A €100 credit for every home in the country to help reduce the impact of electricity bills will be signed off by Government on Tuesday.
All two million homes, regardless of income, will receive the credit in January as the Government moves to address rising energy costs.
Finance Minister Paschal Donohoe has not ruled out a further credit in February if fuel prices remain high, however, he said he expects costs to reduce as we move through next year.
"At this point, we are working on a number of options to see if we can be of help to homes and families as we see energy prices continue to rise," he said.
Mr Donohoe said social welfare and tax changes had been introduced in the recent budget, however, he stressed that not everyone will benefit from these measures "and that is why we do need to look at whether other measures are possible and that will be done quickly".
"This is a continuation of my and the Government's recognition that the cost of living for many is going up, that even though we have been successful in getting so many people back to work due to our efforts and our support schemes, that the cost of living is increasing for many. It is building on what we did on Budget Day measures," he told RTÉ's Today with Claire Byrne show.
Asked if the credit would also be awarded in February if energy prices remain high, Mr Donohoe said: "Let's make the decision first in relation to what we can do in the early part of next year.
"And as we move through the year, I do believe that the prices and the challenges that many are facing with the price of fuel will improve and we will see a change ."
The annual rate of inflation rose to 5.3% in November, its highest level in 20 years. It has not been this high since June 2001.
At present, the average annual electricity bill for a customer on a standard tariff is €1,274, while a gas customer on a standard tariff pays €989. An average electricity user on the best deal in the market pays €961, while a gas customer on the best deal pays €792.
In the wake of 35 increases in energy prices since the start of the year, several government departments are developing a plan which will see the €100 credit applied to domestic bills only. No commercial premises will be eligible.
The move will cost about €200m and will be met from existing resources within Minister Eamon Ryan’s Department of Energy budget.
A previous proposal of waiving the public service obligation levy which is €4.30 per month per household was rejected as insufficient to meet the political need to counter soaring energy costs.
It is understood that homes that do not use up the €100 credit in the first billing period will not be in a position to carry it over.
Mr Ryan is driving the plan in conjunction with Public Expenditure Minister Michael McGrath and Finance Minister Paschal Donohoe.
There is some concern that very wealthy homes receiving the payment in addition to poorer ones may be “politically tricky” but applying a means test was seen as “too onerous, complicated and slow”.
Yesterday, Tánaiste Leo Varadkar said the Government is developing a plan in recognition of rising energy costs for hard-pressed families.
He said: “We'd certainly like to do something that would help with electricity bills and maybe gas bills as well. That's currently under consideration at the moment.
“We'd hoped to be in a position to make a decision on that in the near future so that people will see the effect of the bills that they receive in the New Year being a little bit less than perhaps they expected.
“We're particularly focusing on electricity because that's the bill that everyone gets and something that people have to use and you don't have any choice as to what type of energy you use,” he said.
Sinn Féin TD Pearse Doherty said by the time the Government announces the plan it will be too late.
“There seems to be a kind of trend here," he said. "We had the same thing on you rolling out free antigen tests and the private sector sorted that out for you. It's likely that the same thing will happen here. You'll take so long to actually come up with a scheme that the weather will have got better. We'll be into the spring or the summer and you'll say 'sure it's not needed any longer'. We've been raising this issue since October with the Government. We have seen 35 energy price increases,” Mr Doherty said.
Meanwhile, economists have warned inflation is likely to remain high in 2022 and beyond with food and fuel becoming increasingly costly.
The grim outlook follows the latest CSO figures showing the annual rate of inflation hit a 20-year high last month, with consumer prices up 5.3% year-on-year in November. The latest monthly rise was driven by jumps in energy, transport and rental costs.
Economists say inflation could remain as high as 4.5% next year if there is no relief in energy costs and wage pressures in the first half of the year.