Windfall tax on energy companies could help households with soaring energy bills next year

Taoiseach Micheál Martin said money from windfall would be used to alleviate pressure on households. Picture: Gareth Chaney/ Collins Photos

Taoiseach Micheál Martin has said revenue from a windfall tax on profitable energy companies will come on stream from early next year and could further help households with soaring bills.

It comes as Mr Martin attends the second day of an EU Summit where leaders on Thursday night agreed to press ahead with a cap on the wholesale cost of gas as a way to bring down electricity prices.

When asked if Irish people will see a reduction to energy bills as a result of Thursday night’s decision, Mr Martin said there may not be an immediate impact.

He said: “We import our gas from the United Kingdom. Our prices are lower than some across Europe so there may not be an immediate impact other than to say that any stabilisation of the gas market ultimately benefits us.”

However, Mr Martin said he believed the decision taken previously by the energy council on a windfall tax will see Irish consumers benefit.

He said the Government would be able to use this money in respect of “alleviating pressures on households.” 

He said it would be early next year when that revenue comes on stream to EU countries and Environment Minister Eamon Ryan will have greater clarity in the next couple of weeks on how much exactly Ireland will receive.

He said: 

So we will have reserves and that revenue will add to those reserves to give us firepower to do things if we have to do it.

“One of the areas last evening that I would have stressed is the need for the reform of the temporary business scheme under the temporary aid crisis framework, which the commission has done significant work on because we’re still examining the degree to which the scheme that has been announced and the broader European framework will allow us to deal with the issues for industry and for businesses and the protection of jobs.”

He said there were still some areas that need to be examined in terms of ensuring jobs can be protected and to keep companies viable through the winter and to have a medium-term plan.

Ukraine

He said a presentation from the President of Ukraine, Volodymyr Zelenskyy to EU leaders on Thursday was “sombre” in terms of what is happening now in Ukraine.

Mr Martin said: “The destruction of the energy infrastructure by Russia to take the heating away from the civilians and energy and also the mining of a key dam in the south which could have, in the words of President Zelenskyy, catastrophic implications for people.” 

He said the war was becoming more severe and there was no doubt it was “casting a very significant clouds over the continent of Europe”.

Last night, EU leaders agreed to what is being called a dynamic price corridor when gas is being purchased from outside suppliers.

This would mean that wholesale prices could be capped if there are spikes in the benchmark price.

But the cap would be heavily conditioned on ensuring it does not reduce the security of supply.

Leaders also agreed to press ahead with joint purchasing of gas over the longer term to help fill storage facilities, and to deepen measures to reduce gas consumption.

Mr Martin said it was fair to say the EU knows where it wants to get to on gas prices but not quite how it is going to get there.

He added: “It’s a very complex area because every country is coming at this from a different perspective, not least our own, but nonetheless, a stable gas market is good for everybody, it’s good for Ireland, we export into the European markets as you know quite significantly so we see this as progress and a significant agreement again.”