Perhaps we should think of the staggering increases in fuel bills now facing Irish households as a public health emergency. Because, in a very real sense, it is.
These bills will tip many families who are “just about managing” into poverty. The link between poverty and chronic ill-health is all too well established. This stuff will make people sick, and not just metaphorically.
If we think about energy bills as a public health crisis, we might get some sense of the scale and urgency of the response required from the Government. The Government itself might see that, by failing to respond at all adequately, it is sleepwalking into a social disaster.
Last week, Electric Ireland, which is owned by the State, increased electricity bills for households by 10.9 per cent and gas bills by 29.2 per cent. When this increase was announced, EI implicitly accepted that this will cause profound distress to many people.
As we experienced during the pandemic, there are times when the common good has to override normal procedures. Other EU governments seem to recognise this
It created a Hardship Fund of €3 million to help customers who can’t pay their bills. It’s a nice gesture — but €3 million will not go very far when hundreds of thousands of families are faced with bills they cannot pay unless they deprive themselves and their children of other necessities.
We all know that the rise in energy prices is linked to global developments, particularly the war in Ukraine. But it is also obvious that several energy companies are managing to generate significant profits despite the crisis.
Here in Ireland, Bord Gáis increased its operating profits by a whopping 74 per cent in the first half of this year. In March, even before the real price shocks, Energia paid a €40 million dividend to its private equity owners — presumably a mere taster for the main course that is to come.
The wind energy we use is not generated in Russia or Ukraine, yet we know, from figures released this week, that the prices that Irish wind energy companies are getting on the wholesale markets have risen astronomically. Two years ago, the regulator set an expected price for this electricity of €54 per megawatt hour. From this autumn that price is expected to rise to €330 — a near seven-fold increase.
Now, some of this windfall will go the ESB, of which Electric Ireland is a subsidiary. So, in this emergency, surely the ESB can use its bonanza to offset price rises for EI’s retail customers?
But, no. The law blocks this from happening — and in the current emergency the law is an arse.
It’s an arse because, as we experienced during the pandemic, there are times when the common good has to override normal procedures. Other EU governments seem to recognise this.
In France, at the beginning of January, the Government forced its equivalent of the ESB, the state-owned energy provider Électricité de France (EDF), to cap wholesale price rises at four per cent for the rest of this year. (It is not accidental that inflation in France is running at half the rate in Ireland.)
In May, the Spanish and Portuguese governments approved a graduated cap on the price of gas used for generating electricity, so that it will be fixed for the next 12 months. The cap, which was approved by the European Commission, limits those prices to an average of €50 per megawatt-hour — that’s one-seventh of the expected price of our wind-generated electricity.
Here, the Government’s line, as articulated by the Tánaiste Leo Varadkar, is that price caps “do not work very well” because: “What governments that introduced price caps have had to do is keep increasing them and that does not work for people.”
Eight per cent of Irish children are already living in consistent poverty — the State’s official target is two per cent
This is simply untrue. Spain and Portugal’s system laid down a controlled rise during this year from €40 to a maximum of €70. That maximum has not increased. In France, the capped price will not change at all throughout this year.
The Government’s lack of action is all the more deplorable because, even before the storm that is about to hit Irish households in the autumn, we had a deep crisis of fuel poverty.
A recent report by the ESRI showed that the price rises for energy between January 2021 and April 2022, were, in proportional terms, twice as expensive for lower-income as for high-income households. For poorer families, they ate up six per cent of their income; for the better-off families, the hit was three per cent.
This, remember, was before the effects of the war in Ukraine on energy prices really kicked in. As they do so, more and more families are being impoverished.
None of this is normal. “Unprecedented” is an overused term, but this situation really is so. Irish society is about to experience levels of energy poverty (defined as a situation in which you are having to spend more than 10 per cent of your income on energy bills) unknown in modern times.
In 2016, 13 per cent of households were living in energy poverty. By April this year, the figure was over twice as high: 30 per cent.
And it’s getting much worse. The ESRI reckoned that a 25 per cent increase in prices from last April (which is what we’re getting) would leave a stupefying 43 per cent of households in energy poverty.
That’s not just the highest level ever recorded in the history of the State. It is almost double the previous record, which was in 1994-1995, at the end of a very grim decade of recession and mass unemployment.
If this is not an emergency, what is? It’s a calamity in particular for the most vulnerable in society: people with disabilities, Travellers and, in particular, households with children.
Eight per cent of Irish children are already living in consistent poverty — the State’s official target is two per cent. These are the very children who will suffer most, both from the drop in real incomes coming into their homes and from the stress and despair their parents will experience.
Writing in the Observer last Sunday, the former UK prime minister Gordon Brown warned that “a financial time bomb will explode for families in October” and added that: “We know the short-term consequences of rising poverty — more stunting, more family break-ups, more homelessness and more children in care”.
These words apply just as much to Ireland as they do to Britain. In the UK, energy poverty is predicted to rise to 49 per cent of households. The ESRI’s prediction of 43 per cent for Ireland is almost as bad.
Half of us will be annoyed, inconvenienced, very unhappy about the size of the bills. The other half will be desperate. No society can, or should, endure such a division with equanimity.