I thank the Cathaoirleach. I very much appreciate that.
I thank Senators for raising these important matters and allowing us time to discuss them today. Clearly, the current situation where we are witnessing significant increases in energy bills and the cost of living is a matter of real and serious concern. The Government is keenly aware of the growing pressures this is placing on families and businesses. As Senators will be aware, in recognition of this situation, we have already put some €2.4 billion in place as part of a package of support policies and measures to help our people in this difficult time over the past year. The increased cost of energy is an issue that is affecting not just Ireland but all European states. Increased international gas prices as a result of the Russian invasion of Ukraine have experienced a serious knock-on effect in the market.
In speaking to the motion, I will deal with substantive issues of Government policy and household supports for energy costs. First, I will set out the global market developments that have affected Irish energy prices. I will then set out the functions of the independent regulator, the CRU, in respect of these matters, including its highly relevant activities in consumer protection and monitoring competition. Finally, I will outline Government policy and what we are doing in providing significant assistance for households' energy costs, both in terms of energy efficiency and welfare supports.
First, it is important that I outline what has been happening to prices in the market. I want to clarify that the energy price increases we have seen are not Government, or even regulatory, decisions and are not due to Government or regulatory decisions. Price regulation of the energy market ended many years ago. Suppliers compete with each other and set their own prices accordingly, as is to be expected in a competitive, commercial and liberalised market. Increases in wholesale energy prices, following rises in international gas prices, have been the principal driver of these increases.
International wholesale gas prices began to rise in 2020 and unprecedented increases have continued as a result of the volatility in the international gas market driven by the ongoing invasion of Ukraine and the ongoing war. These gas increases feed directly through to retail electricity prices because the wholesale price of electricity correlates strongly with the price of gas. As this is a European-wide phenomenon, an extraordinary meeting of the EU Transport, Telecommunications and Energy Council was held on 9 September in Brussels. The purpose of this meeting was to address the extraordinary situation of energy prices in the EU, and to agree to advance work on possible emergency measures to mitigate the impact of higher prices on consumers and support demand reduction for gas and electricity to strengthen the EU's winter preparedness. Following the meeting, ministers invited the Commission, by late September, to propose additional potential measures, including capping the revenues of inframarginal electricity producers with low costs of production such as renewables like hydro, nuclear, biomass and wind, and to propose emergency and temporary interventions, including a wholesale gas price cap. These are very important developments. At that meeting, I worked very closely with my European counterparts, and I will do so again over the coming weeks.
I will turn to the role of the Commission for the Regulation of Utilities, CRU, in these matters. Senators will be aware that CRU, which is the independent energy regulator, has a wide range of economic and customer protection responsibilities. As part of its statutory role, CRU has consumer protection functions and monitors energy retail markets to ensure competition benefits the consumer. CRU also overseas non-price aspects of competition. It has taken, and continues to take, steps to increase transparency and consumer engagement in retail markets. This includes, for example, developing various codes of practice that set out customers' rights. These can be found in the suppliers' handbook. Additionally, CRU can certify price comparison websites. It leads the roll-out of smart metering and participates in initiatives like the supplier-led voluntary Energy Engage Code, which is where suppliers will not disconnect a customer who engages with them.
In August, following Government-enacted legislation that allows a negative public service obligation, PSO, levy, CRU published the annual PSO levy decision paper that outlined an annual saving of €89.10 per year for household electricity bills from 1 October. This will be reflected in bills as soon as possible within the 2022-23 PSO period. In August, following engagement with customer representative groups, energy suppliers and network operators, CRU announced enhanced consumer protection measures. They include an extension to moratoriums on disconnections, extended debt repayment periods, reduced debt burden on pay-as-you-go top-ups, better value for those on financial hardship meters and the promotion of a vulnerable customer register. In terms of Government policy, the best long-term approach for Ireland is to insulate consumers from volatility on international wholesale energy markets by investing in energy-efficiency and renewable energy, expanding interconnection with European and neighbouring markets and deepening the internal market in energy. Increased market integration, as noted by the EU agency of energy regulators, has introduced significant benefits for customers, including cheaper electricity.
The renewable electricity support scheme, RESS, has already begun delivering sustainable and cost-effective indigenous renewable electricity projects, as recommended by Senator Pauline O'Reilly. Projects under the first RESS auction, RESS 1, are expected to contribute an increase of approximately 15% in our renewable energy generation capacity by the end of next year. Projects under RESS 2 are expected to deliver an additional increase of nearly 20% to our renewable energy generation by the end of 2025. The nature of RESS auctions means that renewable generators partaking in them pay back to electricity customers when electricity market prices are high. CRU has calculated that RESS 1 projects are expected to return €313 million to consumers through the PSO over this year and next year.
