Coalition looking to accelerate use of ESB windfall profits to lower energy costs

The Government is exploring ways it could accelerate the use of soaring ESB profits to help bring down energy costs for families and businesses.

With just 10 days to go until the budget the Government is under pressure to deliver a cost-of-living package that will reduce the impact of spiralling electricity bills. Concern over energy supplies during the coming months persist too and the Department of Environment said on Friday evening that a joint energy emergency exercise, the second in a week, had been held “to test the response to a hypothetical and unlikely disruption to Ireland’s gas and electricity supplies”.

It said the test had been successful.

The news that profits at the ESB have surged due to the huge rise in energy prices has added impetus to calls to use increased revenue to provide relief to households.

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Profits at the State-owned electricity company rose sharply in the first six months of the year.

Earnings, including a one-off gain from what it called “exceptional volatility” in global commodity markets, jumped to €390.3 million from €128.4 million a year ago.

The group recorded revenue of almost €3.7 billion, up from almost €2.2 billion the year before.

Taoiseach Micheál Martin said: “Obviously, given the scale of the profits on the back of the energy crisis, I think Government can look forward to a much higher dividend than would have been the case.”

He said the Government would use the funds “to underpin its efforts to reduce pressures on households and also protect jobs”.

Tánaiste Leo Varadkar said it was “right and proper” that the Government should take back some of the big profits that energy companies were making.

He said when it came to the ESB it could be done either through a windfall tax or a bigger dividend.

However, dividends are not generally paid until the year after profits are recorded and the Government is examining ways it could access the funds earlier, including the windfall route.

One senior source said “All options are being looked at” while also suggesting the Government did not want to impact on the ESB’s commitments to invest in renewable energy as part of climate action plans. Another said it was hoped the funds could come on stream “sooner rather than later, ideally” but the details were “to be worked out”.

The Government is currently assessing how European Commission reforms to the energy market aimed at unlocking funds to help consumers could be applied to Ireland.

Assistance with energy costs for households in the budget is likely to come in the form of electricity bill credits similar to the €200 payment seen earlier this year and an expanded fuel allowance for people at risk of fuel poverty.

Separately, Mr Varadkar also said he wanted to see the help-to-buy scheme for first-time buyers extended beyond the end of 2022, in an indication that the measure will be included in the budget.

Bilateral meetings between Ministers from spending departments and Michael McGrath, the Minister for Public Expenditure, are set to intensify next week.

The Irish Times understands that in advance of the budget proposals for the future of the State pension age will go before the Cabinet in the coming days.

There is a widespread expectation that they will suggest allowing people to continue to retire at 66, with higher PRSI contributions brought in to help fund the cost of not increasing the qualification age as had previously been planned.