Tánaiste Leo Varadkar says the introduction of price caps on energy bills has “echoes of the bank guarantee”.

TÁNAISTE Leo Varadkar said the introduction of price caps on energy bills had “annotations to the bank guarantee”.

Although he doesn’t specifically rule it out, Mr Varadkar said he was “nervous” about a price cap, comparing it to the government’s 2008 bank guarantee, which led to an EU-IMF bailout two years later.

The comments appear to pour cold water on the proposal to limit household and business energy bills this winter, which has been announced in the UK and called for by Sinn Féin in Ireland in recent days.

“One problem I think of with price caps – and I’m not ruling them out – is essentially how the price cap would work if the government sets the price cap and then agrees to pay the amount above that, whatever it is,” he told reporters inside government buildings.

“That means you can’t possibly taste it, you can only guess at what it might cost, and to me it has, if you will, affinities with the bank guarantee and contracts for difference.

“Actually, it would be a contract for difference. Remember with Anglo Irish Bank and all.

“So the government is saying here’s the cap and we’re going to pay anything above that no matter what and we don’t know what that’s going to be. So for me that’s the area of ​​bank guarantees, it’s contracts for difference. I would be nervous, but wouldn’t rule it out.”

He said coalition leaders and finance and public spending ministers agreed on Tuesday to commission a paper examining the issue of energy price caps and how they might work, as well as their pros and cons.

He said the UK has announced corporate energy price caps but “they don’t know how they’re going to do it”.

Mr Varadkar said the government is keen to introduce a windfall tax on fossil fuel producers and electricity producers in the budget.

“They’re making profits they never thought they would make and we’d love to take some of that money and give it back to families and businesses to help them with energy bills,” he said.

He said the government must await European Union proposals to inform its budget plans.

Meanwhile, Sinn Féin Chairwoman Mary Lou McDonald has said the government must cut gas and electricity prices and then set a maximum price cap.

Ms McDonald said a leaked government memo last week warned households they face a €6,000 energy bill in the coming year. She said all signals from the government pointed to direct payments – or so-called “energy credits”.

She said the €200 electricity payment earlier this year was “eaten up” before it was even paid out. She said repeating those payments was a flawed approach and that it was time to bring energy prices down to pre-crisis levels, followed by a cap on future price increases.

“Taoiseach, it’s all about choices – the government has to choose to lower and cap electricity bills. It’s the right thing. This government really has a choice to protect households and I urge you to make that choice,” Ms McDonald told the Dáil.

In response, Taoiseach Micheál Martin said Ireland and the world were facing the worst energy crisis since the 1970s oil crisis. He said it could well be worse than it was in the 1970s because it now also affects gas and electricity.

Mr Martin said there was no doubt the government must and will intervene. The only question was which method was chosen, and the government is now considering a mix of energy payments, conservation measures and other supports to subsidize costs for families and businesses.

He asked Sinn Féin to draw up detailed cost proposals. “What you are proposing would amount to a blank check for energy companies,” the Taoiseach argued.

He said the government had already committed over €2 billion in cost-of-living support and more of that would be in the budget by September 27.

https://www.independent.ie/news/tanaiste-leo-varadkar-says-putting-price-caps-on-energy-bills-has-echoes-of-the-bank-guarantee-41989053.html Tánaiste Leo Varadkar says the introduction of price caps on energy bills has “echoes of the bank guarantee”.

Fry Electronics Team

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