Seanad Éireann debate -
Thursday, 6 Jul 2023

Vol. 295 No. 10

Energy (Windfall Gains in the Energy Sector) (Temporary Solidarity Contribution) Bill 2023: Second Stage

Question proposed: "That the Bill be now read a Second Time".

Minister of State at the Department of Environment, Climate and Communications (Deputy Ossian Smyth)

I am pleased to address the House and I thank Senators for the opportunity to present this Bill.

As they will be aware, the Russian invasion of Ukraine in early 2022 led to exceptionally high energy prices. The Government is aware of the resulting financial strain on households and businesses in Ireland and has introduced numerous supports for homes and businesses to offset the increase. This includes a €2.4 billion package of supports introduced during 2022 and a package of once-off measures worth €2.5 billion, which were included in budget 2023.

The main purpose of the Bill is to provide for the temporary solidarity contribution, TSC, of Council Regulation 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices in accordance with the Government decisions on the implementation of this regulation. The Government is seeking to maximise the collection of the TSC while balancing concerns about energy security of supply and impacts on future energy investment. This Bill also provides robust powers to the Revenue Commissioners to ensure a timely and efficient collection of the TSC.

The TSC proceeds will be remitted to the Exchequer and the specific distribution of proceeds will be subject to a Government decision and agreed in the context of budget 2024 following consultation with the energy poverty steering group. A separate Bill, entitled the Energy (Windfall Gains in the Energy Sector) (Cap on Market Revenues) Bill 2023, which will be published in the coming weeks, will implement the cap on market revenues provided for in the Council Regulation.

I will provide a brief overview of the most important measures the Bill addresses before discussing them in more detail. The Bill provides for the TSC to be payable by companies with activities in the fossil fuel sector, including the production or refining of natural gas, coal, petroleum or the manufacture of coke oven products, carried on in the State for the fiscal years 2022 and 2023. The TSC is 75% of taxable profits, which are 20% above the average of taxable profits in a baseline period of 2018 to 2021. The Bill amends the Taxes Consolidation Act 1997, which I will call the Act of 1997, through the insertion of a new Part 24B, which provides for the definition of "taxable profits", the definition of "average taxable profits" for the purposes of the TSC and the deductibility of the TSC from corporation tax. These definitions of "taxable profits" and "average taxable profits" for the purposes of the TSC provide for a calculation of the TSC in the same manner as profits chargeable to corporation tax.

The Bill provides for certain exceptions that Senators should note. Losses prior to 1 January 2018 and after 31 December 2023 will not be deductible in calculating taxable profits for the purposes of the TSC. Additionally, group relief claimed in an accounting period falling wholly or partly in 2018 to 2023 will not be deductible in calculating taxable profits for the purposes of the TSC. Group relief surrendered in an accounting period falling wholly or partly in 2018 to 2023 will be disregarded and, therefore, deductible in calculating taxable profits for the purposes of the TSC. Capital expenditure on the acquisition or construction of allowable tangible assets will be deductible in addition to relevant capital allowances that may have been deducted in calculating taxable profits.

Senators should note that the TSC is not a tax, and as such, the Revenue Commissioners require powers for the TSC to be under its care and management. Provision is, therefore, made in the legislation for the Revenue Commissioners to administer, collect, undertake assessments of returns and enforce the TSC. The legislation also provides an appeal mechanism to the Tax Appeals Commission, TAC, for companies that are aggrieved by Revenue assessments.

I now propose to give a more detailed overview of the Bill, which contains four Parts, 26 sections and one Schedule. Part 1 contains standard legislative provisions that cover the Short Title of the Bill, its commencement, definitions of terms used in the Bill and a standard provision enabling the expenses of the Minister to be paid out of moneys provided by the Oireachtas.

Part 2 provides for the calculation of the temporary solidarity contribution, TSC, for TSC to be under the care and management of the Revenue Commissioners, and for an appeal mechanism to the Appeal Commissioners. This Part also sets out the obligations of energy companies with respect to the TSC.

I wish to draw particular attention to the following provisions of Part 2. Section 4 provides for a levy to be known as “temporary solidarity contribution” on the taxable profits of each energy company in respect of each chargeable period. It also provides for the calculation of TSC, and for the TSC to be payable to the Revenue Commissioners on or before the specified date.

