Energy companies will oppose any attempt to levy a windfall tax on their profits, warning it would deter companies from investing in Ireland.
The Electricity Association of Ireland (EAI), which represents electricity and gas utilities, said its members are ready to help customers in other ways when energy bills skyrocket but are urging the government not to target their recent earnings gain weight.
“The market has to work,” said EAI Managing Director Dara Lynott. “Intervention in the market can send false investment signals.”
Energy company profits have soared on the back of soaring energy prices over the past year, and especially over the past six months when the war in Ukraine has fueled gas shortages.
Other EU countries took early steps to tax windfall gains to fund cost-of-living support, but the government here scrapped the option.
Taoiseach Micheál Martin recently said the idea could be considered ahead of next month’s budget, however.
The Greens continue to push the issue, with party leader and energy secretary Eamon Ryan saying energy companies should help pay for budgetary measures to help struggling households.
The opposition parties are also urging the government to adopt this approach.
Mr Lynott said such a move would be risky in an Irish context where the state needs massive investment from energy companies to double renewable generation by 2030.
“The same companies that are operating in the system now will require significant investments, investments that will amount to tens of billions of euros,” he said.
Cutting profits now could have “unintended consequences,” he added.
“Whether it’s one-off, short-term or ongoing, it sends the message to investors that they can make plans and investments based on a range of numbers that could change midway through the investment.
“Trust then begins to wane. It remains for the Government to make that decision, but our main argument is that investing in Ireland will only be harder to sell if they go down this route.”
Mr Lynott said the association was working closely with energy regulator CRU on a possible range of measures to help customers with further expected price increases this winter.
“The government has already acted aggressively to grant VAT cuts and cashbacks and lower the levy on public service obligations, all of which are reflected in customer bills.
“We are working closely with the regulator to assess what other options rolling out this winter would help customers in need.”
Members had set aside millions of euros in hardship funds and worked with charities like St. Vincent de Paul and the Money Advice and Budgeting Service to help those in need.
They were keen that any subsequent cashback payment via customer bills would be targeted at those most in need, as opposed to the universal payment earlier in the year.
“It’s difficult because suppliers have limited information about customers.
“The government has to work to identify those most in need.”
Mr Lynott said suppliers were adamant there would be no return to a decade ago, when thousands of customers were being disconnected every year.
“At the end of the last recession, there was significant energy poverty, which is why we introduced the Energy Engagement Code.
“It is the ultimate promise that no customer will be disconnected as long as they continue to work with their supplier.
“Our supplier members are providing additional resources within their customer service centers, particularly to deal with vulnerable customers and ensure engagement is maintained.”
https://www.independent.ie/irish-news/government-warned-not-to-impose-new-tax-on-power-firms-41937918.html The government warned against imposing new taxes on energy companies