Oireachtas Joint and Select Committees
Wednesday, 13 May 2026
Joint Oireachtas Committee on Climate, Environment and Energy
Energy Prices, Consumer Protection and the Role of Regulation: Discussion
2:00 am
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Apologies have been received from Deputy John Clendennen and Seanadóir Malcolm Noonan. The first session this morning, by agreement of the committee, is on energy prices, consumer protection and the role of regulation. I welcome the following representatives from the Commission for Regulation of Utilities, CRU: Mr. Fergal Mulligan, chairperson; Mr. Jim Gannon, former chairperson and commissioner; Mr. John Melvin, director of security of supply and wholesale markets; Ms Bríd O'Donovan, retail markets manager; and Mr. Fergus O'Toole, active customer and smart metering manager.
I remind everybody in attendance to ensure their mobile phones are either in silent mode or switched off.
Before I invite the witnesses to deliver their opening statements, I wish to advise everybody of the following in relation to parliamentary privilege. Witnesses and members are reminded of the long-standing parliamentary practice that they should not criticise or make any charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.
On the format of the meeting, I will invite witnesses to make an opening statement of a maximum of five minutes. Once it has been delivered, I will call members of the committee, in the order in which they have indicated to me, to put their questions. The committee operates a rota system that provides each member with an initial five minutes to engage with witnesses. It is important to note that the time is for both questions and answers and, therefore, it is essential for members to put their questions succinctly and for witnesses to be succinct in their responses. If we have time, we will have a second round of questions. Please note that the duration of this meeting is limited and, therefore, the times must be strictly adhered to. I ask everybody to be focused in making their contributions.
I invite Mr. Mulligan to make an opening statement on behalf of the CRU.
Mr. Fergal Mulligan:
I thank the committee for the invitation to attend the meeting. I am the chairperson of the CRU, a role I took up only in March 2026. I am joined by my fellow commissioner Jim Gannon, the lead commissioner in relation to the retail market, and my colleagues John Melvin, director of security of supply and wholesale markets, Bríd O'Donovan, retail markets manager, and Fergus O'Toole, active consumer and smart metering manager. We welcome the opportunity to engage with members on issues that are central to Ireland's climate ambitions, energy security and, critically, the experience of households and businesses as we progress through the energy transition and address the issues currently affecting Irish customers.
As Ireland's independent energy, energy safety and water regulator, we act in the public interest by regulating essential services on which every household and business depends. Our core objectives are to ensure that the services are safe, secure, sustainable and delivered efficiently, while protecting consumers and enabling long-term decarbonisation.
The CRU is also supporting and working with the Department of Climate, Energy and the Environment's national energy affordability task force, which we call the NEAT. It was established in 2025 with the objective of delivering medium- and long-term measures to support households in meeting the cost of energy. We understand that the NEAT expects to submit an energy affordability action plan to the Government in the third quarter of this year. In that context, the CRU has also published a call for evidence on protecting and supporting customers facing sustained high energy prices. Members will note we published a report on Monday.
Ireland is undergoing a profound transformation of its energy system. That transformation is essential to meeting climate targets but it is also taking place in the context of continued cost pressures, international volatility and significant infrastructure requirements. Balancing these realities is at the centre of the CRU's work.
We fully recognise the very real concerns among households and businesses about the persistence of high energy prices.
It is important to be clear about the regulatory context in which the CRU operates. The CRU does not have a role in setting prices as the electricity market works on an open and competitive basis as set out under EU law. The CRU does not approve or set retail prices, but we have a clear role in monitoring the market, analysing outcomes, protecting consumers and intervening where suppliers do not meet their obligations. We also work to ensure that households in Ireland have access to well-functioning electricity and gas markets that encourage choice, value and accountability among suppliers. A recent analysis of the market, including a detailed review conducted in 2023, showed that retail prices broadly reflected underlying cost drivers, particularly wholesale gas and electricity prices. That said, we recognise that this does not answer all of the questions being raised, particularly regarding the speed of pass-through from wholesale prices to retail prices, the extent of any price reductions, supplier margins and the overall effectiveness of competition or affordability. We are happy to be here today to talk through all of these things and the various reports we have published. For that reason, the CRU is progressing a retail market competition review, including examination of wholesale to retail pass-through, supplier costs and margins and the overall functioning of the market. This work forms part of Ireland’s wider response under the NEAT and we are engaging closely with the CCPC also as part of this process. We have published and shared with this committee the interim findings of the retail review as it has progressed since we began work on this in December.
