"That the Bill be now read a Second Time."
Having regard to the unprecedented rise in electricity prices, I am pleased to have the opportunity to commend the Electricity Costs (Domestic Electricity Accounts) Emergency Measures Bill 2022 to the House. I will open the debate by setting the context for the actions to be taken on foot of this Bill. Although many Members will be familiar with these issues, it is important to take this opportunity to set out the complex situation we will find ourselves in with regard to energy costs and wider pressures on the cost of living. I will also describe the sections of the Bill in detail and, with regard to its main provisions, set out the background and why they are needed for the operation of the scheme. However, my overarching message today is that while the scheme which the Bill will establish is just one of a suite of measures, it is critical that it is put in place within this quarter. I seek Members' support to achieve that.
First, I will outline the main factors affecting electricity prices in Ireland. Second, I will provide an overview of the domestic and international response to rising electricity and gas prices. Third, I will reaffirm the Government's conviction that the best long-term approach for Ireland is to insulate consumers from volatility on international wholesale energy markets.
On the factors affecting Irish electricity prices, Deputies will appreciate that we face additional costs due to our geographical location, fossil fuel dependency, the small scale of the Irish market, low population density and exchange rate fluctuations. However, the most immediate factor affecting electricity prices in Ireland is the upward trend in international gas prices, which has brought them to an unprecedented high. In Europe, wholesale natural gas prices have been on an upward curve since the second half of 2020, for a variety of international reasons. Current indications are that these higher prices will continue at a significantly higher level than in early 2020 for the foreseeable future. This feeds directly through to retail electricity prices, as the wholesale price of electricity correlates strongly with the price of gas due to the fact that gas is used for electricity generation.
It is a matter of serious concern to the Government that recent electricity and gas price increases caused by these international conditions are putting increasing pressure on consumers, particularly those in a more vulnerable economic position. It is important to recognise that these price increases are not caused by Government or regulatory decisions. This is because price regulation ended many years ago. Suppliers compete with each other on price and set their own prices accordingly, as one would expect in a competitive, commercial liberalised market. Consumers can shop around and switch easily. It is important to point out that all European markets are experiencing these price increases. While Ireland has its own specific circumstances, the rise in energy costs is not unique to us.
I will now turn to the international and domestic response. In general, in terms of the overall cost of living it vital to stress that a co-ordinated, whole-of-government response is being followed. It is essential in tackling this issue. In response to rising electricity and gas prices in the EU, the European Commission published a communication in October 2021 entitled, "Tackling rising energy prices: A toolbox for action and support". The toolbox sets out the measures available to member states to mitigate the impact of the energy price rises, which, at the same time, do not cut across the EU energy legislative framework or the EU longer-term policy framework for the green transition. The Government made a number of interventions in budget 2022 in line with measures put forward in the European Commission's toolbox, such as implementing safeguards to avoid customer disconnections, providing supports for consumer empowerment and providing for a supplier of last resort in cases where suppliers exit the market in a disorderly manner. The electricity costs emergency benefit scheme to be established by this legislation is an additional measure.
The Government's primary response to tackling the impact on households of increasing energy costs has been to use the tax and social welfare system to counter rising costs of living as set out in budget 2022. The fuel allowance is one of a range of income supports paid by the Department of Social Protection, which also includes general social welfare schemes, the living alone payment increases, to support those living alone and at a higher risk of poverty, and the household benefits package. Targeted supports are also provided under the supplementary welfare allowance scheme, exceptional needs payments, ENPs, and urgent needs payments, UNPs. Under the supplementary welfare allowance scheme, a special heating supplement may be paid to assist people in certain circumstances who have special heating needs, for example, in the case of ill health. This is in addition to increases in basic welfare and pension rates. Adjustments to income tax bands have also been introduced primarily as a response to the cost of living increases more generally, driven in part by higher energy prices.
