Budget 2024: What Does It Mean for My Energy Bills?
On 10 October, the Irish government announced its Budget for 2024 with a package to help with the cost of living crisis in Ireland. The most important part is a renewed electricity payment to be paid out to all households during the course the winter. In our guide, we’ll go through what has been announced in the Budget 2024 and how to when you'll receive your electricity credit payment.
What Was in the Budget 2024?
In response to the continued energy crisis and a housing crisis, the Irish government has decided to renew its efforts in fighting the cost of living rises. Although inflation in Ireland has crept down to 4.9% according to the European Central Bank, the need for the government to intervene and help with the rising costs is still important. The Budget 2024 contains a number of elements for ordinary citizens and for businesses that are a continuation of the policies implemented last year:
- Social Welfare
Those on long-term social welfare will get an extra once-off payment every week in order to deal with costs in the winter of 2023. There will also be a 100% Christmas Bonus paid in December 2023 and other social benefits such as Child Benefit and Working Family Payment will receive increases in 2024.
Income tax rates are to stay the same but there will be increases to tax credit like last year. There will be a Rent Tax Credit increase introduced in 2023 followed by Mortgage Interest Tax Relief in 2024 to help with rising interest rates. The 9% VAT rate on energy will remain the same, but the rate on audiobooks and ebook will be dropped to 0% from 1 January 2024.
- Employment and Business
National minimum will be increased from 1 January 2024 to €12.70 and Parent’s leave will be increased to 9 weeks from August 2024.
The Help To Buy scheme will be extended until the end of 2025. There will also be a new Rent Tax Credit of €750 for those privately renting. In addition, landlords will receive temporary tax relief that will increase with each year they stay in the market until 2027. The Housing Assistance Payment (HAP) scheme will stay the same.
Public transport rates are to be reduced by 20% will continue into 2024 and Young Adult Leap Card will be amplified for travellers aged between 19 and 25.
What Help Will There Be for Energy?
A considerable chuck of the Budget 2024 will go towards helping people deal with the energy crisis. At least €1.2 billion will be spent in both 2022 and 2023 to help bring down the cost of living for energy consumers. This will take place in two main parts:
Last year, a considerable chuck of the Budget 2024 went towards helping people deal with the energy crisis. With the crisis abetting slightly, energy suppliers are now dropping their electricity prices there's less need for such drastic measures. However the government has announced continued help for struggling energy customers and is incentivising more renewable energy:
- Electricity Credit
Like last year, each domestic electricity customer will receive a new €450 electricity credit payment has been announced for domestic energy customers that will split up into three instalments until April 2024.
- Fuel Allowance
More people will now qualify for the fuel allowance and people who are already receiving it will get another once-off payment of €300 during the last quarter of 2024. There are also other options for vulnerable people who are struggling with their electricity bill.
The 9% VAT rate that was set to increase back up to 13.5% will remain at 9% on electricity for another 12 months. The temporary excise rate reductions on fossil fuels will also continue for the next 12 months.
- Incentives for Renewable Energy
In order to incentivise Ireland's push to reduce our carbon emissions, the VAT for new solar panel installations will be reduced to 0% from 1 January 2024. The carbon tax is also set to increase until 2029.
What Is the New Electricity Credit Payment?
In December 2021, the Cabinet approved a €210 million scheme to help all domestic households protect themselves against the rising cost of electricity. Given the continuous rise of electricity prices, the government also announced in February 2022 a once-off €200 electricity bill credit for every household. The 2023 Budget included another electricity bill payment for each domestic electricity customer which was paid out throughout the year.
What About the Electricity Credit Payment in the Budget 2024?
Although the price of electricity has come down significantly from the high in 2021 and 2022, it's still way over what the prices were like in 2020. The government has decided to pay out another round of electricity credits totalling €450 in three €150 instalments. Here are some details of what we know at the moment:
- It provides a total of €450 discount towards each household’s electricity bill
- It will be only for domestic electricity customers
- It will affect 2.1 million homes in Ireland
- The payments will likely be managed again by the Department of the Environment, Climate and Communications and ESB Networks.
- The energy providers will in turn apply the credit to each of their customers.
