Mr. Dermot Nolan:

I thank the Chairman and members for the invitation to be present today. I will give a brief overview on the Commission for Energy Regulation, CER, and will then deal with any questions members might wish to ask. The CER is Ireland's independent national energy regulator. It has broad functions in economic energy issues, in safety issues, as well as in customer protection issues. These comprise its current set of activities. These activities have changed over the years. When the CER was set up in 1999, it originally only had responsibilities for economic regulation of the electricity area. A few years later, it was given responsibilities in respect of gas regulation and in recent years, it has been given enhanced safety responsibilities in the energy area as well, to the point where at present, approximately a quarter to a third of our staff are generally working in safety areas. In that sense, we have changed and have been given further responsibilities over the last few years. Obviously, further details may be found on our website, if anyone wishes to examine that. The Government has made known its intention, I believe the draft Bill has recently been published, to give the CER, subject to Oireachtas approval, responsibilities for water regulation from approximately 2014 onwards. That will further change the organisation and give it further responsibilities. At present the CER has two commissioners, namely, myself and my colleague, Mr. Garrett Blaney.

I will turn briefly to key CER activities and will go through them relatively quickly. The first is what we call the wholesale market, which essentially is the electricity generation market.

That is jointly regulated. We regulate it in an entity known as the single electricity market committee. We do that jointly with Northern Ireland. It is an all-island initiative. We have joint functions with an independent member as well in case we disagree. The committee regulates the generation sector for the entire island.

We then regulate the electricity and gas networks. They are monopoly networks perhaps similar enough to aviation. We do price reviews every five years where we directly regulate the sectors. We investigate how efficient they are, make sure they are efficient and set the level of prices they can charge for the next five years. That is pure monopoly regulation.

We oversee the Irish smart metering programme as well and it is planned to put energy meters in every house and business in the country in the coming years. I hope that will stimulate innovation in and of itself, apart from giving considerable consumer benefits.

In terms of the size of the sector; the single electricity market and network sector are large in economic extent and vital to Ireland’s electricity security with an annual turnover in electricity of more than €3 billion. We also monitor energy retail markets, engage in customer protection measures and we resolve customer complaints on the energy sector that come to the CER.

I spoke earlier about safety regulation. That role has been greatly enhanced in recent years. In particular, we regulate general gas safety in gas undertakings and businesses. We also regulate gas and liquid petroleum gas installers – people who put gas into houses and businesses - and electrical contractors as well. In recent years we were given a new function in upstream petroleum safety, which makes the CER responsible for regulating safety in the offshore petroleum sector, including Kinsale Energy and the potential Corrib field. It is envisaged that we will have a function for water regulation in the future as well.

In terms of our financial data, we have included details on expenditure in recent years. It peaked around 2006 and 2007 when the single electricity market was being set up and it has fallen somewhat since then. As is the case with the other two regulators, we levy industry every year in December. We have an arrangement whereby we levy and then spend and if there is a shortfall, we levy less the next year, as is set out specifically in legislation. We must apportion the levy to specific areas. We have divided it into electricity, gas and, in recent years, petroleum safety. The increase in petroleum safety has driven the increase in 2012, as set out in the unaudited accounts, plus legal costs. As is clear to the committee, there will be greater expenditure in the next two to three years if we take on water functions in addition to the safety functions. That is all I have to say for the moment but I am happy to take any questions the committee might have.