Ms Aoife MacEvilly:

We will take the committee through a brief presentation in this area. I will begin by explaining the key cost components of an electricity and gas bill and then I will hand over to Ms Brien, who will talk the committee through recent developments in wholesale markets and how they affect retail prices.

Our first slide shows some of the components in electricity and gas bills. The first element is the network charge. In electricity, that relates to the costs of operating, maintaining and developing the transmission and distribution lines that bring the electricity from generators to our homes and places of business. This amounts to around 30% of the final bill. The CER has a role in regulating those costs, because there are monopoly providers of those services. Our focus is on ensuring the least-cost investment in necessary infrastructure and driving efficiency and innovation for ESB Networks and EirGrid in that area.

We then move to the market component of the bill. For electricity, there are two elements. There is the wholesale element, namely, our generators. There, the CER has a role, along with our Northern Ireland counterparts, as part of the single electricity market committee in setting the rules for this all-island competitive single electricity market. Those rules are, again, about ensuring that we get the least-cost generation portfolio to meet demand at any given time. That element of our bill, the wholesale cost, constitutes about 50% of the final bill. We also have a competitive retail market. The activities of the suppliers around billing, customer service and buying the electricity for the customers constitute 12% of the final bill. The CER has a role in regulating the activities of suppliers, particularly to ensure that competition is working for the benefit of consumers and to ensure a significant level of consumer protection in that area.

Finally we have the levies, which are shown on electricity bills as the PSO levy. This is effectively a Government policy instrument to support particular types of electricity generation, including renewables and peat. That amounts to 8% of the final bill. There is no PSO levy on gas but there is a similar breakdown of networks, namely, the pipeline and interconnector conveying gas to our economy, primarily from Scotland. That is about 40% of the bill. There is also the cost of purchasing the gas in the UK market and bringing it across, which makes up the remainder of the bill.

About 50% of the gas bill will be impacted by falling fuel prices on wholesale markets. The single electricity market generation aspect of the electricity bill is not all about fuel but gas will drive 30% of the final electricity bill at the moment.

I hope that helps explain how the wholesale price fits into the bills. I will now hand over to Ms Laura Brien, who will take the committee through recent developments and recent price changes.