Section 5 provides for anti-avoidance measures in respect of the TSC. Section 6 provides for TSC to be under the care and management of the Revenue Commissioners. Sections 7, 8 and 16 provide for the obligations of an energy company with respect to TSC, including notifying the Revenue Commissioners by specified dates, the preparation and delivery of a return and the retention of records. Section 15 provides for an energy company to make an appeal to the Appeal Commissioners in respect of a Revenue assessment or amended assessment. It also provides that an appeal cannot be made against a surcharge under the Bill, a self-assessment or the amount of taxable profits specified therein.

Part 3 provides for enforcement measures for TSC to ensure a timely and efficient collection by the Revenue Commissioners. I wish to draw attention to the following provisions of Part 3. Section 17 provides for a percentage increase or surcharge on TSC returns that are not delivered by the specified date. In light of the short time between the potential enactment date of this Bill and the first payment date on 23 September 2023, it was considered fair not to impose a surcharge for the first three months. Provision is also made for caps on the amount of surcharge that can be added to a late return. Section 18 provides for the interest on overdue amounts, based on a formula set out in this Bill. Sections 19 to 21, inclusive, provide for a penalty where an energy company fails to deliver a return on or before a specified date, comply with a notice to make a particular item available for inspection or retain records in accordance with this Bill.

Section 21 provides for other penalties, including deliberately or carelessly making incorrect returns or failing to make certain returns. Section 22 provides that Chapter 4 of Part 47 of the Act of 1997 shall apply to the TSC. Part 4 amends the Act of 1997 through the insertion of a new Part 24B and sections 697R, 697S, 697T and 697U. I wish to draw attention to the following provisions of Part 4. Section 23 inserts the new section 697S into the Act of 1997, which will provide for the calculation of taxable profits for purposes of TSC. This section also sets out the conditions which are not to be taken in account in calculating taxable profits for purposes of TSC.

Provision is made for the treatment of losses in the calculation of taxable profits, and for the calculation of taxable profits where the accounting period of an energy company does not align with a calendar year. In addition, section 23 inserts new section 697T into the Act of 1997, which will provide for the calculation of average taxable profits in a baseline period, for partial trading years and non-operating trading years in the baseline period. This section also provides that where the average taxable profits are less than zero, then the average taxable profits shall be zero for the calculation of TSC. The Schedule to this Bill provides for consequential amendments to the Act of 1997, to the Ministers and Secretaries (Amendment) Act 2011 and to the Finance (Tax Appeals) Act 2015.

I have outlined the main provisions of the Bill and provided additional detail on the sections. I hope this will be of assistance to Senators. I look forward to an informed and meaningful debate and to working constructively with Senators on both sides of the House.

Senator Timmy Dooley

I welcome the Minister of State to the House and I welcome this Bill. It is necessary when one considers what the energy sector has experienced since the invasion of Ukraine by Russia, as well as the impact that has had on world fossil fuel prices. It is appropriate that those companies that have had significant gains and no increases in their costs would be made accountable and made to contribute to the State. The State, on behalf of its citizens, has done a really good job in attempting to ensure that energy remains affordable, insofar as it can be, to assist people with the heating of homes, moving around in the economy and getting on with daily life.

Notwithstanding the difficulties we have with Opposition parties and differences of position on so many issues, there is a fairly widespread acceptance that this Government has stood with the people. It has been imaginative and creative in finding solutions to the really difficult problems that have been foisted on the Government as a result of the invasion of Ukraine by Russia, as well as the impact that has had not just on supply chains but, particularly, on the cost of energy. With the passage of time and when history is written, all political parties will come out of this looking well, including Opposition parties, which have been cautious and mindful in their responses to the decisions that have had to be taken.

However, this points to an area in which the Minister of State and I have a particular interest, namely, the necessity to move away from fossil fuels as quickly as possible. We must wean ourselves off that problem, which is bedevilling our environment and our society. We must get to a greater reliance and dependence on the offshore opportunity to capture of wind for the generation of electricity to power our economy into the future. The quicker we can do that the better.

