TÁNAISTE LEO VARADKAR has said potential price caps on energy bills have “echoes of the bank guarantee”.

While a second electricity credit and possibly a third has been confirmed over the past week, there is pressure being heaped on the Government to act and place price caps on the cost of energy.

Speaking today, Varadkar said that he is not ruling out price caps, but added that he was nervous about it.

“It has echoes, if you like, of bank guarantee,” the Tánaiste said. 

“[It's] bank guarantee territory and contracts for difference. I’d be nervous about it, but not ruling it out. Anyone who says they can cost it, how can they possible cost it?” he said. 

Varadkar said Government agreed last night that it would commission a paper studying the pros and cons of energy price caps and how they might work.

Earlier today, Minister Simon Coveney said the Government has not ruled out any options to deal with soaring energy costs and will consider the viability of capping householders’ and businesses’ bills. 

Coveney said all measures to ease the pressure on households and businesses are being considered, including a price cap or more electricity credits, or a “combination” of both.

“The Government hasn’t ruled anything out officially and as late as last night I had a conversation with others in Government in terms of how to deal with the energy crisis as best we can,” Coveney said.

“The issues under consideration which is energy credit to households, we also have to have a support package for businesses, SMEs in particular and we are looking at the viability of a price cap in terms of how we introduce that and what level we could set it at, whether it is partial or full in terms of energy usage,” he said. 

Coveney said they will be “talking to other EU countries and we will be seeing what the UK has done in terms of the details of that”.

“Let’s not forget in two weeks’ time today we will be announcing a Budget and a big part of that will be responding to the pressures that households and businesses will be facing in terms of energy costs,” he said. 

“These are exceptional times and we will be doing exceptional things in this Budget.

“I don’t want to give an indication now if that involves a price cap or financial supports or combination of both but they are all under consideration at the moment.”

Coveney said the Government wants to give householders and businesses “as much certainty as we can” as they face into a winter of “real uncertainty and concern”.

He said it was up to the Government to respond to those pressures and anxieties.

“We need to do that in partnership with other European countries, with the European Commission to ensure that we spend public money,” Coveney added.

“We are effectively giving people back their own money here, we are using public money and taxation to try to reduce the pressures and uncertainty and anxiety that otherwise would be the case if we didn’t intervene,” he said. 

“If that involves the partial capping of energy prices or it involves some form of extended energy credits over a period of time, that is very much a discussion at the minute,” the Minister added. 

“The Government is understandably cautious where a Government would intervene to set energy prices but we are living in unprecedented times. We have to ensure we have done our homework fully before we commit to something of this scale in terms of cost.

“This is about protecting families through the winter and protecting businesses to stay in business so we will spend a lot of money to protect people from energy inflation.” 

The Government’s Budget will be announced on 27 September.

Includes reporting by Press Association