Government energy costs scheme for businesses is ‘damp squib’, says Dublin hotelier

A Budget 2023 measure the Government says will support thousands of businesses experiencing a “material shock” in their electricity and natural gas costs has been criticised as “a damp squib” for delivering “pittance” payments to the hospitality sector.

Paul Gallagher, general manager of well-known Dublin hotel, Buswells, said many businesses may be eligible only for low levels of support from the Temporary Business Energy Support Scheme (TBESS) because of the way the scheme has been designed.

Mr Gallagher said the hotel would only be able to access a payment of about €1,100 through the scheme based on the first three months of its six-month duration because of the tight comparison period it specifies for calculating increases in energy bills.

Under TBESS, qualifying businesses that have seen their energy unit prices increase by 50 per cent or more can make a claim for 40 per cent of the increases in their bills relating to the period September 2022 to February 2023. The comparison month, for the purpose of establishing if the average unit price has increased by at least 50 per cent, is the same month one year earlier.

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Mr Gallagher said Buswells’ energy costs had soared by as much as 300 per cent between 2020 and 2022. But between October 2021 and October 2022, and also between November 2021 and November 2022, contract arrangements meant the average unit cost increase did not meet the 50 per cent threshold.

This means that the hotel has only been able to trigger a payment of €1,109, which covers September 2022.

In the context of electricity and gas bills that increased from €67,000 in 2021 to about €165,000 for 2022, the support is a “pittance”, he said, and does not provide a meaningful cushion against energy cost shocks.

Figures published by the Revenue Commissioners last week show that more than 8,800 businesses have registered for the scheme to date, with the first claims possible since early December.

Revenue’s preliminary statistics, which it intends to update, show that some 2,984 claims have been approved so far worth a total of €6.64 million, pointing to an average payment of €2,225. Accommodation and food businesses have made a total of 939 claims with an approved value of €1.91 million, indicating an average payment of €2,023 for this sector.

“It seems incredibly low and suggests to me that accommodation providers are unable to trigger support because of the comparison periods used,” Mr Gallagher said.

Hotels that use liquid petroleum gas are also not eligible for the scheme, he noted.

Energy is Buswells’ highest cost. Hotels typically have limited flexibility to cut down on energy costs, Mr Gallagher added, in part because they must have constant hot water available for guests.

The Government has said TBESS will run until “at least” February this year. In its Budget 2023 package of measures, it costed the scheme at €1.25 billion.