The Minister of State knows about the plans the ESB has with others to develop an offshore wind farm off the west coast of County Clare. That will bring great potential for Ireland in terms of green, clean energy. It will potentially bring the benefit of storable and transportable fuel. I am referring to the project around hydrogen, as well as the potential for ammonia, which are more storable and transportable fuels. The opportunities are endless.

This gives us an opportunity for the first time in a long time to look with ambition at addressing the carbon emissions from the aviation sector. Aviation is hugely important to County Clare, Shannon Airport and the mid-west region, not just from a domestic jobs perspective, but also because of the benefits tourism brings. However, aviation has been off the agenda in the carbon emissions debate for a long time. We are looking at land use, agriculture, retrofitting of homes, etc. However, we have had to turn a blind eye to aviation. With the advances now in sustainable aviation fuel development and hydrogen and ammonia being the constituent part of that, I see real opportunities. I see a real positive for the environment in reaching targets as we head to 2050. I also see a real opportunity for Ireland to be at the cutting edge of the development of sustainable aviation fuels.

I am pleased that the Technological University of the Shannon, TUS, which is based in Limerick and was previously known as the RTC, and UL, together with Trinity College Dublin, are working through their chemistry departments and other units to develop that sustainable aviation fuel sector. That is something we should be championing much more, as we should the offshore potential I have spoken about, which has the capacity not just to power our domestic economy. If we get more clever about our interconnectors to Europe, we could provide a very long-term sustainable supply of electricity. While electricity cannot be stored, there is also the matter of what can be done with batteries, as well as hydrogen, as I have said.

Another innovative Irish company, Supernode, is developing a technology that can be part of the future super grid for Europe. They are developing a high-tech piece of infrastructure. It is effectively a cable that allows electricity to be transferred at very low temperatures. It is known as a "superconnectivity". Therefore, for far less use of copper, and through those proprietary cables they are developing, one can get a greater transfer of electricity. Ireland is quickly becoming seen as an innovator in this space.

It is long overdue because, quite frankly, we have some of the best renewable resources off our western and southern seaboards. We do not have the sunniest climate, but with the technologies that are being developed and the reduction in the cost of solar technologies, we can be and we can use solar as a contributor to our decarbonisation. Work on this is being done at Government level.

We have to join the whole lot up. We have to look at the supergrid and the technologies SuperNode is developing to see how that can play a role in making Ireland accessible to the rest of Europe to sell our clean energy. We must then look at how we can use that domestically to power our economy now and into the future.

We get many comments about data centres. It is often pushed back that data centres are a luxury or nice to have, and that all they are doing really is storing social media accounts. That is not the case. Quite frankly, data centres are what filing cabinets were in the offices of the 1970s. We used to talk about advanced factories and offices with underfloor cabling and raised floors. The latter were seen as the new normal for office buildings. Those offices will not exist anymore. People are working from home. They are working in smaller clusters. So much of our lives now involves accessing data from the cloud. It is not about the storage of silly videos or kids playing games. That is part of it for sure, but it is not the main part of it. When I hear people suggesting that we should somehow be looking at reducing the number of data centres because of the potential for electricity shortages, I find it bizarre. Effectively, we are telling the outside world that the economy of the future is not for us and to go somewhere else. We have to get real. There will be a significant impact on the environment in the short term, so we really do have to power ahead, pardon the pun, with repowering our economy through clean energies.

Acting Chairperson (Senator Lynn Boylan)

Before we move to our next speaker, I welcome pupils from Deravoy National School to the Seanad. We are discussing the windfall tax on energy. I hope they can understand what we are saying. Our next speaker is Senator Seán Kyne.

Senator Seán Kyne

The Minister of State is welcome. I am taking this Bill on behalf of my colleague, Senator McGahon, who cannot be with us.

I welcome the introduction of the Bill and look forward to it being enacted. The Title to the Bill contains a word with which we can all agree, namely, "solidarity". What we are looking at here is a temporary solidarity tax.

It is clear that the consequences of the war in Ukraine have been felt in many aspects, including with regard to inflation and, of course, the energy costs impacting directly on homeowners, businesses and others. That has caused a significant impact in the context of the cost-of-living challenges that families have and also with regard to the bottom line for businesses. The Government has responded directly in terms of providing recompense through energy supports. It also provided assistance to businesses by means of the temporary business energy support scheme.

