The Government has announced plans to offset the cost of energy price rises by increasing the entitlement of 335,000 pensioners and social welfare recipients to a third more free gas and electricity.
In an announcement which came just days after the energy regulator approved electricity price increases of almost 20 per cent, the Government said it will spend an extra €45 million to expand the coverage of the free energy scheme for eligible welfare recipients.
Taoiseach Bertie Ahern yesterday said the less well-off in society would be able to maintain their average use of gas or electricity without any increase in cost as a result of the decision.
However, groups representing the poor such as the St Vincent de Paul warned that thousands of welfare recipients are ineligible for the scheme and will be left to bear the full brunt of the energy price rises.
The cost of electricity is set to increase by almost 20 per cent on January 1st 2007, while a 34 per cent increase in gas is due in October.
Additional funding for the free energy schemes will be made available from January, before the electricity price increases come into force. However, measures have yet to be finalised on the expansion of the free energy scheme for gas users ahead of next month's price rise.
The personal intervention of the Taoiseach, who made a formal announcement on the issue yesterday, is seen as an indication of the political sensitivity of rising energy costs as the Government prepares for the next general election.
Mr Ahern said: "This Government is committed to ensuring that the needs of the most disadvantaged in our society are prioritised. This measure will target precisely those people in the face of the rising cost of energy, over which we have no control."
Some 310,000 people benefit from the free electricity allowance scheme and a further 25,000 people get the free gas allowance. The annual cost to the exchequer of both schemes is currently €120 million.
Under the Government's plan, entitlement to free electricity units will increase by one third, with equivalent increases in gas allowances. The overall cost of the scheme will rise to €165 million, although the State will receive some of this back in VAT.
Minister for Finance Brian Cowen said at the weekend that he regretted the timing of the regulator's price hike.
"I am conscious that the price hikes proposed by the regulator are well beyond the cost of living for people on fixed incomes. . . It [the expansion of the free scheme] should help pensioners, people with disabilities and others on welfare and low fixed incomes."
Under the energy regulator's proposals, the average household will pay a bi-monthly electricity bill of €150 from January 1st, up from €126 at present. The average annual gas bill will climb to €1,208 from €902. Welfare recipients on the free electricity scheme currently pay about €400 per year of their own money on electricity bills. This is set to rise to €480 in 2007.
However, the additional free units offered by the State will completely cover this cost.