ENERGY credits in future budgets should be avoided despite concerns that electricity prices will continue to rise over the next five years, Public Expenditure Minister Jack Chambers has been advised.
In recent budgets, the Government has used “one off” energy credits to help protect households from enormous electricity bills as prices skyrocketed in the wake of Russia’s invasion of Ukraine.
While energy prices have stabilised, Irish households are still paying the highest rates in Europe.
The Department of Public Expenditure believes that electricity prices in Ireland are set to rise over the next five years due to the level of investment required to update our energy infrastructure.
A briefing document provided to the new Minister Jack Chambers warns that €20billion in investment is needed to upgrade Ireland’s electricity infrastructure over the next five years.
This bumper investment is needed “to cater for increased housing, demand from large energy users (primarily data centres) and to facilitate growth in renewable electricity, including offshore wind”, the Minister was advised.
Officials warned Minister Chambers that this need for investment is likely to see household electricity bills rise.
They said: “The investment requirements will place upward pressure on electricity prices that are already the highest in the EU.”
The Department said they are working with State owned energy companies and the energy regulator on policy issues including direct capital funding and how that would impact prices.
The Minister was warned that “defraying some of the impact on household and businesses’ electricity prices would have a significantly larger investment requirement.”
The briefing document later advises the Minister that energy credits used in recent budgets should be removed to reduce the pressure on the State’s finances.
The document said: “Energy credits, which were introduced as a temporary support, have a significant Exchequer expense at a cost of €210m for every €100 credit per household, and they also reduce the incentive to conserve energy use.
“Similar to other temporary supports, their removal is important to reduce pressure on fiscal resources.”
The briefing memo for the new Minister also sets out a number of medium and long term risks and challenges for the Irish economy including demographic trends, climate emission challenges and the volatile international environment.
On demographics, the Department said that by 2050 Ireland will have only two workers for every person at pension age as opposed to four workers for every pensioner at the moment.
The ageing population will put severe pressure on the State’s finances for pensions and healthcare.
It comes after the Taoiseach confirmed that there are no plans to introduce or continue a new cost-of-living package or €250 energy credit in Budget 2026.
END OF COST-OF-LIVING PACKAGE
The Minister’s comments echo that of Taoiseach Micheal Martin earlier this month, who said there’s no plans to continue energy credits in the next budget.
The Fianna Fail leader also added that a new cost-of-living package would not be included, but he did not specify which measures would be affected.
Speaking to RTE Radio One yesterday, he said: “We’re not going to have a cost-of-living package this year, that’s the Government’s view.
“We will endeavour through the budget, through the various mechanisms we have from social protection to tax, to help people.”
WHAT WAS BUDGET 2025’S COST OF ‘LIVING PACKAGE’?
THE last budget, which was announced in October, saw thousands of families across the country benefit from cost-of-living measures.
The package, which was worth €2.6 billion in total, was the largest social welfare package in the history of the State.
It was made up of a mixture of increased payments and once-off lump sums for social welfare recipients.
Other measures in Budget 2025 included an expenditure of €6.9billion and €1.4billion in tax changes.
Energy credits were also agreed as part of a €2.2 billion cost-of-living package included in Budget 2025 to help people through the winter.