What is proposed in the Bill arises on foot of an EU directive. The Government is waiting to see the response from the EU, but it is probable that it would have been able to do something anyway. The UK has done something similar to what is proposed in the EU directive and what certain member states have done. It is clear that this is obviously not just an Irish issue. It is an issue that has had an impact across the European Union and the wider world because of the uncertainties arising from the war in Ukraine and the impact on the movement of fossil fuels.

As I said, the Government responded by providing electricity supports. These were very evident and welcome. There would be some concern with regard to price gouging and falls in wholesale prices being passed on to consumers over the period. There are differences between houses and businesses in terms of how these things are charged. Perhaps that needs to be looked at in the context of savings being passed on to consumers and households as soon as there is an improvement in the wholesale market price.

Smart meters allow people to monitor their electricity usage. We are dealing with a number of cases relating to smart meters where people are concerned that their introduction will lead to a spike or a perceived spike in usage. Going back to dealing with the energy companies, I had assumed that if a person had a heating system, a washing machine and a tumble dryer, the companies would be able to monitor the energy used by each. As I understand it, they determine whether a person has a washing machine or tumble dryer and then estimate a percentage of the overall bill on the basis of that usage. This means that it is not actual usage but an estimate. I did not know that. Maybe everyone else did, but I did not. It is not exactly as beneficial as I would have assumed. People cannot say that it was a fine summer, that they did not use their tumble dryers and that, therefore, this is an actual saving. The companies are making an estimate on the basis of someone having an appliance. I thought that was interesting and wondered whether there is a methodology that can be used to determine the energy used by the relevant appliance. The latter would be much more beneficial.

What is clear to see, however, certainly from my experience and from talking to other people, is that there was a concerted effort to not leave on outside lights, to turn off the lights on the stairs and ensure that the lights in rooms were turned off, whereas perhaps before the energy price increases, people may have had a more relaxed attitude. Usage dropped during that period, even though people were conscious of the initial costs. That is welcome at any time. Reduced usage means reduced costs. That, in itself, was a benefit.

I want to touch on the issue of wind farms. There is a very exciting project off the west coast of Galway called the Sceirde Rocks Windfarm. When Deputy Bruton was Minister, the project received preferred status. It has gone through the various stages since then. Hopefully, we will see that developed and there will be a knock-on benefit both in terms of construction jobs and to the community fund and local community in Connemara. That will be beneficial.

Obviously, many projects relating to onshore energy are going ahead. I continue to receive representations and meet people who are concerned about onshore developments and issues relating to proximity to houses, the visual aspect or shadow flicker. This is a real issue for many individuals. They are genuinely concerned. They feel that the system is stacked against them in terms of the planning process. There are reams of data with regard to all these matters when they go into the local authority, and there is very little hope of the ordinary Joe Soap being able to combat that information or check and verify it.

There have been concerns about plans for new developments or even the visual aspect in circumstances where planning permission has been granted for a development where the height is being increased. I have met people while out walking in recent weeks who have genuine concerns in that regard. I know from experience that when wind farms were being constructed in the past, there were issues with noise and dust from road construction. The impacts on local residents have been huge. Much remedial work had to be done to widen roads to take bins out or move junctions to improve engagement with road sweepers and trucks bringing concrete and hard-core. All off that would have a huge impact. When projects are labelled 100% renewable and 100% green, there is a question about that. Obviously, they might be green once they are constructed and there is a finished product, but not so much during construction.

While there were costs for the energy companies, they were able to make super-profits. It is right that there is now the temporary solidarity for that period.

I acknowledge the work of the committee on the pre-legislative scrutiny. The committee queried a lot of the losses from 2018 to 2022 to be carried forward and offset against companies' profits in 2022-2023 for the purposes of calculating the temporary solidarity contribution or whatever that is. Maybe that is something legitimate that businesses do, but there was a concern about the impact. Perhaps this is the reason the Minister of State can only estimate the revenue to be generated from this - from €250 million to €400 million - and cannot put a precise value on that because of the possible tax treatments on those issues. I am just drawing attention to that and perhaps the Minister of State will comment.