Having regard to the urgent to decarbonise, I will now outline the long-term approach for Ireland. In that context, the Government's energy efficiency and renewable energy measures are key. Government policy is driving investment in energy efficiency, investment in renewables, enhancing electricity interconnection and deepening the internal energy market. I will take energy efficiency as an example. Energy efficiency measures are not just essential to reduce emissions from our housing sector, they are also central to addressing the root causes of energy poverty and to improving health and social inclusion outcomes, while at the same time contributing to decarbonisation.
The residential energy efficiency budget for my Department in 2022 is €202 million. Financed by carbon tax revenue, €109 million of this will fund Sustainable Energy Authority of Ireland, SEAI, schemes to provide free energy efficiency upgrades to households that are in, or are at risk of, energy poverty. More than 4,500 homes will benefit from the upgrades that will be carried out under these SEAI schemes in 2022. The Minister for Housing, Local Government and Heritage will invest a further €85 million as part of the local authority retrofit programme in 2022. This will deliver approximately 2,400 retrofits of local authority homes next year up to a building energy rating, BER, of B2 or cost optimal. Additionally, the review of the national development plan resulted in an unprecedented level of investment in retrofit. Some €5 billion of additional carbon tax revenues have been allocated to support residential retrofit to 2030. This means that the overall allocation for residential retrofit will be approximately €8 billion to 2030.
Alleviating energy poverty is a key consideration in the new national retrofit plan, published as part of the climate action plan last year. More generally, the Climate Action Plan 2021 commits to improving how energy poverty schemes target those most in need. As is clear from the supports relating to energy efficiency and the specific measures introduced in budget 2022, the Government is committed to protecting the most vulnerable. As we transition away from fossil fuels and progressively decarbonise, we must ensure the way we decarbonise captures this unique opportunity to improve the quality of life for all. Making our homes energy efficient not only means they are warmer, healthier and cheaper to run, but also means we are taking concrete action on social deprivation that is sustainable and enduring.
I will devote my remaining remarks to the subject matter of the Bill. Notwithstanding the other measures, the Government is determined to act quickly to help people further with these higher energy prices. The Bill provides for the establishment of a scheme for the purpose of making the electricity cost emergency benefit payment of €100 in 2022. The moneys for the scheme will be allocated by the Minister for Environment, Climate and Communication, Deputy Eamon Ryan, with the consent of the Minister for Public Expenditure and Reform, out of moneys provided by the Oireachtas. This amount will not exceed €215 million and will be for the purpose of making a once-off €100 payment by suppliers to each domestic electricity account held by them. This is on the basis of there being approximately 2.15 million domestic electricity account holders, as indicated by the Commission for Regulation of Utilities, CRU. The CRU will provide oversight of the scheme and it will be operated by the distribution system operator, ESB Networks, ESBN.
The mechanism by which the scheme will operate is as follows. I will provide under regulations for a date, to be known as the relevant date, on which the distribution system operator will calculate the total number of domestic electricity accounts in the State, on the basis of meter point registration numbers, MPRNs. The MPRN is the unique identifier for all accounts and as such must be used to ensure the €100 payment reaches each account. ESB Networks will notify me of this number, and this will allow the calculation of the necessary allocation of moneys for the scheme. On the effective date, which will also be set out by me in regulations, ESB Networks will notify each electricity supplier of the assigned MPRN for each domestic electricity account it supplies. ESB Networks will also, on the effective date, notify suppliers of the amount of money it will transfer to them for the purposes of the scheme. I will set out in regulations the period within which ESB Networks will transfer the funds to suppliers for the sole purpose of making payments under the scheme. Following receipt of these funds, suppliers will then, within the period to be prescribed by me under regulations, credit each domestic electricity account held with them on the effective date with a payment of €100. The CRU, as an independent regulator, will have oversight of the scheme. It will put in place administrative and operational arrangements to ensure that ESB Networks and suppliers perform their functions under the scheme.
