Electricity Costs (Emergency Measures) Domestic Accounts Bill 2024: Second Stage

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

Minister of State at the Department of Public Expenditure, National Development Plan Delivery and Reform (Deputy Ossian Smyth)

Having regard to the continued high energy costs for households, I am pleased to commend the Electricity Costs (Emergency Measures) Domestic Accounts Bill 2024 to the House.

This Bill will establish two schemes to give further support to households with their electricity bills, following the success of the previous electricity costs emergency benefit schemes in 2022 and 2023. The electricity costs emergency benefit scheme IV, will see two payments of €125 made to approximately 2.2 million domestic electricity accounts between November and February. Following successes of the previous schemes, this scheme continues to use low electricity usage threshold, to ensure that payments are not made to households with usage levels below 450 kilowatt hours per quarter in four consecutive quarters, indicative of vacancy. However, payments will not be withheld where the account holder is a registered vulnerable customer, has a hardship meter, or is micro-generating electricity. Customers can contact their energy supplier for a review if they have not received a payment, and can further appeal to the regulator.

I am also introducing the submeter support scheme II, which will ensure payments are made to households whose electricity is supplied through what would be considered a submeter, which would be found in situations such as a granny flat, for example.

Complementary measures were introduced in previous credit schemes for Traveller families living on local authorities sites, who could not receive payments. These measures will be introduced again following the establishment of the No. IV scheme. Officials have begun work on this scheme and will engage with the Department of Housing, Heritage and Local Government and individual local authorities in the coming weeks. This scheme is 100% funded by the Department of the Environment, Climate and Communications while the local authorities are responsible for any administration costs.

The payment will be determined on a per-household basis. While I welcome the reduction of energy prices throughout the year, they remain elevated relative to historic levels prior to the energy price crisis. In this context it is important that these schemes are introduced to ensure further support for households is available from the beginning of November and I seek the House’s support in achieving this.

It is important to stress that these schemes are just part of an extensive package of measures introduced by budget 2025 to support households. Budget 2025 introduced a record €2.6 billion suite of once-off cost-of-living supports to assist families, pensioners, carers and people with disabilities. This has included changes to the means test for the fuel allowance to ensure that more people aged 66 and over will qualify for the support from January 2025, as well as a lump sum payment of €300 to all recipients.

A number of key measures introduced in recent years will remain in place. These include a reduced debt burden on pay-as-you-go top-ups; better value for those on financial hardship meters as suppliers must place these customers on the cheapest tariff available; extended debt repayment periods; and suppliers will be required to actively promote the vulnerable customer register and the protections it offers to customers.

In addition, the moratorium on disconnections for all customers will be in place from 9 December to 17 January 2025. The moratorium for registered vulnerable customers will be in place from 1 November to 31 March 2025. I would remind the Senators that it is important that any customer in difficulty contact their supplier. Suppliers have additional supports in place, including hardship funds, and through the energy engage code, they have committed that they will not disconnect anyone who is engaging with them.

I will provide a section by section summary of the 14 sections in the Bill. Section 1 is a standard provision which provides for definitions. Section 2 provides for the establishment of the scheme. It provides the basis for estimation of the amount required and the allocation of the moneys for the scheme up to €565.75 million, by the Minister for the Environment, Climate and Communications, with the consent of the Minister for Public Expenditure, NDP Delivery and Reform.

Section 3 provides the legislative basis for the transfer by the Minister for the Environment, Climate and Communications, with the consent of the Minister for public expenditure and reform, to the distribution system operator, the moneys, up to €565.75 million, for the operation of the scheme. This will be paid to domestic accounts in two payments of €125, including VAT, or €114.68, excluding VAT, each, in the November to December 2024 and January to February 2025 billing periods.

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 that an electricity supplier will review its refusal to make a payment to a low usage electricity account, if requested by a final customer, and sets out conditions under which suppliers must decide to award a payment.

Section 7 provides for the establishment of the submeter support scheme Il and provides the basis for estimation of the amount required, and the allocation of the moneys for scheme II, by the Minister for the Environment, Climate and Communications, with the consent of the Minister for Public Expenditure, National Development Plan Delivery and Reform.

Section 8 provides the legislative basis for the transfer by the Minister for the Environment, Climate and Communications, with the consent of the Minister for Public Expenditure, National Development Plan Delivery and Reform, to electricity suppliers of the moneys up to €1.25 million for the operation of scheme Il. This will be paid to supplier submeter accounts in two payments of €125 including VAT, or €114.68 excluding VAT, each in the November-December 2024 and January-February 2025 billing periods.

Section 9 provides for the functions of suppliers in relation to the submeter support scheme II.

Section 10 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 the administrative and operational arrangements necessary for the functioning of both schemes.

Section 11 deals with an amendment to the Taxes Consolidation Act 1997. This amendment is to exempt the electricity costs emergency benefit payment and the submeter support scheme payments from income tax.

Section 12 provides for the Minister for the Environment Climate and Communications to make regulations, with the consent of the Minister for Public Expenditure, National Development Plan Delivery and Reform, for the purposes of this Act.

