I call the co-leader of the Social Democrats, Deputy Catherine Murphy.

I too would like to be associated with the Tánaiste's remarks about the awful tragedies we have seen in relation to children in the past month or so.

Energy prices are now out of control. They are obliterating the incomes of workers and families and threatening the survival of so many businesses. In June, the Economic and Social Research Institute, ESRI, reported that a record 29% of households were in energy poverty. Following recent price hikes, that figure has already jumped to 43%. In a few weeks or months, we could be facing a catastrophe in which 70% of households are in energy poverty. This is not sustainable for either families or businesses and the immense uncertainty about how bad the crisis could get and how high prices could go is causing a huge degree of stress and anxiety.

Clearly, the energy market is broken. When markets are broken, it is the job of the State to intervene. Given the scale of this crisis, that intervention will have to be huge.

One of those interventions must be a windfall tax. It is grotesque to see the level of obscene profiteering by energy companies which is accompanying an energy crisis caused by Russia's barbaric invasion of Ukraine which is causing so much death, destruction and suffering.

While it is welcome that the EU is now moving ahead with a windfall tax, it is regrettable that it has taken so long to act. Energy companies have been making lavish profits all year. In fact, profits surged last year when energy prices soared as economies came out of lockdown and demand increased. Vermilion Energy, which owns the Corrib Gas Field, increased its profits four-fold to €152.8 million last year. The average price it received for gas in the final quarter of 2021 was more than nine times the average price for 2020. We can only assume the prices it is receiving this year are off the Richter scale.

Renewable energy companies are reaping profits they never imagined in their wildest dreams. It is not because of any innovation on their part. It is because the price of electricity produced with renewables is linked to the price of gas. The EU has now proposed capping the price renewable companies can earn to €180/MWh with the remainder being recouped by governments. It is not clear why this figure of €180/MWh was chosen. It is true it represents a halving of recent market prices but those prices were signs of a market imploding. This week gas prices fell to €200/MWh, which is still six times what was being charged last year. Is not the point of renewable energy that it is clean and much cheaper than fossil fuels?

I hope the Tánaiste can clarify some of these points. When will the Government introduce the windfall tax? Will it be backdated to capture the obscene profits that have been made this year? How much does the Government expect to raise? Why, under the EU plans, is the cap proposed on renewable energy generators so high?

I want to acknowledge that everyone in government is very much seized and very much aware of the cost-of-living crisis, how it is impacting on people's household bills and many people having to make difficult decisions about what they spend their money on over the course of the next few weeks. We see it at the pumps, we see it in our utility bills and, increasingly, we are seeing it feeding through to other bills, such as groceries.

The Government has acted already. I will not go through the list of things that we have done. It is long, as the Deputy knows. The Government will act again, into the winter and, indeed, into next year. We will be able to help people in many different ways, for example, pay increases. We have the increase in the national minimum wage. We have a public sector pay deal going through at present. We will be able to reduce income taxes in the budget. We will be able to increase the pension and other welfare payments and also we will be able to take specific action to help people with their energy bills. All of that will be ready for the package that is announced on budget day.

In relation to a windfall tax, it is our intention as a Government or at least we are minded at this point to introduce a windfall tax. We need to work out the details of that but, certainly, in principle, the Government has agreed that that is something that we will pursue and it will form part of the budget. What we have to work out is how it will apply and how it will work and that is not straightforward. However, as it would apply to profits made this year, it would be backdated to the beginning of the energy crisis earlier this year because profits are taxed on an annual basis. It would, of course, apply to profits made this year hitherto. If that is what the Deputy means by "backdated", the answer is "Yes".

Quite frankly, when it comes to the EU proposals, I cannot explain them for the Deputy or interpret them. They are not Government proposals. They are proposals of the European Commission. They are not yet agreed and, quite frankly, they are not entirely clear. We need to figure them out, ideally, before budget day, because what is done at European level will impact on what we want to do here. However, the principle is there that there will be a windfall tax and we will use the proceeds from that windfall tax to help reduce the cost of energy for families and businesses.

As a footnote, the Deputy mentioned the ESRI energy poverty index. Of course, the Deputy is correct in what she says but it is important to point out that the way the ESRI calculates energy poverty is essentially anyone who spends more than 10% of his or her disposable income on energy. Quite frankly, at present, that is probably most people in the country. It is a different index to consistent poverty or deprivation, which are different things. Perhaps that particular index does not reflect the reality of the new world that we are going into which probably is one of higher energy costs.

We agree that fundamental reform of the energy market is required at EU level.

I am concerned, for example, that the decoupling of the energy prices from gas does not seem to be a priority for the EU. That crucial reform is not part of the plans that were unveiled this week and we may at best see something in 2023. The reality is that the spiralling cost of gas is what is contributing to the misery. Can the Tánaiste confirm that the Government, which opposed reform of the energy market last year, is lobbying strongly for this critical and crucial reform at EU level? Can the Tánaiste outline exactly what is our approach to the EU in relation to this and other matters that may well impact on the actual cost of energy? Why was the €180/MWh set at that level? It seems incredibly high and way more than the cost of producing the energy.

In relation to the €180/MWh, I honestly cannot answer that question. That is a question only the EU Energy Commissioner can answer. As I say, it is not agreed. It may be the case that when this action is agreed, that figure will come down. I agree with the Deputy that it seems higher than it should be but, as I say, it is an EU proposal, not a Government one and not one that has been agreed yet by the governments of the EU. The Minister, Deputy Eamon Ryan, will be attending those meetings. It is intended to have agreement before the end of the month but, hopefully, we will know what the shape of that agreement looks like because it will influence the decisions that we make on budget day.

I absolutely agree that we need to reform the way the EU energy market works. It made sense in the past to give wind and solar generators the best price - the price that the gas generators were getting at peak time - because that was all about encouraging investment in wind and solar, which we need and need more of.

Nobody ever anticipated, however, that gas prices would go so high. As a result, wind generators and solar generators are making profits and booking revenues they never in their wildest dreams thought they would be able to get. That is what needs to change and that is what is being worked on: a new way of pricing electricity so it is not linked to the marginal, peak price of gas. That cannot be done right away, however. It takes a while to reform a market. We therefore need interim measures as well as long-term ones.