The main findings are that competition in the Irish retail electricity and gas markets is working and generating meaningful rivalry, particularly in domestic segments. The assessment is that the market is performing reasonably well from a competition perspective, with switching rates reasonably high. Customers who engage in the market can secure significant savings, which delivers clear benefits for them. As per previous reviews, the interim stage review shows that retail prices continue to broadly reflect underlying cost drivers, including wholesale costs, Ireland’s network architecture, network investment in support of a secure low-carbon transition and the lack of any underlying issues or failures in the competition model. Alongside this review, we continue to strengthen customer protections, including winter disconnection moratoriums, enhanced protections for vulnerable customers and requirements on suppliers to meaningfully engage with customers in arrears. Our approach is based on evidence and focused on outcomes that genuinely support customers while maintaining a sustainable retail market.
In relation to the ongoing issue of arrears, the CRU’s data shows that arrears levels remain historically high. The most recent figures for February were published on 28 April and showed that the total number of domestic customers in arrears in electricity was 316,000 and in gas was 179,000, while the average value of debt in each is €492 and €207 respectively. Customer protection is a core part of the CRU’s mandate. Since 2022, we have put in place enhanced protections to shield all consumers from the most severe impacts of high energy prices. These include extended winter disconnection moratoriums, strengthened obligations on suppliers to engage meaningfully with customers in arrears, minimum repayment plan timeframes and discounted tariffs for vulnerable customers, and financial hardship customers, including requirements to provide all 124,000 electricity registered vulnerable customers and 37,000 gas registered vulnerable customers, and all 28,000 hardship electricity and 17,000 hardship gas customers, with discounted tariffs. Disconnection levels have remained relatively low compared to pre-pandemic levels. This reflects both these regulatory protections and the supplier obligations under the energy engage code.
As we have communicated to this committee previously, the CRU is very conscious that prolonged arrears can store up deeper problems for customers. Our approach, therefore, seeks to balance short-term protection with measures that support sustainable repayment and engagement. The CRU has met suppliers in relation to the current crisis in the Middle East to reinforce the requirements on suppliers to protect their customers. We will continue to engage with them. As we speak, we are carrying out a lot of work with the NEAT, the Departments and other stakeholders. The transition must also be underpinned by secure and resilient energy systems. The CRU continues to support investment in flexible generation, storage, renewable integration and demand-side response. Through the single electricity market, new capacity has been delivered and is under construction. This supports both security of supply and decarbonisation. We are also progressing major regulatory decisions on networks, interconnection and system services to ensure the system can operate safely and efficiently as renewable penetration increases which is a very complex process.
Network investment is a critical enabler of climate action. Through price review 6, the framework for which we published last December, the CRU is regulating unprecedented levels of investment in electricity networks to support electric vehicles, heat pumps, offshore wind, interconnection and economic growth among many other things. This will see up to €18.9 billion of vital investment in our network over the next five years. While such investment will see increases in network charges in the near term, it is essential to delivering a more resilient, low-carbon system that serves consumers over the long term. Strong regulatory oversight is central to protecting consumers’ interests as this investment is delivered. As can be seen in the decision we published in December on PR 6, there are significant controls and oversight included in that decision. A just transition for all customers is important. New policies on electricity connections, grid access and emerging technologies are designed to manage risk to security of supply while enabling clean technologies to connect to the system in a fair and transparent way. We will continue to engage with this committee as key decisions are finalised.
In closing, the CRU is committed to open engagement with this committee. The CRU and its staff are working hard with the Government and with stakeholders to achieve the shared objective of delivering a secure, affordable and decarbonised energy system in the interests of all consumers. We are ready to work with the committee and colleagues. We are happy to take questions.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I thank Mr. Mulligan. I will now invite members in the order they indicated to engage with the witnesses.
Malcolm Byrne (Wicklow-Wexford, Fianna Fail)
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I thank Mr. Mulligan and his team for being here as witnesses. I wish him the best of luck in his role. I will ask a blunt, direct question: what in the CRU's opinion is the reason Irish consumers pay such high electricity prices?
Mr. Fergal Mulligan:
We published a document on Monday which we hope will be very helpful to stakeholders to explain the bill. There has been a lot of criticism from consumers in recent years that they do not understand what is in the bill. That was a fair criticism because there a lot of complicated things in the bill from network charges to the PSO levy, the actual cost of energy itself from wholesale markets, retail costs and VAT - lots of things which are set out in our report we published on Monday. We do not disagree that prices here are high relative to Europe. They definitely are and Eurostat's report shows that. We have heard that many times. Last week was not the first time we heard it. The key components driving the huge cost of our bills are the cost of upgrading our network, which is our PR 6 development at €18.9 billion, what has been spent to date and will continue to be spent, the wholesale cost of buying the energy, generation of electricity and the purchase of gas to generate electricity, which is down to a lot of macroeconomic volatility as we have seen with the Middle East. Those elements make up about 80% of the bill and then there are the other things we spoke about like the public service obligation levy and many other things.
Malcolm Byrne (Wicklow-Wexford, Fianna Fail)
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Mr. Mulligan is essentially saying the two main reasons are that our grid and network are not adequate and we are still over-reliant on imported fossil fuels.
