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Budget will protect the most vulnerable against energy price hikes, says Taoiseach

Leo Varadkar said in the Dáil that Ireland is a “price taker” when it comes to oil and gas.

Image: PA Images

Updated Sep 21st 2021, 7:15 PM

NEXT MONTH”S BUDGET will include measures to protect the most vulnerable people against energy price hikes, Taoiseach Micheál Martin confirmed in New York today. 

Speaking to The Journal this afternoon in Manhattan, the Taoiseach said: 

“We are concerned about energy prices.”

The spike in energy costs can be attributed to the rise in inflation, he said.

“In the forthcoming budget we will seek to protect the lowest income groups and those most impacted by increasing fuel prices so that will be an objective of ours,” he said, stating that ministers will have to decide on the specific measures needed.

Tánaiste Leo Varadkar said in the Dáil today that Ireland is a “price taker” when it comes to oil and gas, but hinted at greater supports for people in the upcoming budget. 

“We are all very aware of the increasing cost of fuel and how it is impacting on families, consumers and businesses.  The fuel allowance kicks in again from next week.  In the context of the budget we will look both at the rate and widening the eligibility to cover more people,” he said. 

Energy prices in Ireland and across Europe have been rising in recent months due to a surge in demand as economies have reopened while the energy stocks have been depleted following last year’s harsh winter.

Irish electricity prices rose by almost 19% in the year to the end of August with fears that there could be a tighter squeeze in the winter months. 

In New York today, the Taoiseach went further than hinting at a welfare package to deal with rising costs stating that the “principle of protecting the most vulnerable to price hikes around energy is one that we will subscribe to and adhere to – we want to protect people from the worst impacts of that”. 

Labour leader Alan Kelly TD said today that inflation was “only going in one direction” and that the government was “facing a winter of discontent unless it acts on these issues” 

“People living on fixed incomes and social welfare payments who rely on gas and electricity to heat their homes face a very worrying winter,” he added. 

Social welfare rates have not increased in two years and tens of thousands of people are out of work.  We have multiple warnings about electricity blackouts due to rising demand from data centres, and two gas plants have closed for maintenance.  We recently had, as the Tánaiste knows, amber alerts in this area.

The alerts Kelly was referencing are two separate amber alerts issued by grid operators Eirgrid and Northern Ireland counterpart SONI for potential supply shortfalls

In response, Varadkar said that energy supply would be “tight” this winter and more so in 2022. 

“On electricity supply, we have had a number of briefings, meetings and consultations about this,” Varadkar said.

There is a concern about supply being tight this winter and even more so next winter, but contingency plans are being put in place to avoid that. We are confident that even in a very cold winter, when it is calm, the wind is not blowing and we have to produce our electricity from oil, gas and coal or import it from elsewhere, we will not see brownouts or blackouts in the winter.  We are doing everything to ensure that does not arise.

Speaking about utility prices, Varadkar said that these are influenced by international energy markets “and we are price takers in that regard”.

Instead, he said that the government can ease the burden on consumers with further fuel supports and social welfare increase.

“What we can do is provide a welfare package in the budget helping those on fixed incomes, action on the fuel allowance, pay increases where they can be important – important that they happen – and also a tax package to make sure that people retain those pay increases and do not lose most of them in USC, income tax and PRSI,” he said. 

Asked by Kelly whether the government would consider maximum price orders if the need arises this winter, Varadkar said the government wouldn’t rule it out but that this may have unintended consequences.  

“In the UK, where there is a system of maximum price orders, we are now seeing energy companies going bust, because they are not able to offer energy at that price, and looking for a bailout from the state,” he said. 

Independent TD Mattie McGrath also addressed what he termed the “energy crisis” and referenced plans for Carbon Tax increases up to 2030. 

“Something has to happen to help these hard-pressed people. It is crucial to introduce measures that will ease the burden on families because of rising energy costs,” he said.

Following today’s proceedings, Social Democrats TD Jennifer Whitmore has called for a specific Dáil debate on the surging energy costs. 

“The wholesale price of natural gas has nearly tripled already this year – and that’s before peak winter demand sets in. As a consequence, consumers are experiencing enormous hikes in their energy bills,” she said.

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“These increases in prices will have a hugely disproportionate impact on people on fixed incomes, including pensioners and those in receipt of social welfare payments. Environment Minister Eamon Ryan urgently needs to come to the Dáil and answer questions on this escalating crisis.”

Asked about Ryan’s comments yesterday, where he said the Government doesn’t expect blackouts and energy shortages to be a feature of the Irish winter despite ongoing pressure on Ireland’s national grid, the Taoiseach said the minister is “confident that we will get through this winter”. 

“But there are challenges ahead which is why we really have to push ahead with offshore wind – that is going to be the next big story for Ireland over the next decade in addition to what we have been doing onshore,” he said.

People Before Profit’s Bríd Smith said her party is calling for a moratorium on new data centres being built, as well as new fossil fuel exploration projects. 

When asked about the proposals, the Taoiseach said: “Legislating to ban data centres is not the way to do it, that is too crude a measure in terms of dealing it.”

Data centres are required, said the Taoiseach.

“The number of them and the level is an issue we can review, but you don’t do it by primary legislation, that doesn’t sound to me like a very intelligent way of approaching what is a genuine issue. I think we have to approach that through our energy policy more generally and we are doing that currently, there is a review underway already with Eirgrid,” he said.

The Taoiseach said many countries have data centres, but noted that Ireland is an attractive location given out climate.

Counter measures to offset their energy demands are one answer, said the Taoiseach stating that ensuring such centres protect the environment through “obligations to grow trees” to offset the energy demands of data centres is one measure to be considered..

With reporting by Christina Finn in New York, with additional reporting by Ian Curran

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Rónán Duffy

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