Ms Aoife MacEvilly:

We directly regulate network cost to customers. The way we do this for electricity, gas and water, although we do it in a slightly different way in the case of water, is through what we call price controls or revenue reviews. These take place over a five-year period. We carried out what we called Price Review 5 for electricity, ESB Networks and EirGrid last year and are in the process of doing the same thing for gas. As part of that, we look at the costs submitted by the network companies that are related to operation, maintenance and development and the companies' projections for what they see as necessary to support those activities for the networks in the five-year period ahead. We go through a detailed analytical process. There are teams within the CRU with experience and expertise in this area. The Senator is right. This is an area where we do bring in external expertise because we need that level of constructive pushback on what the companies would submit to us.

The types of analysis we carry out include benchmarking with other jurisdictions, particularly the UK distribution networks, to assess for types of activities. If ESB Networks is engaged in an activity, is it delivering it at reasonable value compared to similar types of activities in the UK? We would use that as a basis for imposing efficiencies on the network companies so we would look for percentage reductions based on the opportunity to drive efficiencies in what they do.

We also look for innovation because we think using innovation to drive down costs is a real opportunity. First we would put funding towards innovation to ensure they are undertaking innovative activities and then we provide incentives around delivering on innovation. The key point is deploying that so that we can see customers are getting the benefits of it.

We do exert that kind of pressure and put that sort of analysis into it. Underlying that, however, is the need to invest in the networks in support of the public interest effectively. The kinds of areas of investment where we do approve additional spend include around supporting security of supply, better infrastructure for customers, the roll-out of smart meters and the decarbonisation agenda. Network infrastructure is vitally important to ensure first of all that we are connecting new renewable infrastructure to the grid and then removing constraints that that we can move that renewable energy around the grid more efficiently. We do assess those programmes and carry out analysis to ensure the delivery of necessary investment is efficient. The Senator is right. That is a big chunk of customers' bills. We take that very seriously and try to ensure that it is the least cost delivery. Where we can, we also impose those efficiencies to ensure we are getting the best value.