Mr. Jim Gannon:
They are the two key pillars. We spoke about this before but it is worth saying again and getting a common understanding around it - we are an island nation at the periphery of Europe. We have limited primary fuels. Unlike other countries attached to central Europe, we have more limited interconnection than many. We do not have significant nuclear or hydro. We no longer have the opportunity to take more gas.
Malcolm Byrne (Wicklow-Wexford, Fianna Fail)
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Does Mr. Gannon believe nuclear could form part of the long-term solution in terms of energy generation in Ireland?
Malcolm Byrne (Wicklow-Wexford, Fianna Fail)
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We need to look at fast-tracking investment in renewables - this is essentially what Mr. Gannon is saying - in order for us to be able to control costs.
Mr. Jim Gannon:
That is what I was coming to. Gas is our main backup fuel at the moment. However we have significant wind and solar resources here. They are our domestic resources right now with the constraints we have. Those resources, allied to greater flexibility in demand, greater battery investment and greater interconnection, will allow us to match demand with supply but it will take investment. The second piece, as Mr. Mulligan referred to, is that the dispersed population in Ireland means we have four times the amount of electricity wires per capita than the European average.
In terms of maintaining that, making sure it is resilient to storms, cutting timber around it, and ensuring it can be decarbonised and made more flexible, it takes more per capitato create and develop that investment, so there are some fundamental reasons.
Malcolm Byrne (Wicklow-Wexford, Fianna Fail)
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I am conscious of time. I consider it lazy coverage but quite often we hear that data centres are responsible for taking up much of our energy. Data centres and our digital infrastructure are a critical part of our infrastructure. It is correct to say data centres are not a cause of higher electricity prices.
Mr. Jim Gannon:
I do not think there is a black and white answer to that question. Data centres are part of our growing economy. Data centres have significant electricity draw. There is a Government statement from 2022 on the role of data centres in Ireland's enterprise strategy and that calls out digitalisation and decarbonisation as being important to the economy. As for our brief within the regulatory slot, we addressed the security of supply concern in 2021 by requiring that data centres be more flexible or bring their own generation to raise security of supply, or both. In a more recent decision published before Christmas, we addressed security of supply concerns within our brief and we also challenged and forced the data centres to bring along corporate power purchase agreements to reflect some renewables in their mix. However, they bring asks to the grid and bring asks in terms of connection, so they bring costs with them. That said, they bring tax returns to the State. They also bring a significant tariffs contribution. Separately, we have seen that data centres in particular engage in corporate power purchase agreements that potentially displace costs that the PSO levy would otherwise bear, so it is balanced. They bring infrastructure asks but they also contribute to the costs associated with that.
Jennifer Whitmore (Wicklow, Social Democrats)
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There are an awful lot of questions I want to ask following up on that. PR6 is the €18 billion that the ESB is investing in the grid, which is required but forms a large component of the bills people pay. Significantly, a lot of the PR6 investment is going to shoring up the grid for existing data centres. Is that correct?
Mr. Fergal Mulligan:
Not necessarily. When people talk about the grid, ESB Networks, ESBN, and EirGrid are the people who would be spending up to €18.9 billion. The network is made up of the distribution network and the transmission network, as the Deputy knows. The data centres do not use the distribution network or primarily use the transmission network. The cost of running our distribution network is taking up a huge amount of that €18 billion. Take, for example, forestry corridors up and down the west coast, upgrading our high-voltage, HV, stations to low voltage and medium voltage, and our interconnectors. The distribution network, in the next five and ten years, will take a significant amount of investment, and that is not driven by data centres.
Jennifer Whitmore (Wicklow, Social Democrats)
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One of the things the ESB officials said when they were talking about the investment was that a portion of it was to make the grid secure for the existing data centres. They were not looking at data centres being built but at data centres already built. The ESB's report said that data centres would "comprise [7%] of the distribution load in 2030" and that, since this was "based on existing connection agreements that were put in place prior to the CRU direction", the ESB had included that in PR6.
Jennifer Whitmore (Wicklow, Social Democrats)
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Can Mr. Mulligan say that 7% of the €18 billion will be as a result of that? What I am trying to get across is that it may be hard to quantify but data centres are not a zero cost.
Jennifer Whitmore (Wicklow, Social Democrats)
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They are actually putting significant pressures and, I believe, costs on the grid, even if we are looking at 7% of €18 billion.
Jennifer Whitmore (Wicklow, Social Democrats)
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Those costs are going on people's bills. As such, we need to have some level of transparency about what people are paying when it comes to data centres. We need data centres but the question is how many and who is going to pay for them. At the moment, an awful lot of that seems to be falling on the taxpayer to put in the infrastructure to enable them to work.
I want to go to the bills that the CRU has, and it was very interesting to see the bill broken down like this. Network imperfections account for €91 of the average bill. Will the CRU explain what those are?