The cheapest energy to produce is the energy we do not use. The Government has committed to supporting households with their energy costs through promoting energy-efficiency measures. The wider package of energy-efficiency supports, which are available from the Sustainable Energy Authority of Ireland, SEAI, make it easier and more affordable for homeowners to undertake home energy upgrades for warmer, healthier and more comfortable homes that have lower energy bills. It is through the warmer homes scheme and grants for cavity wall and attic insulation that we can do this best. This year has seen the highest ever allocation for SEAI retrofit schemes. A total of €267 million has been allocated for these schemes in 2022 and this will support almost 27,000 home energy upgrades. Of this sum, €118 million has been dedicated to energy poverty schemes which will deliver over 4,800 free energy upgrades. The average retrofit value per home has increased significantly from €2,500 in 2016 to €18,750 today. In addition, the Minister for Housing, Local Government and Heritage will invest a further €85 million as part of the local authority retrofit programme in 2022, thereby delivering approximately 2,400 B2 retrofits of local authority homes this year. Furthermore, an unprecedented €8 billion of funding from the national development plan will be available to support the implementation of the plan through SEAI residential and community retrofit schemes through to 2030.
I will highlight the extensive Government supports in place to support consumers to meet their energy costs. Throughout 2022, the Government has taken action in response to rising prices through a variety of measures. The electricity costs emergency benefit payment saw 99% of domestic electricity accounts being credited with a payment of €176.22, at a total cost of over €377 million. This scheme was part of a €505 million package of measures that was put in place to address the increasing cost of living. These measures included increases in the fuel allowance and a reduction in VAT on electricity and gas bills from 13.5% to 9%. A €350 million measure, which was included to temporarily reduce excise duties on petrol, diesel and market gas oil, cut excise by 20 cent per litre of petrol and 15 cent per litre of diesel.
The Government is committed to supporting households with their immediate energy costs through targeted ongoing schemes. The fuel allowance payment of €33 per week is paid for 27 weeks from late September to April, and is a total of €924 each year. This supported over 370,000 households last year. The estimated cost this year is €366 million. The purpose of this payment is to assist those households in most of need with help with their energy costs. As part of a package of measures totalling €500 million, an additional lump sum payment of €125 was paid to all households in receipt of the payment. This fuel allowance payment is the equivalent of almost four weeks of additional fuel allowance. A further lump sum of €100 was paid to all households in receipt of the fuel allowance in May as part of the measures included in the national energy security framework. This means that low-income households saw an overall increase of 55% in the fuel allowance support provided through the fuel allowance season, compared with last year. A recipient household, which would have received €735 in fuel allowance last year, saw that increase by €404 to €1,139 this year.
The household benefits package consists of a set of allowances that help with the costs of running a household. This was also increased to help to cover electricity and gas costs. Recipients are paid €35 per month. Under the supplementary welfare allowance scheme, a special heating supplement may be paid to assist people in certain circumstances. Exceptional payments can be made to help to meet an essential once-off cost which an applicant is unable to meet from his or her own resources. Additionally, the living alone allowance, which is targeted at recipients of certain social welfare payments who live alone and often have significantly higher heating costs, is paid at a rate of €19 per week in addition to primary social welfare payments such as the State pension. The back to school clothing and footwear allowance was increased by €100 for each eligible child under the scheme this year. The amount being paid for each eligible child aged four to 11 years is €260 and the rate payable for each eligible child aged 12 and over is €385. Furthermore, funding for the school meals local projects scheme, which is financed by the Department of Social Protection, was increased from €47.5 million in 2017 to over €68 million this year.
To date, 1,361 schools and organisations have received funding.
My Department recently published a review of the strategy to combat energy poverty alongside a public consultation which closed on 5 September last. This will inform the development of a new action plan to combat energy poverty which will set out the whole-of-government response to energy poverty to be implemented ahead of the coming winter, as well as key longer term measures to ensure that those least able to afford increased energy costs are supported and protected. It is intended that the new plan will be published shortly after the budget.
As I have highlighted, the Government has long provided and will continue to provide practical supports for those struggling with their energy costs. We are in unprecedented times. I listened to Senators' contributions and they are correct that this requires further Government action. My speech has concentrated on some of the measures that have been introduced in the last year. Obviously I cannot outline the measures that will be introduced in the budget because the budgetary process will be completed over the next two weeks. That said, we are committed to a range of measures similar to those that have already been implemented because they are targeted and practical ways to get our country through an incredibly difficult period. It will not be easy.
We have to be careful that we are not divided from our European colleagues in the measures we take. One of the ways in which this war is being played out is through the European Council, whereby the Russian Government is looking to divide us. It is important in order to provide protection to our country and support for our people that this war does not see the division that is being sought in the measures that are being taken. We can and will get through this. This will be done through investment in energy efficiency measures and investment in alternative, non-fossil fuel supplies and in energy storage in the interim period. We can and will do that in a way that is practical, most affordable and that helps us with our low-carbon transition so that our country is more reliant on its own resources rather than being able to be blackmailed and held to ransom by distant fossil fuel producers, which is the cause of this crisis. We have to be strong and resolute in taking on that blackmail but we can and will do it. The Government is committed to giving every resource and support it can to Irish people to get us through this.