It is unconscionable that some firms face going out of business because of rising gas and electricity prices while energy providers experience profit surges, the Minister for Finance has said.
As consumers see continuing rises in their energy bills, the Government is facing pressure to impose windfall taxes on energy firms.
Paschal Donohoe said the move is being considered by the Government ahead of the budget later this month.
Businesses and householders face massive increases in their energy bills which are expected to continue into next year.
On Thursday, Electric Ireland became the latest energy company to announce price hikes. From October 1, it plans to increase residential electricity bills by 26.7 per cent in the Republic and 29 per cent in Northern Ireland.
In an interview on RTÉ's Morning Ireland, Paschal Donohoe said he recognised the concerns over rising energy costs and that measures would be taken in the upcoming budget to help.
Mr Donohoe said that as the days shorten, bills will go up and people’s concerns will heighten, but the Government will help. He said the full details of that support would be confirmed in the Budget which had been brought forward specifically for that reason.
A windfall tax was a measure that was being considered, he said, but like any highly complex and sensitive issue, there were no simple answers. Mr Donohoe said it was important not to make the situation worse, not to undermine investments or do anything that would drive up prices in the future.
The Government will look at all measures that will help the country, but would be wary of any measures that could damage the country, he said. It was all about not making decisions today that could cost the country in the future.
“We need to make decisions that we can afford. We will overcome the challenges, but not at an exorbitant risk.”
Mr Donohoe pointed out that during the Covid-19 pandemic the Government had responded with agility and clarity and had acted quickly to help people, they would do the same again during this crisis, but any response would have to be affordable and not add to difficulties in the future.
Energy poverty
The Minister's comments come amid a warning that up to 43 per cent of households could shortly be in energy poverty.
Speaking to Morning Ireland, Niall Farrell, a senior researcher at the Economic and Social Research Institute (ESRI), said energy poverty was determined when a family spent more than 10 per cent of its income on energy.
That figure had been 29 per cent earlier this year, but with the recent rise in energy costs the figure was now at 43 per cent.
It was very hard to predict when the levelling off of energy prices would happen, he said. There were extraordinary circumstances at present which were having side effects. It was impossible for the energy companies to predict future prices based on current information, but he said it was to be hoped there would not be many more increases going forward.
However, if something unprecedented were to happen “then all bets are off.”
Mr Farrell also cautioned that introducing windfall taxes could lead to unintended consequences. Alternatives such as market reform or pressure release valve measures were possibilities.
He said the trajectory at the moment was that energy poverty was going to be an increasing burden for a greater proportion of the population. This could be tackled through measures which should be targeted at the most vulnerable, possibly through social welfare payments, he said.
