‘Right and proper’ government takes back huge profits from energy companies

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He said it was “right and proper” that the government take back some of the big profits being made by energy companies because of the energy crisis.

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Leo Varadkar made the remarks after ESB Group reported a significant increase in profits in the first half of the year.

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The Fine Gail leader said that with ESBs, the government can claim some of its profits in two ways, either through an unexpected tax or by taking a large dividend from the energy firm.

As customers face rising energy bills, ESB saw revenues of €3.7 billion in the first six months of 2022, an increase of €1.5 billion over the same period last year.

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Mr Varadkar said that energy companies like ESB are making huge profits in the midst of the international energy crisis.

“It’s partly because of the price of electricity, it’s linked to the price of gas,” he said on Friday.

“This is something we need to change, which in the past made sense – it doesn’t make sense now.

“This is going to change on a European level and will help reduce electricity rates. But at the same time, I think it is right and appropriate that the government should take back some of the profits of some energy companies.

“When it comes to ESBs, we can do this through one of two ways.

“Either unexpected taxes or taking a big dividend out of the company because it is ultimately owned by the people, and we will use that money to help reduce costs for families and businesses.

“Interest rates are going up, which means the credit rate is going to be more expensive for people.”

The power company’s profit after tax and exceptional items increased to 390 million euros – nearly three times the figure from last year.

According to the company’s half-yearly results, it made a profit of 128 million euros in the first six months of 2021.

The significant increase in profits reflects rising energy prices in international markets and rising consumer bills.

The government said this week it would introduce an unexpected tax on rising profits of energy companies.

Mr Varadkar confirmed on Thursday that the tax would be rolled back before the energy crisis, meaning full-year profits would be targeted.

In a statement published to accompany its interim financial results, ESB said: “As ESB’s generation and supply businesses need to operate separately, the increased profits from ESB’s production business can be used to cover costs incurred by Electric Ireland. Cannot be done to offset.

“However, the group’s profits are invested in critical networks, renewable generation and other critical energy infrastructure, as well as used to pay taxes and dividends to the government.”

Volatility and high wholesale market prices remain a feature of energy markets in 2022

It said that, over the past 10 years, ESB has invested more than 10 billion euros in energy infrastructure and paid out more than 1.2 billion euros in dividends.

Chief Financial Officer Geraldine Heavy said: “Volatility and high wholesale market prices remain a feature of energy markets in 2022.

“In the first six months of 2022, ESB delivered an operating profit before exceptional items of €357 million and capital investment of €532 million.

“This provides the basis for continued strong investments in energy infrastructure to decarbonize electricity, improve resilience and empower customers, in line with our 2040 net zero strategy.”

Credit: www.standard.co.uk /

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