Mr. John Melvin:
"Network imperfections" essentially refers to how the electricity market is scheduled assuming every electron from every part of the country can meet every other customer and that it is costless to keep the grid secure. In reality, not every generator outside Dublin can move electrons into Dublin or vice versa. The network cannot deliver everything from everywhere. The cost of changing the way the market is organised is called "network imperfections". The network cannot deliver all the electricity all the time, so you have to change things around and turn on plants in Dublin and turn down plant outside Dublin, for example, or vice versa. That is one driver. We control those costs by the network investments that we are speaking about. The North-South interconnector is one piece of infrastructure that is expected to, and can, deliver savings in the imperfections category.
Jennifer Whitmore (Wicklow, Social Democrats)
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Okay. I have only a minute left. Network imperfections are essentially how the grid is balanced.
Jennifer Whitmore (Wicklow, Social Democrats)
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When we talk about wasted energy, which was covered on "Prime Time" last night with EnergyCloud, that is essentially when, at night-time when there is not demand for the electricity, wind farms are either switched off or paid to switch off. It is also when too much energy is being created in one part of the system and it cannot be delivered to another part. In those instances, that energy generation is switched off and therefore wasted, and we sometimes fire up gas generation in other parts of the grid to compensate for that.
Jennifer Whitmore (Wicklow, Social Democrats)
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When we look at an average bill, therefore, we have to pay €91 to essentially switch off our wind generation. Is that correct?
Jennifer Whitmore (Wicklow, Social Democrats)
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Or solar.
Jennifer Whitmore (Wicklow, Social Democrats)
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Primarily, it is curtailment and constraints.
Mr. John Melvin:
Exactly. Another key issue was referenced on the programme. At night, if there are 6,000 MW of wind available but 3,000 MW of demand because most of society is in bed, that is energy that is available to be used for which there is no demand at the moment. There are measures to seek to move demand from outside the periods into the periods when renewables are available, such as long-duration energy storage.
Jennifer Whitmore (Wicklow, Social Democrats)
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Does Mr. Melvin not think it is the responsibility of the CRU to work with the system to ensure that there is demand there? There is demand. The demand can be created through the use of smart meters or encouraging people in the locality. We are wasting €500 million of electricity a year because the system has not been put in place. Germany has been using up its wasted electricity for a number of years and the UK is moving in that direction, so it seems incredible that we are not only wasting that electricity but consumers are having to pay approximately €90 per year to switch it off. It is madness.
Mr. Fergal Mulligan:
If I can come in, I watched the programme last night and I think "waste" is not an appropriate term. The solar and wind farms being built up and down the country are being built primarily as commercial investments. That is going into the hundreds of millions and even billions of euro and it is essential to get our renewable energy system up and running. If the developers did not see a commercial model, they would not build. The imperfection cost, as the Deputy says, or the imperfections model that Mr. Melvin is explaining, is to support our energy infrastructure building and the commercial public-private partnership model that we know from roads and the broadband plan. We have to get these networks built. Imperfections are one part of the job to get them built. If imperfections were not there, somebody would have to pay something else somewhere else, but that is the model that we have agreed. It is not that there is 16% wasted; I would say that there is 84% built. Renewables that are saving us money are being built with the model we have and with the imperfections supporting it. Obviously, our target is to get as much of that energy used as possible and there are all these other programmes that Mr. Melvin might mention - we could talk about battery storage and long-duration energy storage - but huge programmes of work are going on in parallel. A lot of it has happened already.
This is a market in which all of the investment has been happening in the past five or ten years, and will continue to happen. Imperfections in the UK and Europe are a fact of life. We are all trying to address them by reducing them as much as possible.
Jennifer Whitmore (Wicklow, Social Democrats)
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Those countries give low-cost electricity back to the consumer. We do not. Consumers here pay to switch them off.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I will let Deputy Whitmore back in second round, but we have to keep an eye on time.
Ciarán Ahern (Dublin South West, Labour)
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I thank the witnesses for attending. To follow up on the points regarding data centres and how they prevent the decarbonisation of our grid, the Climate Change Advisory Council today reports that data centres are cannibalising all the new renewable energy that is being generated. In the context of PR 6 and the 80% rule, which is that 80% of energy going into new data centres must be renewable, does the CRU have statistics or data in respect of how much additional demand the 20% of fossil fuel energy required will create based in relation to current plans for additional data centres and large energy users?
Ciarán Ahern (Dublin South West, Labour)
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It strikes me that this alone will massively increase our need for gas. I would appreciate an answer on it.
The CRU's report is a good piece of work. I commend the witnesses on it. One of the conclusions is that competition is working reasonably well. However, the report also states that the benefits of competition in our energy market may not be flowing equally and that this can be the result of weaker customer engagement, limited switching by some consumers and incomplete take-up of lower cost tariff options. It goes into some detail to point out that people are relatively good at switching, with approximately 20% of energy users switching. Does the CRU have any strategy to improve that rate? We are still doing relatively well compared with other European countries, and we are above average, but the report has identified some issues. I wonder whether the CRU has a strategy to change it.
