Continuing price rises are making energy bills “unaffordable” for many people and measures to ease the pressure on consumers will be implemented quickly after the budget, the Government has pledged.
As the State’s largest energy retailer announced another round of price increases, Minister for Finance Paschal Donohoe said the next raft of cost-of-living measures would target not just people on lower incomes but also businesses and those on middle incomes who were struggling with increased costs.
He said that the Government would take action to help people with bills that “are increasing at a rate that can be and will be unaffordable”, adding that measures that can help with the rising costs would be “at the heart” of the budget and would be implemented this year.
Mr Donohoe warned, however, that there were constraints on how much the Government could spend to assist households with energy bills, but repeatedly declined to be drawn on a figure.
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‘Budgetary constraints’
Government sources have speculated that the additional cost-of-living measures in the budget, to be implemented this year, could exceed €1 billion, but it is understood no actions or spending ceiling have yet been agreed between the parties.
“There are no open-ended fiscal processes,” Mr Donohoe said. He added that “budgetary constraints… are back”, pointing to movements in the bond markets which have increased the price of borrowing for governments.
He acknowledged, however, that the Government had a significant surplus with which to fund some budgetary measures.
Mr Donohoe also emphasised that while measures to help the low earners and those on social welfare would be introduced, the Government would also seek to provide assistance to people who earned too much to qualify for means-tested supports, but did not earn enough to be insulated from rising costs, and to businesses.
The State’s largest energy retailer, Electric Ireland, said on Thursday it was raising its standard household electricity and gas prices by 26.7 per cent and 37.5 per cent respectively from October 1st in response to the recent increase in wholesale gas prices.
The move will impact about 1.1 million electricity customers and 175,000 gas customers. This is the fourth price increase announcement from an energy supplier in less than a week, following hikes by SSE Airtricity, Community Power and PrepayPower.
Electricity hike
Electric Ireland blamed the company’s latest price hikes “on ongoing volatility in the wholesale energy market”, claiming the cost of supplying electricity and gas to customers in the Republic has risen by 700 per cent in past 12 months and by 200 per cent since June.
The State’s largest energy retailer also said it expected the price volatility to continue over the coming months given the uncertainty in the geopolitical situation and international energy markets.
While wholesale gas prices have come down in recent days in anticipation of EU plans to reduce energy usage and avert a winter energy crisis, companies here have already baked recent increases into their pricing schedules. Electric Ireland said it would continue to keep prices under constant review.
Taoiseach Micheál Martin warned energy prices would continue to rise sharply during the autumn and winter months in Europe, necessitating a wider intervention from the EU into the markets but also forcing individuals to see how they consume energy.
The EU is expected to recommend cuts to power demand and a cap on the price of electricity generated by anything other than gas in an effort to ease the impact of higher gas prices. In a paper drafted by the commission to be circulated to energy ministers ahead of an emergency meeting next week, Brussels said it proposed a three-pronged package of measures. The package includes a reduction in demand that could fluctuate according to times of peak use, a cap on the price of electricity from non-gas power generators, and using revenues from that price cap to support consumers either by subsidising bills or regulating tariffs.