Senator Vincent P. Martin

The Minister of State is very welcome to the Chamber, as always. In his opening remarks he said the Russian invasion of Ukraine in early 2022 led to exceptionally high energy prices, that the Government is aware of this, and that the Government is recognising and responding in an appropriate way. Russia has used energy as a weapon of war in its illegal and unprovoked brutal war in Ukraine. Communities across Europe have had to pay extremely high gas prices. For a time, the price of gas was ten times higher than the pre-war price. We have seen massive profits recorded across the fossil fuel industry over the past two years, while at the same time energy prices for consumers were going in one direction only. They increased and then they increased further. Many companies faced no additional costs but still benefited from this huge increase in the cost of energy as a result of the international market. This war profiteering is simply wrong.

This Bill, which the Green Party group welcomes, will allow the State to take a contribution from excess profits that were experienced by companies in the fossil fuel sector in 2022 and 2023. The temporary solidarity contribution is 75% of taxable profits that are above a 20% threshold of average taxable profits in 2018 to 2021. This is applicable for 2022 and 2023. Regulation to allow Ireland to do this comes from the EU. However, Ireland has decided to collect 75% rather than 33%, which is the minimum contribution required by the European Union regulation. This is significantly higher than many of the European countries that have already implemented the EU regulations. Most have levied the suggested 33%. Only Romania comes close to Ireland at 60%. This Bill will result in a gain to the State of between €240 million and €250 million. The Government will consult the energy poverty steering group on how the collected revenue will be distributed. This is welcome. It is essential we protect those who are unable to pay for energy in this crisis, just like it is essential our response to tackling climate change is underpinned by a just transition. As we transition away from fossil fuels it must be just.

In response to the public being hit very hard with rising costs, I welcome this year's €600 electricity credit. Last year's €200 electricity credit was also welcomed. There is also the €400 fuel allowance lump sum and the extension of the fuel allowance qualifying threshold. The expansion of that scheme meant that up to 81,000 new households were supported with their fuel costs for the first time. I also welcome across-the-board increases of €12 per week in welfare, which took effect from this January. I welcome the €200 lump sum payments for those in receipt of the living alone allowance. I welcome the extension of the VAT cut on gas and electricity. I welcome the 20% cut in excise on petrol and the 15% cut in excise on diesel. At the time it was an essential response for people who are hurting so hard and so deep. I also welcome the €500 lump sum on the working family payment for those on low incomes. There were also other important initiatives delivered by the Government, including a double payment of child benefit last November, an extra €100 per child in child benefit this May, free school books coming this September for primary schools and special schools, a €500 payment for those in receipt of the carer support grant, and a €500 payment for those in receipt of the disability allowance.

It is clear that fossil fuels are not the future for our energy system, which I am aware the Minister of State knows only too well. Fossil fuels have been used as a weapon of war in the Russian war on Ukraine and it has forced hardship on consumers here in Ireland and all over Europe as gas prices increased tenfold. Thankfully, prices have dropped but still remain nearly double the pre-war price. If we have any chance of meeting our global climate objectives, we must keep fossil fuels in the ground. We must power our lives and our economies with renewable energy. The energy transformation is under way in Ireland with a significant investment in solar and wind energy. Solar is taking off. The Green Party can take huge credit for an even and just transition. There is a solar revolution taking place.

The Green Party also has a proud tradition in adherence to proper planning and sustainable development, and the principles of planning law. I would like to see certain ground rules as we roll out solar and other very important initiatives. Certainly, lithium storage for batteries has a role to play in the short to medium term. Right now there is no need for an environmental impact assessment for such developments or for large-scale solar projects, yet for a piggery we need an environmental impact assessment. Right now in this jurisdiction we do not grade the quality of land. I believe we must take every one with us, and the last thing I want to see is to take two steps forward and then being forced to take five steps back by the superior courts overturning and throwing out initiatives because we did not do the groundwork for planning in a proper and coherent way that would pass the test that would be placed in the courts. It is so important these projects are not reversed or we will lose years. Good land should be graded, and for solar, for example, we should prioritise car parks and poor quality land first before going for other land, if at all possible. That is the way it should be done and I believe it can be done that way.

