sum payments to fuel allowance recipients, and a total of four €200 electricity credit payments applied to all domestic electricity accounts, including those with pay-as-you-go meters.
On 21 February Government announced a further €470 million package of measures to help social protection recipients from April to July and an extension to the reduced VAT on electricity and gas until October. On 13 December 2022, Government approved a new energy poverty action plan. This plan provides for, among other things, the establishment of €10 million fund to further support people who are at risk of energy poverty. The Department will work with suppliers, relevant public bodies and NGOs to provide financial support to citizens experiencing difficulties in meeting their energy costs this winter. This will include a pay-as-you-go gas and electricity customers. This new fund will be available to bolster hardship funds, which most suppliers have in place already.
People are advised to engage with their suppliers directly or to contact the Money Advice & Budgeting Service or Alone. These organisations can advocate on their behalf to suppliers. This is in addition to the existing sources of support such as the supplier hardship fund and the additional needs payment scheme operated by the Department of Social Protection. The objective of the new fund is to provide a further safeguard to help people who may not be able to access other sources of assistance. Again, I thank the Senator for raising this important topic.
Jerry Buttimer (Fine Gael)
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I welcome the students and teachers from St. Pius X school in Terenure who are here as guests of Senator Catherine Ardagh. I hope you have a very good visit.
Maria Byrne (Fine Gael)
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I thank the Minister of State for his comprehensive response and I thank the Government for the €200 energy credits. I know people on social welfare will receive another one next week with their payments. This has been a help. In contacting the energy companies, I found that those providing electricity were much more amenable to answering questions than those providing gas.That is only from my personal experience in contacting them on behalf of concerned citizens. In respect of these high profits that we see, I hope that the regulator and the people involved in working with them will be able to share that cost and bring down the cost for families.
I thank the Minister of State for explaining it. However, I would like a commitment that if costs are to rise again, it will be monitored.
Ossian Smyth (Dún Laoghaire, Green Party)
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The Senator referred to hardship funds and I referred to the fact that there is a new €10 million fund, which is on top of the hardship funds that were there already. As she mentioned, not all suppliers are taking part in hardship funds. Affected people who are worried about paying their bills can contact a supplier directly and ask for that. If they prefer, they can go to the Money Advice & Budgeting Service, MABS, or to Alone and have them advocate on their behalf.
The Senator mentioned that she felt that electricity suppliers are more responsive than gas suppliers. As I was not aware of that, I will take note of it.
I wish to add that we had extensions to welfare payments. We had targeted payments for welfare recipients specifically because when we analysed who needs the money most, that was the answer – double payments in some cases.
The windfall taxes that are coming in will be significant. They will be hundreds of millions of euro and they are ring-fenced for electricity and gas consumers. Again, those will be payments to try to cushion the blow. It does not do it all, but it helps. I think that when people get that €200 in their account, they notice it. The fact that this is going to be a fourth payment is something that people notice. The public service obligation, PSO, levy is gone now; it is actually a credit. We have done many things. It is not over, and we will keep looking at it. If there is anybody falling through the cracks, please contact me.