Mr. Jim Gannon:
One of the benefits of an interim report is that it provides some findings as we are on route, and, separately, as we work with the national energy affordability task force, which deals with domestic consumers and businesses, particularly those in the SME sector. One of the findings on market concentration and switching is that we are significantly outperforming in the context of switching for domestic consumers. That is according to European statistics as opposed to ours. It is working well, and consumers are finding discounts when they switch. That is by comparison with other European countries. That is not the case with businesses. In terms of businesses switching, we are behind the European average. We believe that is particularly so in the SME sector. This is an area where we want to work with our colleagues in the Department, IDA Ireland, Enterprise Ireland, ISME and the Small Firms Association to understand the best way that we can have the same sort of impact for businesses, including small businesses, that we have had with domestic consumers with regard to switching and getting them to be more active.
In terms of market concentration, which is the number of suppliers fighting each other for business and driving down price, the concentration level for business customers is not as good as it is in the domestic sector. How do we improve competition in order that SMEs and businesses have a chance to look at a greater diversity of suppliers and offerings and get a better deal for themselves? We speak about it working reasonably well, but we do want to go into certain sectors in a bit more detail to find solutions and deliver a plan.
Ciarán Ahern (Dublin South West, Labour)
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In the context of domestic consumers, are there subsets such as older people, those with disabilities or individuals who are not tech savvy that the CRU could focus on or is aware of that may not be taking up switching as much as other cohorts?
Mr. Fergus O'Toole:
We have highlighted some areas where we need further investigation. Some of these are in the domestic sector. We will be looking at issues such as the high market share that Electric Ireland still has. We know some customers have never switched and are not benefiting. We will be looking into that and what we can do to get people to switch and get the benefits of competition. Some of the higher prices we have seen are in the pay-as-you-go sector. We will be looking to see what we can do to help customers. With the introduction of smart meters, there are new products available that might help them save money. We believe there are benefits, and we need to look at the hurdles these customers see and implement policy changes to help them.
Ciarán Ahern (Dublin South West, Labour)
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The figures for switching are that in 2023, 11% of people switched. In 2024, it was 15%. In 2025, it was 18.2%. Does the CRU know whether these are the same people switching again and again? Is there an overlap between these groups? How many people overall have switched in the past five to 25 years?
Mr. Fergus O'Toole:
I do not think we have specific data on how many of them are multiple switchers who switch every year. It is safe to assume that many of them are. There are definitely customers who have never switched. That is an area in which we are planning on doing market research in order to dig into it a bit to see what the barriers are and whether there is something we can change to help them take advantage. We collect data from suppliers on how many customers, instead of switching, ring up and ask for the best deal they can get when their contracts are up. That doubles the figure again. There is a lot of engagement, but there is more we can do.
Pa Daly (Kerry, Sinn Fein)
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I congratulate Mr. Mulligan on his appointment. I have a follow-up on the question relating to nuclear power that was asked earlier. It is clear that Mr. Gannon has severe reservations. He said it would be a major policy decision and that it would take a long time. Would he say it is a red herring, given the lack of movement towards exploring offshore wind? We are way behind on our targets for offshore wind. I think Mr. Gannon would accept that.
Pa Daly (Kerry, Sinn Fein)
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It was described last week, in the new alliance between the Taoiseach and one of his backbenchers, as a new national conversation about nuclear energy. Does Mr. Gannon think it is a waste of time - and maybe I am wasting the committee's time - having a national conversation about it rather than concentrating on renewables, which would be more in line for the Government to be doing?
Pa Daly (Kerry, Sinn Fein)
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Mr. Gannon would say it is not where we need to be. Does he accept that?
Pa Daly (Kerry, Sinn Fein)
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Mr. Gannon is not convinced.
Pa Daly (Kerry, Sinn Fein)
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Mr. Gannon's is not convinced.
Pa Daly (Kerry, Sinn Fein)
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We are ten or 15 years off it.
Pa Daly (Kerry, Sinn Fein)
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There have been a few reports from Eurostat recently about the high level of bills. The CRU would accept that there is massive frustration in the community about the high levels of bills. Would it accept that the energy affordability task force, in the context of the action plan, has been slower than would be ideal in the context of addressing the concerns out there? How many people are on the bask force and how many times has it since it was established?
Mr. Fergal Mulligan:
I would not accept that it is going slowly. What I would absolutely state is that it is really complex. Mr. Gannon and I have been at meetings. There have been several meetings; I do not know exactly how many. I have been at least three that the Minister chaired and others that the Secretary General has chaired. There are a lot of stakeholders at the table. A lot of subgroups have been set up recently with which many of our team involved in them. There are four pillars. Mr. Gannon can speak talk the committee through those.