- The Commission for Regulation of Utilities (CRU) will oversee the roll-out of the scheme.
- The scheme will likely apply to Pay-As-You-Go accounts like they were last year.
- The programme does not apply to gas meters or gas accounts like last year.
When you consider the annual average electricity bill in Ireland sits at €2,120, this works out as a 21% discount for the year from the government.
How Much Will I Receive for the Electricity Payment?
Although the government is offering a €450 discount from their energy bills, customers will see this reflected differently on their electricity bills. Due to taxes, the actual amount customers will receive will be a total of €409.50 which will be split over 3 instalments. So on your electricity bills, the payment will likely show up as €136.50 for each instalment of the programme.
Like last year, it's likely that this added money will be deducted from your total bill before VAT is applied. The lower payment after the electricity payment deduction will then be subjected to the 9% VAT rate for energy and will result in a total €150 discount for your bill. Here's an example:
Electricity Payment Example Say, for your electricity bill, your standing charge is €28 and your total usage adds up to €200. This means your total bill will be:
€28 Standing Charge + €200 Usage = €228 Total Bill
Then you have your electricity payment of €136.50 which is then applied to your bill before VAT:
€228 Total Bill - €136.50 Electricity Payment = €91.50 Total Bill
Then you need to add the 9% of VAT to the bill:
€44.51 Total Bill + 9% VAT = €48.51 Final Bill
Disclaimer: this is how it was worked out this year and it does not necessarily mean it will be repeated. When further details of the scheme are published, it shall be updated.
Who Is Eligible for the Electricity Payment?
Like with last year's payment, every domestic household will receive the electricity payment for their electricity bill. This means if your dwelling is classified as farm energy or a business, you will not be receiving any assistance through this emergency initiative.
To add insult to injury for farmers, city dwellers with multiple homes may receive the credit more than once. They will be able to get the credit for every household they own or pay the electricity for.
As just about every dwelling is connected to the grid, this is the quickest and easiest way for everyone to receive some assistance this winter.
How Do I Apply for the Electricity Payment?
It's like this scheme will follow last year's method and don't need to apply for it. It is to be automatically credited to your account via your electricity provider.
Since ESB Networks manages the distribution of electricity to every home, farm, and business in the country. They, along with the Department of the Environment, Climate and Communications, will be in charge of ensuring that every domestic household receives the credit.
What About Pay As You Go Customers?
Similar to last year, for many Pay As You Go customers who have old prepayment meters, energy suppliers will need to deal with your situation separately due to the restrictions on the amount of credit you can actually put on these older meters.
Many older prepayment meters are hard-coded not to accept more than €100 in one top up, meaning the payments will need to add on through separate top ups. The idea is that a prepay customer will need to purchase a minimum top up of €10 and the government will supply a €90 credit.
The suppliers will need to inform you about how they're planning on implementing the scheme for prepay customers.
When Will I Receive the Electricity Payment?
The exact dates for the electricity payment have not been published yet, but we know that it will be paid out in three €150 instalments up until April 2024. This means the discount will over the course of the winter and over the next 6 months.
Our estimate is:
- First payment will be made in December 2023
- Second payment will be made in February 2024
- Third payment will be made in April 2024
As with the payments last year, they may be paid by the ESB to each energy supplier at different stages or groups so some customers might have to wait a little bit for their payment to come through. However, over half of energy customers will likely receive their payment in the first group.
I Want To Switch Providers. Should I Wait?
Last year there was lost of confusing over losing your energy payment if you switched providers. However, you don't have to worry about losing your electricity payment if you want to switch providers. If you decide to switch, your electricity supplier is still responsible for getting your electricity payment to you. You just need to be aware that if you switch, you might receive the electricity payment from different suppliers.
For example, if you switch between 27 October 2023 and 31 December 2023, you'll receive your electricity payment from the supplier you were with on 27 October. This could be part of a final bill for example.
Currently, there is still a competitive energy market in Ireland and making a switch can really make the difference to your bills. Different energy suppliers will offer different rates so if you can switch, you should.
If you’ve never switched energy suppliers before, you can learn everything about switching in our complete guide or you can give one of our energy advisors a call for free to see how your current electricity tariff compares with the rest of the market!
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