There are almost 700 MW of solar installed in Ireland now. This is connected to the national energy grid and is generating around 600,000 MW of clean and renewable energy per year. This includes 6,000 domestic rooftop installations. ESB Networks is processing 500 applications for grid connections every day. Support measures under the Green Party include removing planning permission red tape for solar panels, which I welcome, and the reduction of VAT on solar panels to 0% for supply and installation. There is also a microgeneration support scheme. For the first time consumers can now get paid for any excess renewable energy they generate through solar panels on their private dwelling roofs. Plans at the Department of Education are being finalised for free solar panels for schools. Money has already been assigned under the climate action fund.

Our addiction to fossil fuels must end. I have been told by several people that there is a new happier addiction, if I may call it that, to an app on a mobile phone that measures how much solar energy people are generating in their own homes. This has caused people to look at the app happily on many occasions when they are away and they can see that money is going back to the grid, they see that their car is being charged at certain hours of the day, and still some energy is going back to the grid. This is the way we want to move. This is a step in the right direction. It is in solidarity with the EU. I welcome it and I commend the Minister of State on his continued efforts.

Senator Lynn Boylan

Cuirim fáilte roimh an Aire Stáit. The introduction of this measure and the process leading up to this legislation has been quite the saga. We are aware the EU introduced its regulation in October 2022 and the Government announced its intentions in November. However, here we are and it is coming up to summer recess and the finishing touches are still only being made to the Bill.

We saw the first draft in March and pre-legislative scrutiny was completed in May. Almost one month later, the Minister announced he would split the Bill in two. The delays in finalising this legislation are unacceptable, especially considering the current context. While the Government had ample time to address high energy prices and the struggles faced by ordinary families and workers, Ireland remains in the same position. Energy companies continue to earn exorbitant profits while households suffer. Ireland has some of the highest energy prices in Europe. Over the past year, consumer energy prices rose by 72% while wholesale energy prices decreased by 50%. Household energy costs have more than doubled in the past two years, with the average home now paying approximately €2,000 per year for electricity alone. We know that the number of gas customers in arrears is also rising and almost one in three people are living in energy poverty.

The Government and Minister claim that the delays in the legislation are due to its complexity but that is not a sufficient excuse. Eighteen other European countries have implemented similar measures successfully. The reality is that the Government never wanted to impose a windfall tax on energy companies. It has consistently prioritised the profits of these companies over the needs of ordinary workers and families.

While it is welcome that we have this legislation, we need to ensure that the benefit of the revenue goes to people who are struggling. One might think that is a given but, unfortunately, it is not. The most recent time the Minister, Deputy Eamon Ryan, introduced a windfall tax was in 2009, through the Carbon Revenue Levy Fund Act. The revenues were, believe it or not, ring-fenced for large energy users and not a single cent went to households. A total of €151,326,365 of a windfall tax was given to large energy users between 2010 and 2012 in a shameful act of corporate welfare. There was public fury last year at the revelations that at the same time that windfall tax was being given to large energy users, the Government also designed a secret scheme to rebalance network charges whereby households were subsidising data centres and pharmaceutical companies. It would be unacceptable to repeat the same brazen contempt for ordinary people today.

The EU regulation, unfortunately, allows the Government the latitude to distribute the money to large energy users. Under Article 17 of the regulation, the Government can give financial support measures to support companies in energy intensive industries. The Minister has the power to give that money to corporations when households are crying out for support. We simply cannot repeat what was done on the most recent occasion the Green Party was in government in 2009. Will the Minister of State please give a guarantee that no data centres, pharmaceutical factories or other so-called large energy users will see a single cent of the funds and that it will all go to households?

Energy companies will be able to deduct losses and capital expenditure from their contributions under this legislation. This raises concerns about their ability to reduce the proportion of their profits that can be targeted. These profits were made during times of war and a pandemic, alongside a cost-of-living crisis. The Government needs to justify this approach, as it appears to be business as usual in the energy sector.

The prolonged lag in reducing energy prices in Ireland is unjustified. Energy prices are falling across Europe, yet Ireland's remain inflated. The Government attributes this to hedging but there are concerns that energy companies are engaging in profiteering. The Commission for the Regulation of Utilities, CRU, lacks oversight of hedging practices. The Government has failed to provide the CRU with sufficient power and resources. Encouraging energy companies to pass on reductions to customers is not enough. An online petition, as Fine Gael put forward, is not going to cut it. The energy market requires proper regulation.

