Up to 40% of households now in energy poverty 

Conference heard current models focusing primarily on people’s incomes mean others also experiencing fuel poverty are being excluded from relief measures.

The number of Irish households which have descended into energy poverty has increased from 29% to roughly 40% in just four months, a conference has heard.

Households in energy poverty spend at least 10% of their disposable income on energy costs. It has increased markedly due to the spate of price hikes by utility companies, the cost-of-living crisis and the colder weather.

A conference on energy poverty held by the Economic and Social Research Institute (ESRI) heard “more nuanced” ways of measuring energy consumption needed to be examined. 

It said current models focusing primarily on people’s incomes mean others also experiencing fuel poverty are being excluded from relief measures.

Niall Farrell, an energy and environmental economist with the ESRI, noted statistics suggest energy poverty is more predicated on electricity usage as opposed to the heating of one’s home.

He said people were more likely to cut back on their energy consumption when an economic shock hits a country and that renters are more likely to restrain their usage than homeowners.

There has also been an imbalance in terms of energy consumption between rural and urban dwellers as a result of the current inflationary crisis, though much of this disparity is attributable to motor fuel costs.

The conference heard other methods of evaluating energy poverty issues, such as the energy rating of a home, need to be factored in when considering how a society as a whole is being impacted by an energy crisis.

Mr Farrell said the evidence points to changes to indirect taxes being “the least preferable option” in terms of mitigating such a crisis, given such a change favours those on higher incomes.

Lump-sum payments

From that point of view, he pointed out that lump-sum payments such as those recently introduced by the Government are seen as preferable to caps on energy prices “in most circumstances”.

However, the conference heard a major problem with lump-sum payments was their inherent temporary nature, as there was no guarantee the Government would repeat the use of such measures should the energy crisis persist in the long term.

Mr Farrell said a cap on the market revenue of energy providers — with the savings from same redistributed to households — could be seen as being a more progressive approach to that of lump-sum transfers, provided “that a cap doesn’t interfere with the operation of the markets”.

The Government last week agreed to introduce such a cap on energy profits, but only on non-gas means of generating electricity.

In terms of carbon taxes, the conference heard carbon taxes are at their most effective in a situation where it is easy to switch providers, while “policies which help lower-income households to switch are most preferable”.

Addressing the conference, Government and Green Party TD Neasa Hourigan said contrary to general green thinking “we have to reconsider consumption taxes” as "people find it hard to change behaviour”.

She said it was becoming clear the best way to address the energy crisis “is not in a piecemeal fashion” in terms of temporary measures such as the lump-sum payments.

“No one should have to apologise for needing the basic minimum to live,” she said.