I am very glad to be here to introduce this Bill. It is an important part of the Government's response to the recent increase in the cost of living due to high electricity and gas prices. It is in this regard that we produced the Bill. I am glad to be opening the debate today and to be able to set the context for the action to be taken on foot of this Bill. I will describe the sections of the Bill and, having regard to its main provisions, set out some background as to why they are needed for the operation of the scheme. My overarching message is that while the scheme this Bill will establish is just one of a package of measures, it is critical to put it into place within this quarter. I seek permission to achieve that. First, I will outline the main factors affecting electricity prices in Ireland. Second, I will outline the Government's response to rising electricity and gas prices. Third, I will reaffirm the Government's conviction that the best long-term approach to insulating consumers from volatility in international fossil fuel markets is to decarbonise our energy system and radically improve the energy efficiency of our housing stock.
I will now turn to the first point, namely factors affecting Irish electricity prices. Senators will appreciate that we face additional costs due to our geographical location, fossil fuel dependency, the small scale of the Irish market, our low population density and exchange rate fluctuations. However, the most immediate factor affecting electricity prices in Ireland has been the unprecedented upward trend in international gas prices since 2020. Indications are now that these higher prices will remain significantly higher for the immediate future. This feeds directly through to retail electricity prices because gas is used for electricity generation. It is a matter of serious concern to the Government that energy price increases caused by these international conditions are putting increasing pressure on consumers, particularly the most vulnerable. These price increases are not caused by the Government or regulatory decisions. Suppliers compete with one another on price and set their own prices, as expected in a competitive commercial liberalised market. The Commission for Regulation of Utilities, CRU, indicated that customers could save €300 by switching their electricity or gas supplier every year.
It is important to state that all European markets are experiencing these same price increase. Other member states have taken various actions, including suspending tariffs for networks, suspending tariffs for green energy subsidies, reducing VAT and introducing or increasing payments to low-income households.
Since Ireland's announcement of a credit to each domestic electricity household, Belgium has followed suit announcing that it will introduce €100 credit for households.
I will now turn to the Government's response to the rise in prices. On 10 February, a suite of Government policy measures was announced by the Minister for Finance and the Minister for Public Expenditure and Reform designed to further support households. These new measures included an increase in the energy credit in this Bill to €200, including VAT. This will necessitate a change to the text of the Bill that specifies both the upward limit on funding for the scheme it establishes and the amount of the individual payment to be made to each domestic electricity account. I will bring forward the necessary amendments on Committee Stage in this House.
A temporary 20% reduction in public transport fares will apply from April until the end of the year. A further lump sum payment of €125 on the fuel allowance will be paid in early March to some 390,000 recipients. In addition, there are reduced caps for multiple children on school transport fees to €500 per family post primary and €150 for primary school children. There will be a reduction in the drug payment scheme from €144 to €80, which will benefit approximately 70,000 residents. The working family payment budget increase announced on budget day will be brought forward from 1 June to 1 April.
All of these measures are on top of the existing measures taken in budget 2022 to support households. Budget 2022 increased the weekly rate of the fuel allowance by €5 to €33 a week so that €924 will be paid to eligible households over the course of this winter. 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, living alone 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 and urgent needs payments while under the supplementary welfare allowance scheme, a special heating supplement may be paid to assist people with special heating needs, for example, in the case of ill health.
Looking to the future and the urgent need to decarbonise, I will now outline the long-term approach for Ireland and in that context, the Government's urgent focus on energy efficiency. Energy efficiency is central to addressing the root causes of energy poverty and improving health and social inclusion outcomes while at the same time, contributing to decarbonisation. On 8 February, the Government announced unprecedented grant supports for home energy upgrades and increased numbers of free energy upgrades for those at risk of energy poverty. A new national home energy upgrade scheme providing increased grant levels of up to 50% of the cost of a typical B2 home energy upgrade with a heat pump - up from 30% to 35% currently - with a one-stop-shop providing an end-to-end service for homeowners. We are also introducing higher grants for cavity wall and attic insulation, which will more than triple to cover approximately 80% of the typical cost of these measures and will be available to all homeowners. For instance, in the case of a semi-detached home, the attic insulation grant will increase from €400 to €1,300. It is expected that these works will pay back in one to two years in most houses.
A total of €267 million has been allocated for SEA's residential and community retrofit schemes in 2022. This investment will support almost 27,000 home energy upgrades, including upgrading over 8,600 homes to a BER of B2, which is a near doubling of B2 output over 2021, and 4,800 free energy upgrades for households at risk of energy poverty. In addition, €85 million in funding has been provided by the Minister for Housing, Local Government and Heritage for the local authority energy efficiency retrofit programme. 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, including energy poverty, that is sustainable and enduring.
I will now devote my remaining remarks to the Bill's subject matter. The Bill will establish a scheme through which the electricity cost emergency benefit can be paid in 2022. The Commission for Regulation of Utilities, CRU, as an independent energy regulator, will provide oversight of the scheme, which will be operated by the electricity distribution system operator ESB Networks. I will provide, under regulations, for a 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.
ESB Networks will notify me of the number of MPRNs and that will allow for the calculation of the allocation of moneys for the scheme. On the effective date, which will also be set out by me in regulations, ESB Networks will notify electricity suppliers of the assigned MPRN for each domestic electricity account supplied and of the amount of money that 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 the payments. 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 the payment.
I will now provide a section-by-section summary of the Bill. Section 1 provides for definitions. Section 2 provides for the establishment of the scheme, to be operated on a once-off basis. It provides the basis for the estimation of the amount required and for the upper limit on total funding to be allocated by me, with the consent of the Minister for Public Expenditure and Reform.
Section 3 provides for the transfer of the moneys to each domestic electricity account in the State for the operation of the scheme by me with the consent of the Minister for Public Expenditure and Reform, to the distribution system operator, DSO. Sections 4 and 5 provide for the functions of the DSO 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 1999 to create functions for the CRU, including oversight of the functions of the distribution system operator and suppliers, to ensure that the administrative and operational arrangements necessary for 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 me to make regulations, with the consent of the Minister for Public Expenditure and Reform, to set out the dates and periods 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.
Section 9 provides that the DSO and electricity suppliers shall bear their own expenses. Section 10 contains the Short Title and commencement of the Act.
I have outlined the main provisions of this Bill and provided additional detail on the sections. I hope this will assist Senators and I look forward to a meaningful debate with Members from all sides of the House.