Dr. Paul McGowan:

I will make a short opening statement. Given that this in the context of the commission's accountability to the Oireachtas, it is probably worthwhile to have a very brief recap of who we are and what we do, as well as what we achieved over the years, setting out publications etc. that are produced which could assist the committee with our accountability to the Oireachtas.

We are now Ireland's independent energy and water regulator. We were established in 1999 and our core function is to protect customers, whether from an economic perspective in terms of charges and customer protection measures, or from the safety perspective, which literally protects lives and property. We have broad functions across economic safety and customer protection in energy, and in 2013 we became the economic regulator for the water and wastewater sector in Ireland. Our mission is to regulate water, energy and energy safety in the public interest. Our functions are encapsulated in our strategic goals and they are simply to ensure that energy and gas are supplied safety, the lights stay on and the gas continues to flow, with a reliable supply of clean water and an efficient treatment of wastewater. Prices should be fair and reasonable and regulation should be best international practice.

To give a sense of the sorts of areas we have tackled over the years, an important element is security of supply. In particular, there have been huge levels of investment overseen by us in the gas and particularly the electricity networks, delivering reliability and accounting for growth in the economy. Separately, there is the development of competitive markets and other instruments to ensure we have adequate generation on the system to ensure the lights can stay on. We have also introduced competition in the electricity and gas retail markets to the extent that they are now fully deregulated. We have introduced a single wholesale competitive electricity market on the island of Ireland and we jointly regulate that it with our sister regulator, the utility regulator in Northern Ireland, and an independent member. We have also established a safety framework both in respect of the safety of upstream oil and gas activities in Ireland and downstream gas in Ireland. We also oversee the registered gas installer and registered electrical contractor schemes.

We have established the water framework under which we have completed two price controls and we have challenged Irish Water to deliver a 20% reduction in their operating expenditure over four years. An important feature of what we do is also the customer handbook, which is essentially the minimum standards that suppliers must reach when engaging consumers. If they fail to reach those standards, we also operate a dispute resolution function that ensures customers have somewhere to go if they cannot reach a satisfactory settlement with their supplier. Through our networks price controls, we drive efficiencies in both the gas and electricity sectors ensuring that while meeting the needs in terms of network infrastructure investment, we also drive performance improvement. For example, one of the key metrics we measure relates to minutes lost, which is the amount of time people have no electricity when they turn on a light. There has been a sustained reduction in that over the years with the level of investments and improvements overseen by us.

We are also very active on the international front. We are active members of four key international institutions. These are the Agency for the Co-operation of Energy Regulators and the Council of European Energy Regulators on the energy and economic side; WAREG, which is a newly established water regulatory forum across Europe; and the EU Offshore Authorities Group, a key safety forum in Europe. We are founding members for some of those institutions. With regard to our own operations it is probably worth pointing out we are compliant with all public sector requirements in terms of payscales and so forth. Everything we do is ultimately subject to sanction by the Department of Finance via our own Department.

It might be worth giving a flavour of the sample of outputs we produce that would assist the committee in its oversight of the CER. It includes our annual report and accounts which we submit and are tabled before the Oireachtas. We have a customer care annual report that outlines the types and range of complaints we deal with throughout the year, along with the types of queries we get as an energy regulator. We also have quarterly retail market monitoring reports and an annual substantive report on the functioning of the retail market. We produce specialist analyses from time to time, and this year we produced a specific analysis of the state of retail competition in the energy markets. Finally, we produce a safety annual report. Our annual report covers both water and energy as we report to Ministers in respect of our functions.

With regard to future strategies, it is worth pointing out there are a few elements we see as key in the foreseeable future.

There is going to be an increasing focus on our part on the role of properly structured incentives to ensure that under network price controls that network companies deliver a win-win situation for themselves and for customers. A good example of that is GNI, Gas Networks Ireland, and how it will grow demand on a gas network which will benefit the consumer without spending too much money which would ultimately fall on the consumer. We are trying to design incentive mechanisms to ensure we get the most out of that asset.

We are also looking at a new integrated single electricity market in conjunction with the North. This will go live early next year and then there will be a serious amount of work bedding that in, as was our experience with the introduction of the first single electricity market.

We are launching a new HR, human resources, strategy. As a regulator, one of our key resources is our staff. Staff development and retention is a key issue for us into the future. We envisage we will be producing our new energy and water strategy statements to apply from 2019 onwards because our current strategic plan applies to the end of 2018. We foresee we will be doing a substantial amount of work in 2018 ensuring those statements will be in place from 2019 onwards.

There is currently an OECD review of the commission, focusing on governance, accountability and the regulatory process, compared to our peers in Europe and elsewhere. Its report will be formally published in November with recommendations. From that point on, we will be looking at its recommendations, trying to take them on board in our new strategy statement. We also feel there will be opportunity to engage further with the committee on this.