Sinn Féin proposes resourcing and empowering the energy regulator to oversee hedging and regulate standing charges. We demand that energy companies provide answers to the public. Despite promises from the Government that energy prices would decrease and companies would be held accountable, nothing has changed. Urgent intervention is necessary to prevent the situation from worsening.

When its representatives came before the Joint Committee on Environment and Climate Action recently, the Society of St. Vincent de Paul reported a significant increase in energy-related requests, indicating the growing burden on households. Irish living standards have fallen behind other European countries and this decline must be reversed. The Irish people deserve a Government that will fight for their interests.

Sinn Féin will introduce amendments to strengthen this legislation. We will endeavour to ensure that the revenue raised is used to reduce the cost of electricity for households immediately. Additionally, we will propose increasing the revenue generated and enhancing compliance enforcement and anti-avoidance measures. The Government should adopt these amendments and take urgent measures to lower household energy bills. The people have waited long enough. They are struggling now and need action. I hope the approach to the Sinn Féin amendments will be better than that taken in the Dáil, otherwise we will be left with a mere shadow of what a windfall tax has the potential to be. I hope the Minister of State will engage with us in the Seanad and accept the Sinn Féin amendments, which are brought forward constructively. I also hope the Government will ensure the regulator has adequate oversight to ensure there is no avoidance by energy companies but also that we can monitor the hedging practices of those energy companies.

Minister of State at the Department of Environment, Climate and Communications (Deputy Ossian Smyth)

The main purpose of the Bill is to provide for the TSC under Council Regulation No. 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices. This is an important Bill which will provide for a fair collection of surplus revenues from fossil fuel companies that have earned unexpected revenues from the high energy prices resulting from the war in Ukraine. It provides for the Revenue Commissioners to administer, collect and enforce the TSC through surcharge, interest, penalties and offences. These provisions will ensure a timely and efficient collection from the companies, which will then be remitted to the Exchequer.

Senators will be aware of the financial pressure that high energy prices have placed on households and businesses. This is important legislation that demonstrates the Government’s commitment to collect revenue from windfall gains generated by companies as a result of high energy prices, which can then be distributed to households and businesses that have been negatively impacted by those same high energy prices.

I will address some of the questions that came up during the debate. How will the money be distributed? Article 17 of the regulation that applies guides the distribution of funds. We will use the principles in that article. The Government decision on exactly how it is to be distributed has not been made. The decisions will be made in consultation with the energy poverty steering group. That group is chaired within my Department and it will advise as to how we can reach the people who need the money most.

I thank all Senators who made contributions. They have pointed out that we in Ireland have a huge dependence on fossil fuels, that some organisations sought to profiteer from the war and that it is only right that we try to recoup the excess profits made during that period and redistribute those to the people who need them most. It has also been pointed out that we have an enormous opportunity here in Ireland. We are putting everything in place so that in the future, we will be less dependent on countries such as Russia or countries in the Middle East. Such countries have gone through periods of instability that have led to direct consequences for people who had no involvement. The poorest people were affected and could not stay warm in the winter or pay their electricity bills. The Government has, of course, spent large quantities, including some €2.5 billion last year and €2.4 billion the year before, to mitigate those high energy prices. However, the long-term solution will be the development of renewable energy, particularly on the west coast, and the development of hydrogen. We require clean energy supplies that will give us greater independence and greater self-sufficiency in the future. This Bill will go some way towards righting the wrong of profiteering on excess energy prices.

It needs to be legislated for as quickly as possible. I want to see that the money is available to distribute over the coming winter. I thank all Senators for their contributions.

Question put and agreed to.

Acting Chairperson (Senator Seán Kyne)

When is it proposed to take Committee Stage?

Senator Timmy Dooley

Next Tuesday at 3.15 p.m.

Committee Stage ordered for Tuesday, 11 July 2023.

Cuireadh an Seanad ar athló ar 12.01 p.m. go dtí 1 p.m., Máirt, an 11 Iúil 2023.

The Seanad adjourned at 12.01 p.m. until 1 p.m. on Tuesday, 11 July 2023.