The amount of work that is going on----
Pa Daly (Kerry, Sinn Fein)
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Strong recommendations have not come out yet.
Pa Daly (Kerry, Sinn Fein)
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To sum up, it is complex, and the recommendations will be out in due course.
Pa Daly (Kerry, Sinn Fein)
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The large energy users have already been mentioned. EirGrid said that 89% of the growth in total electricity needed in the next decade will be attributable to the large energy users. Mr. Mulligan stated that a contributory factor to high bills is upgrading the network, which will be for those users. Given the amount of money that is being expended in upgrading the grid, does he understand the frustration about the fact householders are paying six to eight times more, on average, than data centres for network charges, when, according to EirGrid, it is the data centres that are driving the need to expand the grid?
Pa Daly (Kerry, Sinn Fein)
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I am not saying that we do not need some data centres. We all use their services and so on.
Mr. Fergal Mulligan:
As I explained earlier, there are two factors to our network. The distribution is the tale of poles, cables and wires going the length and breadth of the country to 2.5 million homes. That is up and down every boreen. We know from our broadband plan and our electricity that it is really expensive to build networks to every home. Data centres----
Pa Daly (Kerry, Sinn Fein)
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I am running short on time. Is there a strong argument that the amount of money being paid by householders should be reduced and that the amount data centres pay should be increased?
Pa Daly (Kerry, Sinn Fein)
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Are they paying network charges?
Pa Daly (Kerry, Sinn Fein)
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Mr. Mulligan thinks that data centres are paying their fair share.
Pa Daly (Kerry, Sinn Fein)
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I understand that.
Pa Daly (Kerry, Sinn Fein)
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Mr. Mulligan thinks that data centres are paying their fair share.
Réada Cronin (Kildare North, Sinn Fein)
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I thank the witnesses for attending. It is always a good idea to remind ourselves of why the CRU exists. It was set up in 1999, I think, as we moved from State-led electricity production, which was among the cheapest in Europe, to the market being the answer. The job of the CRU is to regulate the price of energy. As of yesterday, it has been confirmed that we now pay the highest energy prices in Europe. That market change was a bit of a failure really, was it not? The role of the CRU is to regulate energy, which is not just a public good but a public need. Energy being viewed as a commodity is a big problem. In the regulatory context we are discussing, the CRU says it does not approve or set retail prices. However, it has a clear role in monitoring the market. Is there any recent example of the CRU having to intervene with suppliers where they have not met their obligations?
Réada Cronin (Kildare North, Sinn Fein)
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The CRU's role is to monitor the market, analyse outcomes, protect consumers and intervene where suppliers are not meeting their obligations. Can Ms O'Donovan provide any examples of where the CRU has intervened with suppliers that have not met their obligations? What obligations were not met?
Mr. Jim Gannon:
I will answer this in two parts, and directly. What our report right now has shown is that we have not seen excessive or sustained profits. That is an interim finding. We are going to continue that over the next number of months. In relation to excess profit, malfeasance or market manipulation, we have not seen any of that at this interim stage in the report. We will continue to work on that.
Separately, what might be helpful is that we will go back and look at the compliance and enforcement findings we have had over the past couple of years and send details to the committee. They would be on our website. I cannot call all of them to mind now. Some of them relate to network companies. That is how we would deal with reports or specific complaints where suppliers or network operators would not be adhering to their licence requirements, if I can put it that way.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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They do exist.
Mr. Fergal Mulligan:
It is worth noting that we do not react after the event. We are very proactive. Ms O'Donovan can talk through these. We are intervening to put in place better customer protections. We did that during the war in Ukraine where people were having high bills and there were high arrears.
Réada Cronin (Kildare North, Sinn Fein)
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The high bills did not just start when Russia invaded Ukraine.
Mr. Fergal Mulligan:
No, but the situation was exacerbated. The prices went up extremely high, as they are today. They were a lot lower five years ago. We introduced a moratorium to ensure that people could not be disconnected. We work with the retailers to make sure they work really proactively with any vulnerable customers who are having trouble with their bills. We make sure that nobody is disconnected. Disconnections are extremely low and even rare, I would say, compared with the couple of million customers we have. Ms O'Donovan has a couple more examples of where we are proactively helping consumers.
Ms Bríd O'Donovan:
We have a very wide-ranging handbook. It is very detailed and comprehensive. It governs how the suppliers have to engage with customers, how customers are protected and the ways in which the suppliers deal with arrears and disconnections. It is all very comprehensively set up. In 2022, as Mr. Mulligan mentioned, we looked at that. We had seen the high prices following the invasion of Ukraine. We decided to put in place an additional set of customer protection measures. That included discounted tariffs for certain customers, longer moratoriums during the winter months in order that customers would not be disconnected for not paying their bills and a number of other measures. We have reviewed that every summer since, and will be doing so again this year. We have also just published a call for evidence that will feed into what we do this year. If there are short-term measures in there that we can do this summer, that is exactly what we will be doing coming into winter 2026-27.
