Free electricity units to offset 20% hike

PEOPLE on social welfare are to be given more free electricity in a bid to offset the 20% hike in bills from next year, Taoiseach Bertie Ahern announced yesterday.

With social campaigners warning that some electricity users will have to do without heat or hot meals as a result of the sanctioned price rise, Mr Ahern said the support scheme would be extended for the poorest in society.

“This Government is committed to ensuring that the needs of the most disadvantaged in our society are prioritised,” he added.

“This measure will target precisely those people, in the face of the rising cost of energy.”

The ESB got permission on Friday to hike prices to consumers by almost 20%, from January, to offset the 2006 increase in oil and gas costs — adding an estimated €80 a year to the electricity costs of users dependent on allowances for elderly people, lone parents and carers.

Finance Minister Brian Cowan said in order to offset that increase, the number of free units available to social welfare recipients will rise by a third from January.

“I am conscious that this electricity price hike of 20% is beyond the cost of living increases built into last year’s increase in social welfare allowances and will have a significant impact,” said Mr Cowan, who was attending a meeting of EU Finance Ministers in Helsinki over the weekend.

Currently, 310,000 people are entitled to the free electricity allowance, while 25,000 benefit from the gas alternative.

Electricity users currently get 1,600 free units per year, at an annual cost of €120 million. This will be increased to 2,400 free units next year, at an additional cost to the State of €25m.

Mr Cowan said he regretted the timing of the 20% increase in electricity prices, which coincided with a 34% increase in gas prices, adding to inflation.

Mr Cowen expects that inflation, which last week reached a three-and-a-half year high of 4.5%, will rise even higher over the next few months, especially if interest rates are raised again.

However, the minister believes that inflation will average 4% for the calendar year, and disagreed with analysts who predict it could reach 5.5% in December or January.