The CRU, on the basis of its existing powers to issue directions and secure compliance by licence holders with their obligations, will ensure that ESBN and suppliers perform their functions under the Bill. Suppliers and the ESBN are required to repay any moneys received by them which have not been used for the purposes of the scheme.
I would now like to refer to some particular aspects of the scheme that will be of interest to Deputies more broadly. The scheme will apply to all domestic electricity account holders, including pay-as-you-go customers. With the support of the Department of Housing, Local Government and Heritage, my Department is working closely with the Residential Tenancies Board, RTB, to ensure that those due the payment in rented accommodation receive it. I understand that there are approximately 300,000 tenancies registered with the RTB and that the majority of these tenants either hold their own electricity accounts or pay their landlord for their electricity on the basis of an actual bill and would therefore receive the benefit directly. My Department is working with the RTB on a public information campaign to ensure that any tenants, expected to be a small minority, for whom electricity costs are not separate from overall rental cost are aware of the scheme and entitlements. In that context, in the event that a dispute should arise between a tenant and landlord, there are existing dispute resolution mechanisms provided by the RTB. The scheme can only become operational following the passing of this underpinning legislation. As Deputies will appreciate, this emergency measures Bill aims to ensure that the credit can be made to domestic electricity account holders as soon as possible.
The scheme will apply to every domestic electricity account holder using their unique MPRN to allow the payment to be credited to individual bills. This does mean that premises, other than principal residences such as holiday homes with a domestic electricity account will be included in the scheme. The scheme uses the above single eligibility criteria to enable payments to be made at the earliest possible opportunity in 2022. The scheme does not have additional eligibility criteria. For example, it is not means tested because the application of such criteria would override the automatic nature of the current scheme, require input from customers through formal applications and cross checking by administrators, which would significantly delay the roll out of the payments. Therefore, the automatic crediting of all residential customer accounts is the most effective immediate term methodology.
The CRU has advised that to implement the scheme in the timeframe required, suppliers will use existing billing systems to process the credit. The CRU has considered the question of an opt-out for people who do not wish to receive the payment. However, the scale of work required to the billing system would be of an order that would significantly delay the issuing of this payment to all electricity users. While I do appreciate people's views on this, I also feel it is important to move ahead with administering the scheme so that people receive their payments as quickly as possible.
I will provide a section-by-section summary of the Bill. There are ten sections. Section 1 is a standard provision which provides for definitions.
Section 2 provides for the establishment of the scheme, to be operated on a once-off basis. It also provides the basis for the estimation of the amount required, as well as for the allocation of the moneys for the scheme up to €215 million, with the consent of the Minister for Public Expenditure and Reform.
Section 3 provides the legislative basis for the transfer of the moneys, to be €100 for each domestic electricity account in the State, for the operation of the scheme by the Minister, with the consent of the Minister for Public Expenditure and Reform, to the distribution system operator.
Sections 4 and 5 provide for the functions of the distribution system operator and suppliers, respectively, for the purposes of the operation of the scheme. Section 6 provides for the amendment of section 9 of the Electricity Regulation Act to create functions for the CRU, including for the purposes of oversight of the functions of the distribution system operator and suppliers, and to ensure that the administrative and operational arrangements necessary for the functioning of the scheme are in place.
Section 7 deals with an amendment to the Taxes Consolidation Act 1997. This amendment is to exempt the electricity costs emergency benefit payment from income tax.
Section 8 provides for the Minister to make regulations, with the consent of the Minister for Public Expenditure and Reform, to set out the dates and period for the operation of the scheme as well as to provide for additional functions of the distribution system operator, electricity suppliers, and such administrative and operational matters as may be required for the efficient operation of the scheme.
Section 9 provides that the distribution system operator and electricity suppliers shall bear their own expenses. Section 10 contains standard provisions concerning the Short Title and commencement of the legislation.
I have outlined the main provisions of this emergency measures Bill and provided additional detail on the sections. I hope that this will be of assistance to Deputies. I look forward to an informed and meaningful debate and to working constructively with Deputies on all sides of the House.