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Energy prices

Govt to consider time-of-day-pricing for electricity in bid to tackle cost of living

On Wednesday, Electric Ireland became the latest energy firm to announce a price increase.

LAST UPDATE | 31 Mar 2022

THE GOVERNMENT IS to consider using mandatory time-of-day-pricing for electricity in an attempt to address the cost-of-living crisis.

Minister for the Environment, Climate and Communications Eamon Ryan said the Government has plans to bring in more measures to try and ease the living costs on households.

It is to encourage people to change their energy use to periods where costs are usually cheaper.

Electric Ireland became the latest energy company to announce a price increase, which will hit hundreds of thousands of customers across the island.

It comes in the wake of similar moves by Bord Gais Energy and Energia.

Time-of-day pricing

The Government has faced mounting pressure in recent weeks to do more to try and alleviate the financial pressure on households.

“I think we should be looking at market mechanisms. Looking at further efficiency measures and not just looking at government always signing every cheque,” Ryan told the Dail on Thursday.

“I think one that could be really effective is to give time-of-day-pricing, make that mandatory. It’s just one example.

“We will bring that forward in the coming weeks, with a number of other measures such as that to try and help address this real crisis.”

Speaking to reporters at the RDS today, the minister said he met with the Commission for Regulation of Utilities last week.

“They’re looking at every option in terms of how could we help protect consumers,” he said.

“We maybe could switch, with all these smart meters we’re putting in, to go mandatory time-of-day pricing, or that you have to opt out of it if you wanted to. Then you would switch on the dishwasher, the washing machine, at eight or nine o’clock not at six o’clock, when it’s expensive.

“The benefit from that is you save money. We don’t have to turn on as many gas plants at that peak point or peak hour. It’s putting the power back in the hands of the consumer to help address these really hard bills,” he said. 

When asked if he would expect a backlash over the proposal, as it would make electricity prices higher in the evening, the minister said: 

“I don’t see why it would because it does help the consumer to save money at this time. And that’s obviously in everyone’s mind. It’s only one of a whole list of measures that we were discussing with CRU and we will advance in the coming weeks.”

He said the original decision to go for an opt in to time-of-day pricing versus mandatory with an opt out clause was concerns from the data protection commissioner in terms of how that’s done, said the minister. 

Ryan said they would engage with the data protection commissioner on the issues involved but added that “such is the urgency” the Government are going to look at making it mandatory, with an opt out rather than a voluntary approach.

The time-of-day pricing or ‘time-of-use’ pricing, which is the term energy providers use, is something that is already available to customers that have smart meters installed. 

Some 750,000 smart meters have been installed across the country, with a further 250,000 set to get them this year. 

Price hikes 

Sinn Fein TD Pearse Doherty told the Dail that the latest price hikes come on top of 35 energy price increases last year.

Doherty accused environment minister Mr Ryan and the Government of failing to bring in measures that would effectively reduce bills.

“We’ve already outlined to you what could be done. So for five months, for example, we’ve been calling on the government to engage with the European Commission to reduce VAT on household energy bills for a period of time,” Doherty added.

“We need a government that is active. We need a government that will press the Commission to allow VAT to be applied on domestic energy bills at a rate of zero.”

He pressed Ryan on whether the government sought a derogation from the European Commission in relation to VAT energy bills.

The Donegal TD also repeated his calls to remove the excise on home heating oil, something the Government disputes it can do.

Ryan said that while the €200 credit on bills will not cover the increase, it will help “cushion the bill”.

“It was important that we got that ready and had it in place, so that next week it will be seen in people’s bills,” he added.

“We introduced a new eight per cent grant for people to insulate their homes, which is the best way of responding to the crisis, to actually reduce the cost, reduce use of fuel, reduce the influence of the Russian government in our economic affairs by their control on oil supplies and gas supplies.”

He said that further measures will have to be more targeted to help homes at most risk of fuel poverty.

However, Doherty accused the minister of “saying nothing” on addressing the rising cost issues.

‘Innocent bystander’

Social Democrats co-leader Roisin Shortall said that 1.3 million customers will pay 23% more for electricity and 25% more for gas.

She urged the Government to do more, saying it was not an “innocent bystander”.

“If energy companies were compelled to put customers on their beneficial tariff, instead of instantly jacking up prices at the end of an introductory 12-month contract, their profit margins would decline slightly, but it would make a huge difference to their vulnerable customers,” she added.

“(The Government) can’t just wring its hands, as you’re doing, and watch dispassionately from the sidelines, as workers and families are squeezed for every penny that they’re worth.

“There are things you can do, targeted measures that would make a real difference to those most in need.

“Age Action Ireland has highlighted that just one third of older people get the fuel allowance and that payment is not keeping pace with soaring energy price rises.

“It wants you to replace the fuel allowance with an energy guarantee, which means a guaranteed number of free units of energy per month instead of a cash payment.

“This would mean more people qualify for assistance and this would insulate them from certain price shocks.

“If they were forced to wait for your retrofitting scheme minister, they would never be warm. Workers and families can’t use Green Party hot air to warm their homes.”

People Before Profit TD Richard Boyd Barrett urged the Government to declare an emergency in the cost of living, and immediately introduce a package of measures to alleviate the cost of living prices.

Ryan was also asked today if he agreed with Tánaiste Leo Varadkar’s comments last night at his parliamentary party meeting where he said a State run LNG terminal is something that we should consider, and that it wouldn’t be for commercial purposes but merely for supply purposes.

The minister said the Government recognises that there is a real energy supply crisis. 

“We can’t rule out options,” he said.

The United States has promised to send more LNG to Europe to stabilise prices and make up for a potential loss of piped Russian supply.

Against this backdrop, the Government is under pressure to back the development of a commercial LNG import terminal in North Kerry amid heightened concern about Ireland’s energy security and energy price inflation.

However, campaigners are urging the Irish Government not to reverse its opposition to importing fracked gas from the US despite the challenges.

“I’ve always said with energy, you never rule things out, because it should be based on good energy policy, good economics,” he said.  

He said Ireland is in a different position than many other European countries, as only about 3% of our gas comes from Russia. The vast majority comes from the UK and  Norway.

A lot of the Norwegian fields are directly connected into the UK which feed into our system, and they won’t be able to switch the UK system to the European mainland, explained the minister.  

“The connectivity from the UK to the European markets is very limited,” he said, explaining that this is due to very narrow pipelines.

Earlier today, Justice Minister Helen McEntee also said that the idea of LNG supply should not be ruled out.

“I think given what’s happened in the last six weeks, I don’t think anything should be taken off the table but obviously they have very clear policy in that regard. If anything were to change, it would have to be a government decision, it would have to be agreed by all parties and I think we said that very clearly.

“What is clear is that very hard to predict what’s going to happen in the coming weeks and months. We ourselves need to look at our overall energy policy. We need to look at the targets that we’ve already set ourselves, and how can we change and amend, taking on board that the changing dynamic.”

With reporting by Press Association

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