Government to cap energy firms' revenues and tax profits

Pledge to provide direct supports to citizens and businesses in need

Michael McGrath, minister for public expenditure and reform, and party colleagues after the second day of the Fianna Fáil Parliamentary Party think-in in Mullingar. Picture: Damien Eagers Photography

Energy companies will have their revenues capped and their windfall profits taxed to ease the burden on families and businesses struggling with the cost of living, Public Expenditure Minister Michael McGrath has said.

He slammed Sinn Féin’s proposal for a cap on energy bills for consumers, saying it would “give a blank cheque to energy companies”.

In his most explicit comments yet on the Government’s plans to tackle the energy crisis, Mr McGrath said new EU proposals would “place a cap on the revenues that non-gas electricity generators are currently earning” and would also require a “solidarity contribution” from “primary producers of fossil fuel”.

Speaking in Mullingar at the conclusion of the Fianna Fáil party think-in, Mr McGrath said the Government will provide direct support to citizens and  businesses and will take money off those energy companies who are making unjustified gains.

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“We will do that through the EU framework,” he added.

He said there would be “some benefit for every household” in the budget.

“The Government’s desire is to put money in people’s pockets but also to protect jobs,” he said.

“Because if you lose jobs, then the economic consequences and the fallout from that spiral, you end up with more people on social welfare, which has a direct impact on the exchequer as well.

“And we’re not saying as a government that we will be able to fully offset all of the increases. It would be unrealistic to give that commitment, but we do recognise we need to help and we need to help households too.”

Businesses under pressure

Businesses are facing “three or four-fold increases in energy bills”, which to many represents an existential problem.

“Those kinds of increases are not sustainable for many businesses. Some can withstand some have the resources to absorb that scale of increase in costs, but not all of them can,” he said.

Mr McGrath said he expected to have an estimate of projected revenues by the time of the budget in two weeks.

He was echoing comments from Taoiseach Micheál Martin who said further energy credits in the forthcoming budget are the more effective way to deal with rising energy bills rather than a price cap on energy bills.

Meanwhile, European Union energy ministers will attempt to approve new bloc-wide measures in an effort to reduce soaring gas and power prices at an emergency summit on September 30, after Brussels announces the proposals this week.

European Commission chief Ursula von der Leyen is set to unveil a package of measures in a speech on Wednesday.

A draft of the Commission proposals would impose a cap of €180 per megawatt hour on the revenues non-gas fuelled generators can make from selling their electricity, and force fossil fuel firms to share their excess profits.

The draft document would also impose a levy on windfall profits oil, gas, coal and refining companies make from soaring energy prices in fiscal year 2022.

The levy would be 33% of firms’ surplus profits — defined as profits that are above 20% of their average taxable profits from the past three fiscal years.