Naoise Ó Cearúil (Kildare North, Fianna Fail)
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I thank the witnesses for being here. It has already been noted that Eurostat confirmed that Ireland has the highest energy prices in Europe, and that they are 40% higher than in other countries. In its opening statement, the CRU highlighted that it is committed to delivering a secure, affordable and decarbonised energy system. Would the witnesses accept that energy prices are not affordable for households at the moment?
Mr. Fergal Mulligan:
We would accept that they are not affordable for everybody. There is an affordability issue. Part of the work of the national energy affordability task force is to look at affordability for cohorts of customers. There are over 2 million customers and businesses. Affordability cannot be a broad brush in the sense of suggesting that nobody can afford their energy bills. However, there certainly is an issue. The arrears clearly show that. What we are our colleagues in the Department are doing in the context of the task force is that we are trying to look at who is in need most and who needs help. That is a very difficult thing to unpick in the context of a couple of million customers. When we do unpick it, we have to look at how we address it practically with interventions that can be targeted at those who most need them. Affordability is not a broad-brush statement. Our job is to make sure that the network investment is efficient and that there is competition in the market. We cannot address affordability by means of a subvention; that is a State-led thing. We are working with our colleagues in government to look at that.
Naoise Ó Cearúil (Kildare North, Fianna Fail)
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I imagine that the CRU can recommend that within the task force report in quarter 3.
Naoise Ó Cearúil (Kildare North, Fianna Fail)
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The opening statement indicates that the CRU does not set retail prices because the market operates on an open and competitive basis on foot of EU law. I understand that. If the market is competitive but Ireland still has the highest energy prices in the EU, does that not demonstrate that competition, in itself, in this market is not working?
Does Mr. Gannon think additional powers should be granted to the CRU in terms of intervention into the market here?
Mr. Jim Gannon:
That is a fair question, and I will give as clear an answer as I can. There can be significant competition and successful competition in the retail market but that competition cannot solve for the level of wires in our country compared with the average level of wires in Europe. Again, per capita, we have four times the number of wires than are in Europe so we need to multiply any maintenance, upgrade, flexibility or decarbonisation by that. Separately, we are significantly dependent on natural gas as a backup to our flexible fuel supplies. We do not have significant hydro, we have only a small amount of gas on our island, we do not use coal any more, we do not use peat any more - that was a natural resource here - and we do not have nuclear. We are therefore limited as to what we depend on when the international price for gas spikes, as it has done following Russia invading Ukraine and then maintained at an elevated level, although it did come down. Separately, more recently, competition in the retail market again cannot solve for that. There are certain fundamental cost drivers that competition in the retail market can solve for but that does not mean we should not keep driving competition in the retail market, incentivising customers to be more flexible, as Deputy Whitmore said, and making sure that our dynamic tariffs come in this summer so customers are incentivised to shift their demand to make the most of our wind and solar, which we do have in this country.
Naoise Ó Cearúil (Kildare North, Fianna Fail)
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Does Mr. Gannon accept that the competition in the market is slightly flawed, particularly the switching aspect? It was raised earlier by Deputy Ahern. I think particularly of older and more vulnerable customers and how if I call up any of the major energy providers, be it electricity or gas, I can negotiate. I know that if I switch every year, I will get the best deal. It is not purely about an information campaign. There is an element of competitiveness here and retailers taking advantage of a situation where contracts are allowed to roll on and roll over. The CRU should play a role in intervening here. Does Mr. Gannon accept that? Rather than putting the question that way, has the CRU any plans or any intentions to address that problem?
Mr. Jim Gannon:
Yes and yes. We have published a call for evidence in parallel to the retail report. That looks at supplier offerings, that is, in terms of acquisition offers, whether discounts and cash returns are disguising the unit price someone will actually be on after that first period. Separately, in terms of billing, is the information there clear and transparent? Is there too much information there? We are asking questions again of supplier groups and suppliers themselves, both business and domestic consumers. Another aspect is, at the end of the contract, how clearly does someone understand that they will move to a default or a standard tariff? How loudly do we require the suppliers to tell them? In certain cases, latter questions in reports ask if that customer is not just vulnerable or is not on a particular tariff or hardship tariff, are there other reasons the supplier may default them to a more efficient tariff or keep them on an efficient tariff? That call for evidence asks many of those questions and is open. The reason we call it a call for evidence is not that we are trying to start a nine- to 12-month story arc on this. If we get call for evidence actions back that we believe we can implement this summer and that would have impact, we will implement them. However, there are other aspects, as has been stated, where sometimes when you change things in one part of a market, it does not clearly provide efficiency for all. It might just shift them to a different part of the market. However, where we can implement things for those customers, the answers are "Yes" and "Yes".