Section 13 provides that the distribution system operator and electricity suppliers shall bear their own expenses.

Section 14 contains standard provisions concerning the Short Title and commencement of the Act.

I have outlined the main provisions of this Bill and additional details on the sections. I hope this may be of assistance to the Senators. I thank them all for listening and I look forward to discussing this Bill and working with Senators across the House.

Senator Victor Boyhan

I welcome the Minister of State and his officials and thank them for their work on this Bill, which is the Second Stage of the Electricity Costs (Emergency Measures) Domestic Accounts Bill 2024. The Minister of State has set it out clearly in his note before us here and in his opening speech, and it is also clearly set out in the explanatory memorandum. In essence, this is two payments of up to €125, which will affect 2.2 million domestic account holders. Let us keep it simple; it is a good news story. The Minister of State indicated that it needs to be communicated well by his Department and his officials. There are many different players within this market and that is very important.

I am fully supportive of this Bill. I know Senator Warfield has a number of amendments. I do not know how the Minister of State proposes to take them but that will be on the next Stage but I generally welcome this Bill. It is an important measure.

One thing I want to say is that I am always amazed by the issue of VAT when you see our bills and the amount of VAT. I would have thought the Government would have looked at the VAT issue here. Going forward in a new Administration, which it is likely we will have very soon in a matter of weeks, there will be the issue of VAT, which is going back into the coffers of the State. On the one hand, we are charging people VAT and then we are banging ourselves over the head saying how wonderful we are because we are going to give people back two payments of €125. The issue of VAT on what is essential energy to heat or to light people's homes or whatever is a question which should be revisited. That is just a by-the-way. I am not making an issue of it other than this is an opportunity for me to say it. We very much need to be looking at VAT on our bills. When we look at services on our bills and then look at VAT on our bills versus our consumption, it is a bit of an issue.

I spoke to the Minister of State and recognise that this is something that he wishes to push. I recognise there is a general election ahead and that this is good news for the Government but I see a bigger picture. It is good news for the 2.2 million consumers and I am supportive of that.

Senator John McGahon

Similar to my comments on this last year when it comes to energy credits, we have been very honest with the people at every stage over the past two to three years when it comes to the cost-of-living crisis. We have not been able to protect everybody from every pricing fluctuation, level of inflation and from competing costs. We have been honest that we cannot protect everyone from that. What we can do, however, is to try to insulate people as best as possible from price volatility and fluctuations. We are doing that in many ways but, in particular and specifically, we are doing that when it comes to electricity credits because we are getting money straight into people's bank accounts and straight off their electricity bills. This is the third year in a row we are doing that. It is very useful. I have seen myself where it is cutting costs for people and it is all part of a wide scheme of cost-of-living issues where we are trying, as a Government, to give people that bit of financial space. We are trying to put as much money as possible back into people's pockets and we are doing that, in particular, with these electricity credits. I am very glad to see how quickly this has gone through the Dáil and is going through this House because, at the end of day, it is about getting this legislation passed as quickly as possible and getting that financial aid to people. We will see what we can do from there.

The issue of universality has been mentioned over recent years by the Opposition and others in that we are giving credits to people who perhaps do not need them. The concept of this is speed and getting it done as quickly as possible to get that money off people's electricity bills during the winter months when it is needed. If we were to bring universality into this and to start picking between different houses based on means, it becomes much more cumbersome and more difficult to get money out to people who need it. Perhaps the next time, if we or the next Government continues with this, we can introduce some sort of a clawback measure where those who feel they do not want the €200 electricity credit can simply refund it to the State and taxpayer, and it could then be redirected in the form of greater credits to people in financial or fuel poverty who could do with it more. Perhaps people like that might like to give that money back to the State rather than complaining about how they do not need it.

Senator Gerry Horkan

I thank the Minister of State. There is a touch of the Dún Laoghaire-Rathdown chamber about this Chamber today in that I, the Minister of State and Senator Boyhan were all members of the same chamber at the same time. We are now dealing with national legislation and I certainly support this Bill, as does Fianna Fáil, and I am a member of the governing arrangement, along with the Green Party and Fine Gael. The Minister of State has outlined very clearly in a very comprehensive speech all of the technical matters and briefings but there are a couple of things are important to acknowledge.

It is €125 twice in the billing cycles of November-December and January-February and you do not have to apply for it. Councillor Jim Gildea, whom the Minister of State would also know, has put up on his Facebook page that people are sending texts around stating you must click on a link and apply. You do not have to do any of that. It is important we let people know it will be applied automatically to domestic electricity bills and that, while there are provisions for prepay bills and for the Traveller community, the ordinary bill-paying electricity customers, who are the vast bulk - about 2.263 million accounts - do not have to do anything. The Minister of State perhaps might confirm that in his concluding remarks.

I am also very conscious the legislation must be enacted not later than Friday, 11 October, which is tomorrow. Otherwise we do not have it in in time for the billing payments. I am not going to delay this legislation.

