Gerald Nash (Louth, Labour)
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166. To ask the Minister for Communications, Climate Action and Environment the projected dividend from the ESB in 2022 and 2023, respectively; if he has sought a specific figure from the ESB for windfall profits; and if he will make a statement on the matter. [48537/22]

Eamon Ryan (Dublin Bay South, Green Party)
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Increased wholesale gas prices, which are mainly caused by Russia reducing supplies to Europe and the war in Ukraine, are leading to unprecedented increases in electricity and gas prices for households and businesses. They are also leading to windfall gains for some energy companies across Europe, particularly those companies involved in the production of fossil fuels and those who are producing energy at a much lower cost than the cost of gas.ESB’s generation and supply businesses are required to operate separately, so increased profits from ESB’s generation business cannot be used to offset costs incurred by Electric Ireland. Group profits are invested in critical networks, renewable generation and other important energy infrastructure, as well as used to pay tax and dividends to the Government.

Formal dividend policies are in place for all the Commercial Semi State Bodies (CSSBs) operating in the energy sector. These have been developed via the Shareholder Expectations Framework and, in each case, seek to strike an appropriate balance between the payment of dividends and re-investment in the business. Where the dividend target is based on adjusted profits after tax, higher profits arising in any given year in the ordinary course would fall within the scope of the normal targeted dividend payments.

ESB is experiencing greater than forecast profits and would be expected to return significantly higher Dividends in accordance with existing dividend policies. As a shareholding Minister, I have no specific power to direct ESB to pay a dividend.  It would be a matter for the Board to determine at their discretion in any year whether a dividend should be declared when, in their opinion, the profits of the company justify such payment. Projected profits and dividends are a confidential matter for the company.

ESB recently published their interim accounts confirming the payment of an interim dividend of €122m to the Exchequer. The dividend will be used to help ease the energy bill crisis. Profits and dividends paid over the last five years for ESB are set out in the table below.

*Profit after Tax (adjusted) comprises reported net profit after tax adjusted for exceptional items and certain fair value movements. Additional adjustments may be applied by the individual entities in arriving at adjusted profit after tax for dividend purposes.

At the Council of Energy Ministers meeting on 9 September, which I attended, the issue of windfall gains was discussed in some detail.  On 14 September the European Commission published a proposed regulation which includes measures aimed at addressing windfall gains in the electricity sector and in fossil fuel production.

The principle that I am leading on is that windfall gain on the back of the war in Ukraine and the impact on prices, needs to be captured and redistributed to customers. The mechanism by which this is done, be it by windfall taxes, dividends, or EU regulations is being finalised with a view to identifying the optimum solution.

On Friday I attended a meeting of the Council of Energy Ministers to finalise and approve the proposal, which is expected to raise additional revenues to be used to reduce the cost of energy for households and businesses.  Decisions were taken on three matters in an agreed package including: (i) a windfall tax or levy on the surplus profits made by fossil fuel companieswith activities in the crude petroleum, natural gas, coal and refinery sector; (ii) another levy on excess revenues that low-cost power producers make from soaring electricity costs; and (iii)  a mandatory 5% cut in electricity use during peak price periods. The regulation introduces common measures to collect and redistribute the energy sector’s surplus revenues to final customers. The full Council Regulation proposal can be found at the following link: data.consilium.europa.eu/doc/document/ST-12999-2022-INIT/en/pdf