Cost-of-living package: €200 electricity credit ‘unlikely’ as Pinergy becomes first retailer to cut prices

The Government is scrambling to temper public expectations about the scale of cost-of-living measures being announced on Tuesday.

Ministers have said the package on offer will be significantly less than the measures announced in the budget and The Irish Times understands that it may not reach €1 billion.

There is to be a focus on targeted supports – particularly for social welfare recipients – and the prospect of a new €200 electricity credit for all households is seen as very unlikely.

Ministers are meeting to finalise the package as electricity supplier Pinergy becomes the first energy provider in Ireland to announce a reduction in its electricity prices since 2020.

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The company is reducing its standard unit rate by almost 9 per cent from March 31st as European wholesale energy price inflation continues to moderate. The supplier, which increased its prices by 19 per cent only last month, has around 27,000 customers in the Irish market and its prices were among the highest on the market, according to analysis by price comparison website Bonkers.ie.

[ Pinergy becomes first energy retailer to cut electricity prices since 2020 ]

Government sources stressed that the package measures has not yet been decided upon but the indications are that at least one universal measure – the lower VAT rate for electricity and gas – will be kept for some time.

Meanwhile, the reduced excise rate for petrol and diesel may be phased out in two or three stages over the summer and autumn in a bid to “ease the pain” of the rates going back up. There is an increasing expectation that the reduced 9 per cent VAT rate for the hospitality sector will be returned to 13.5 per cent.

[ Euro zone inflation drops more than expected but core price growth holds steady ]

[ From electricity credits to child benefit: What cost-of-living measures will be renewed? ]

Taoiseach Leo Varadkar, Tánaiste Micheál Martin, Green Party leader Eamon Ryan and other senior Ministers are due to meet on Monday to finalise the cost-of-living measures ahead of consideration by Cabinet on Tuesday.

Minister for Social Protection Heather Humphreys said her priority was to help those “hardest-hit” by increased costs including older people, those with disabilities, carers and “working families with children”.

However, she also sought to dampen expectations, telling RTÉ News there was a “comprehensive” package of measures in the budget and “the scale of these measures will be considerably less”.

The Fine Gael TD said: “We’ll be able to give that helping hand to those who need it most.”

Fianna Fáil Minister of State for Enterprise Dara Calleary said there was an €11 billion package in the budget, including €4 billion for measures before the end of 2022 and €7 billion for increased social welfare payments and lower taxes this year.

He said this week’s package of measures would be “much smaller” amid a desire in Government to ensure there were reserves for next winter.

A Government source said the package of measures announced on Tuesday would focus on targeted supports, would “not be a mini-budget” and would likely be less than €1 billion. The final costs will not be known until the measures to be included are signed off on and considerations will also be influenced by any decisions that would increase revenues like ending the reduced VAT rate for the hospitality sector.

Notwithstanding a push by some Government backbenchers to retain the lower 9 per cent rate for hotels and restaurants, one source said that “all the momentum” is towards restoring the rate to 13.5 per cent.

[ Temporary 9% VAT rate for hospitality likely to end on schedule at end of month ]

Changes to the fuel and living alone allowances are among the social welfare supports where people may be in line for more help.

Government sources also played down the possibility of another €200 electricity credit, highlighting how the last of the existing series of payments was due to cut household bills next month though, again, no decision has been made.

The temporary business energy support scheme is expected to be extended beyond its current cut-off date of the end of February and its eligibility criteria is to be changed to help more business to avail of the scheme which has had low uptake so far.