It is, of course, a consequence of Russia's illegal and brutal war in Ukraine that has driven up energy prices and is something the Government has taken upon itself. As a Government Senator, I am delighted to try to mitigate these things. If we did not have that war in Ukraine, we would not have the energy crisis we have and have had since that invasion, which at this stage is more than two and a half years old and heading for three years. The measure impacts on and is of benefit to households, particularly in winter time when energy costs are higher and around Christmas time when people have a great deal of outgoings. It is a very welcome measure that is costing in the region of €545 million, and probably a little bit less than that net of VAT, but it is still a very welcome measure.

It is nice because sometimes legislation is brought in in terrible circumstances. We do something that is not very nice but we have to do it. This, however, is all good and very positive news. I thank the Minister of State and his Department, and indeed the Minister, Deputy Ryan, in the same Department, for all the work he and his officials have done. It is positive. We must enact it by 11 October - tomorrow - so I will not delay it any further. I thank all very much but just again to point out to people who may be looking in and to journalists who are watching that you do not need to do anything. If you are an ordinary domestic bill-paying customer, you do not need to do anything. It will be applied to your bill automatically.

Senator Fintan Warfield

I welcome the Minister of State and his officials. Sinn Féin will support the Bill. However, in our view, the energy credits for which it makes provision do not go far enough. The fact remains that householders are still paying almost 60% more for their electricity and 90% more for their gas than they did in December 2020 prior to the eye-watering and intense increase in energy costs. We need to do much more for ordinary workers and families who are seriously struggling with the raging cost-of-living crisis. Unlike the Government, Sinn Féin proposed a short-term plan and a longer term one to address the outrageous burden placed on people due to the high cost of energy in Ireland. Over the short term, we proposed energy credits worth €450, going far beyond the Government's measures. After all and as already stated, energy prices remain 70% to 80% higher than they were in 2022.

Over the longer term, Sinn Féin is committed to broader reform of the energy market. For too long the Government has presided over an energy market that does not function for ordinary workers and families. It is content to preside over a system that prioritises profit over fairness and equity, meaning that Irish householders are always left with the short end of the stick. We pay some of the highest electricity prices in Europe, but before the market was liberalised, we paid some of the lowest. To make matters worse, energy prices have fallen much more slowly here than they have in other EU states. The fact remains that wholesale prices have fallen significantly. They are 70% lower than they were at their peak in 2022, yet in Ireland these reductions have yet to be passed on to customers. Householders are still paying 70% to 80% more.

The Government, the CRU and energy companies blame hedging for the sustained high prices. There is no oversight, however. For our part, Sinn Féin has longer term measures to make sure that energy companies are held to account on this and more. It is high time we stopped treating them with kid gloves. We will not object to this Bill today but we believe the credit should have been much higher. We are committed to addressing the inequity and the dysfunction at the heart of Ireland's energy market for good. That would lead to lower prices in the longer term.

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

Senator Boyhan asked about the rate of VAT and if we are giving money to electricity consumers, on one hand, and taking it away through VAT, on the other. We reduced VAT on electricity and gas at great expense to 9% from 13.5%, and that is being extended to 30 April.

Senator McGahon pointed out that this is an important measure that will really help people. I have spoken directly to people who have said they found it a great benefit to get this money into their accounts. It takes many tens of thousands of people out of arrears, but it is being wound down. The price of electricity has come down significantly but it is still very high in comparison with what it was before the war. In the first winter we provided €600 in electricity credits, in the second we provided €450 and this winter we are providing €250, so it is being wound down.

Senator Horkan mentioned scam texts. I remind the general public that, just like the last two sets of electricity credits that were provided over the past two winters, the credits will be applied automatically to their accounts. If they receive a text saying that they need to click here to receive their money or if one of their relatives gets such a text, I ask them not to click on the link. They do not need to do that. It is automatically applied, regardless of they are billpay customers or have a prepay meters. It is already applied to prepay meters as well. I have a prepay meter, so I have direct experience of that.

Senator Warfield mentioned that we need more than just the payment of electricity credits to people in winter. This is a universal payment that reaches everybody. We make sure that it reaches those people who fell through the cracks, who would not qualify in a targeted scheme, but we also have targeted energy poverty measures. For example, this year we increased the working family payment, increased the payment for a qualified child for welfare recipients who have children and widened the availability, the eligibility criteria, for the winter fuel allowance. The living alone allowance was also increased. Those are permanent changes, not one-off changes, and they are directly targeting people who may be living in energy poverty. That is to directly meet that need.

In addition, €500 million, the largest amount ever, has been allocated in respect of retrofitting. The low-cost loan scheme is now available. This means that if you get a grant and you cannot meet the capital requirements of the other portion, you can borrow money. Now, as you walk around the country and look at people's roofs, you will see solar panels everywhere. Every school in the country is receiving free solar panels. One hundred families across Ireland are installing solar panels every day. We are having a solar revolution. It is now beginning to really contribute towards our energy security and lower people's bills all around the country. Giving people some money for one winter is not the answer; it is a temporary fix to deal with elevated electricity prices. We have a large suite of measures that will work in the long term to reduce the need for electricity in the first place.

Question put and agreed to.

Seanad Éireann debate -
Thursday, 10 Oct 2024