Mr. David Vickers:

I thank the Senator. Within Electric Ireland's cost structure we have fixed costs and variable costs and our fixed costs are mainly those associated with running the business and accessing the distribution network. Our variable costs are mainly energy costs these days but there are also variable costs associated with accessing the transmission distribution network and the market. As mentioned, our bills structure has a fixed component as a standing charge and a variable component which is a unit rate. When we set our tariffs, we have to look at the overall costs we are trying to recover and then we look at how our competitors are priced because we have to act in a competitive manner.

As Mr. Fenlon mentioned earlier, our standing charge is about mid-table compared with other suppliers at the moment. When we increased our price most recently, we did not increase our standing charge. Perhaps the Senator is referring to our prior price increase, where we increased both the standing charge and the unit rate. We did that when we assessed the quantum of costs that we were trying to recover. We decided that it was a better allocation of those costs to put some of it on the standing charge and less of it on the unit rate. It does not go to generate any extra net revenue for us as a business. We just felt that it was a more appropriate management of those costs to put some on the standing charge in order that we could lessen the impact we would have to place on the unit rate.