Permanent cuts to electricity bills for families struggling to cope with soaring energy costs are being planned by Finance Minister Simon Harris, the Irish Mail on Sunday can reveal.
Senior Government sources this weekend said that the Tánaiste and Fine Gael leader wants to make a ‘decisive’ move to help householders who face the prospect of more fuel and energy hikes.
It is understood the move to permanently cut electricity bills was raised with Fianna Fáil and would involve the Exchequer paying significantly more of the cost of major planned infrastructure changes.
These changes – including investment in the overstretched national grid – are currently funded by charges included on the energy bills paid by households.
But a Government source told the MoS: ‘We are looking at a significant change in how the grid and other infrastructure is financed.’
The rising cost of electricity has become a serious problem as the Government comes under pressure to do more to help families struggling with the cost of living.
Recently published figures show households in Ireland pay €360 more per year for electricity than the EU average.
More than 315,000 households are in arrears on their electricity bills, up 20 per cent in just 12 months.
And despite a fall in wholesale electricity prices of more than 70 per cent since their 2022 peak, retail prices have fallen by only around 20 per cent during the same period.
Now the Finance Minister is planning what one senior source has described as ‘a decisive intervention in the marketplace’.
They said of Mr Harris’s planned move: ‘This is not a short-term option like energy credits. Instead, as the next phase of our response, the Government is planning to permanently reduce the cost of electricity for customers.’
Finance Minister Simon Harris is planning what one senior source has described as ‘a decisive intervention in the marketplace’
No decision has yet been made on what the level of the cut will be.
However, a source close to the budget decision-making process said: ‘Currently, between 40 per cent and 50 per cent of your ESB bill goes on taxes and the funding of investments into the grid.
'A significant element of that cost could be transferred to the Exchequer and taken off the bill.’
The source also said the Government is planning to upgrade the national grid ‘at a serious cost’.
And, they added, the decision ‘on how this will be funded offers us the opportunity to rebalance the bill in favour of consumers’.
Unlike VAT changes on petrol or diesel, which until last week required EU consent, the source said of the planned changes to ESB charges: ‘We can do this unilaterally by ourselves.’
They added: ‘Europe is far more receptive to these sorts of moves.
‘We went to Europe last week with a letter admitting we had breached the EU directive on VAT cuts and seeking retrospective permission to do so, only to find that Europe had decided this was actually a good idea – and that all states were free to act unilaterally when it comes to the cost of fuel.
‘The possibility even exists that Europe will provide funds for new infrastructure. There are talks.’
Writing in today’s MoS, Sinn Féin leader Mary Lou McDonald called on the Government to do more to help households and for the immediate introduction of a mini-budget.
Ms McDonald said: ‘An emergency budget would mean immediate, practical relief. Cutting the cost of fuel. Reducing energy bills.
'Putting money back into the pockets of workers and families who need it most, and a permanent cut to USC.
'It would show that those in power understand the scale of the pressure people are under – and are willing to act in real time, not months down the line.’
She added, ‘This isn’t about theory or ideology – it’s about whether people can afford to live,’ saying, ‘Right now, Fianna Fáil and Fine Gael are failing that test.’
However, Government sources claimed Mr Harris’s planned intervention would have a much greater impact on families.
‘Sinn Féin are talking about one-off credits – we are permanently rebalancing the bills for consumers,’ one source told the MoS.
‘When it comes to energy costs, we still have significant cards to play. This can come out of the surplus.’
This is a reference to the estimated €9.2billion surplus for this year outlined in the Spring Economic Forecast this week, a huge increase from the €5.1billion surplus that was projected on Budget Day last year.
Mr Harris gave a hint this week of his planned move to permanently reduce electricity bills when he was questioned by Sinn Féin Finance spokesman Pearse Doherty during Leaders’ Questions in the Dáil on Thursday.
He told Mr Doherty: ‘There are options that can be considered in relation to electricity. It [the EU] will soon adopt a legal proposal in relation to this, and Ireland will constructively engage on that.’
Mr Harris has also said that there was ‘an interesting question, quite frankly, as to what more we can do around the structural cost of electricity’.
He noted of the planned upgrading of the grid: ‘The question of how much of that will come onto the household bill versus how much of it will come from the resources of the State is an important and legitimate debate.’
A source who is familiar with the planned cuts has noted: ‘Simon was flying a kite there, or rather a couple of kites, but Pearse just didn’t spot them.
‘He’s not sophisticated enough.’