THE GOVERNMENT IS expected to introduce a windfall tax on profits generated by electricity companies. 

A memo will be brought to Cabinet tomorrow seeking to introduce a cap on market revenue on non-gas electricity generators in an effort to lower the cost of energy for households and businesses. 

The memo will also seek to introduce a temporary solidarity contribution for companies that produce fossil fuels. 

A windfall tax is a one-off government tax on an unexpectedly large profit from a company. Calls for an introduction of the tax on energy companies’ soaring profits increased earlier this year as household bills ramped up for consumers.

EU member states agreed to introduce a windfall tax on the profits of energy companies as part of a package of measures in September.

Member states agreed to temporarily cap revenue on electricity produced at €180 per megawatt-hour.

Speaking at the time, Energy Minister Eamon Ryan said that Ireland could expect “one to two billion (euro)” from the deal that was agreed to.

“But that depends on so many different factors – you can’t exactly be clear, but it’s that sort of amount of money,” he said.

Ryan said the measures “allow us to address some of the excess profits going to the energy industries and bring it back to help our people”.

He added: “The unfair profits, caused by a war and not by any action of any companies, do need to be brought back.”

EU countries have also been asked to reduce energy demand during peak hours, with the aim of reducing overall electricity demand by at least 10% until 31 March next year.

Under the Government’s one-off Budget measures to help people with the rising cost of living, three €200 energy credits are being paid per household over the winter months.

But opposition parties have increasingly argued that this will not be enough to insulate customers from spiralling energy costs as the winter months drag on.

Additional reporting by Christina Finn and the Press Association