Fuel allowance rise likely in Budget as consumers feel impact of soaring energy prices

Fuel allowance rise likely in Budget as consumers feel impact of soaring energy prices

Natural gas wholesale price has surged 250% since the start of the year.

Increases in the fuel allowance, the qualified childrens' allowance, and the living at home allowance are likely in the Budget to ease the pinch of soaring energy prices.

The Government is bracing itself for rising energy prices this winter as the most likely derailment of October's Budget. With Russia "turning down the tap in the flow of gas into Europe" people could be facing potentially very large energy bills over the winter.

Officials from several Government departments are now planning for what has been described as a very real situation coming down the track.

The Fuel Allowance is a payment under the National Fuel Scheme to help with the cost of heating your home during the winter months. The allowance is paid to people who are dependent on long-term social welfare payments and unable to provide for their own heating needs. Only one Fuel Allowance is paid to a household.

Public Expenditure Minister Michael McGrath has admitted the challenge posed by rising fuel costs, and government sources have said that beyond extending the fuel allowance, there is a limit to what can be done to combat the price hike.

Speaking on the News at One today, Energy Minister Eamon Ryan said the Government will look at “specific measures” to cushion the impact of rising electricity bills on those most at risk of fuel poverty this winter.

“We introduced a range of measures last year — the Fuel Allowance is probably the one that’s most targeted to people at risk of fuel poverty,” he said.

“But we went further with the likes of the Living Alone Allowance and particular allowances for people with children.

“So we’ll look at that again and we’ll come forward with specific measures to address this very significant, but hopefully short-term, problem.”

“There is a limit to what we can do,” said one senior source. “We can increase the fuel allowance but that only has a limited impact, it does little for the price of filling your petrol tank, especially when carbon tax increases are locked in,” the source added.

Natural gas wholesale price has surged 250% since the start of the year. Last month saw an increase of around 35%, causing significant rises for business and domestic customers.

As a result, prices for customers are around 40% higher than at the start of the year.

After a difficult winter last year, supplies across Europe are lower than they should be. According to the Financial Times, the deficit is around 16% below the five-year average.

Some energy providers here like Panda Power and Pinergy have raised prices four times already this year, according to price comparison site, Bonkers.ie.

Mr Ryan has 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. Two separate amber alerts were issued by the all-Ireland Single Electricity Market Operator (SEMO) last week due to temporary electricity supply shortfalls.

Mr Ryan said the shortfalls were mostly due to two of Ireland’s main power plants — Whitegate in Cork and Huntstown in Dublin — currently being out of commission for maintenance.

“It’s a very significant issue,” he told today's News At One but it’s likely to be temporary.

“Two of our biggest, most modern gas-fired power plants were out over the last year — major outages. They are expected to come back within the next two months and that should see through this winter.”

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