Naoise Ó Cearúil (Kildare North, Fianna Fail)
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Linked to that, one particularly concerning element is around the prepay element of electricity and gas. A lot of people who have gone into arrears have been encouraged to move to prepay and then with the considerable increases to prepay energy and gas, those families are left in more difficulty. While we are trying to address one problem around arrears, we are driving people into further fuel poverty in another area. I am out of time - I appreciate that, Chair - but I might come back in in the next round to Ms O'Donovan, or the witnesses could give a brief answer if that is okay.
Ms Bríd O'Donovan:
Absolutely. The Deputy said a couple of things a second ago about vulnerable customers. They are on discounted tariffs if they are registered vulnerable customers so we are protecting them very much in that way. They get a discount on their tariff. For the prepay customers who have come from arrears and onto a prepay meter to help them to pay off their arrears, at any point if they decide that solution does not suit them, they can move back to billpay if they prefer-----
Naoise Ó Cearúil (Kildare North, Fianna Fail)
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With no penalty.
Naoise Ó Cearúil (Kildare North, Fianna Fail)
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Is there a penalty?
Ms Bríd O'Donovan:
No, there is no penalty, not for coming off prepay onto billpay, but they also get a discounted tariff while they are on prepay. The idea here is that we are helping them to navigate their way back out of the arrears situation they found themselves in while avoiding disconnection. That is really what we are trying to do.
Mark Duffy (Fine Gael)
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I thank the witnesses for being here. I am from County Mayo and we have a high number of wind farm projects at different stages. As discussed here previously, as regards the sometimes untapped potential to use excess energy that is created, oftentimes there is the dispatch down where there is an oversupply to the grid. We see that more and more people are using battery storage and purchasing electricity at a cheaper night-time rate. I see it as a very good opportunity when Deputy Whitmore mentioned the €500 million that is maybe wasted or at least not capitalised on. There is a very good opportunity there to use that energy. I just want to understand this. Does the CRU have a view on or a role in microbattery storage for residential homes that can capitalise on that unused energy that is being wasted, and is there a policy on it? It is something I have spoken on recently and it is something that should be explored. I refer to the value if the Government were to invest and incentivise homes in areas where there are wind farm developments to have battery storage and to avail of night-time capture to then be released during the day. A good example is EnergyCloud, which the witnesses may be familiar with. That is on a smaller level where it heats up at night-time during oversupply to power hot water tanks. It has a positive impact for those who have higher bills, but specifically about residential microbattery storage to capture unused energy, is there a view on that?
Mr. Jim Gannon:
I am going to suggest I pass over to my colleague Mr. O'Toole on active consumers and perhaps the dynamic tariffs coming in this summer, which could have a bearing on this.
One point I will make at a high level is that before the development of the Climate Action Plan 2023, we wrote a letter to the Department and suggested that Ireland should have a national energy demand strategy. As it happens, we subsequently got the job to write that strategy and we did so. That outlines a suite of actions that look at our demand, how we can make it more flexible, how we can make it more sustainable, and how we can provide the market signals in terms of sending the signal to both domestic consumers and business consumers as well as looking at battery investment and the large-scale infrastructural investment. It would be worthy of bringing back to the committee as a session just to talk about flexibility in terms of progress along those lines. There is progress along all those lines. There are barriers in the way for some of them that we are seeking to address, but talking about flexibility in a session may be good. It would help all.
In terms of the specifics, we are very much aware of EnergyCloud. It is an out-of-market solution currently; it is not within the market. We note, as Deputy Whitmore said, that the UK is moving towards something like that within the market, so it is something that is of interest to us.
I ask Mr. O'Toole to speak about the dynamic tariffs, which might be of interest, and how microgeneration is treated at the moment in the market.
Mr. Fergus O'Toole:
We do not have any specific role in installing domestic batteries but it is a huge advantage to customers if they have a battery and they can charge it at cheaper night rates. We see that with EVs now where customers are offered really cheap rates at night. From next month, customers with a smart meter will be able to avail of dynamic tariffs. They will not be for everybody and I caution on advising people, but what they will do is reflect the wholesale market charges. If there is high renewable output at night and the prices are low, people will be able to avail of those cheaper rates. On the flip side, when there are low renewables and prices are high, they will be subject to them. There are a lot of changes happening in the market that will bring in ability for people to be more flexible users and take advantage of when prices are lower.
Mr. Fergal Mulligan:
When it comes to residential, the price of batteries is coming down significantly.
I got panels put on my roof not that long ago, and the price of a battery was something like €3,000. My brother is getting them this week and it is half the price a year later. There is a huge push on with the providers of solar to make sure domestic customers actually get the batteries as well. People are catching on to the fact that we want to have batteries. They are also getting inverters now so they can use their electricity when there is an outage. Nearly 200,000 domestic customers now have solar panels, and this figure is growing by thousands a month. Battery storage in homes is now a real thing.
Mark Duffy (Fine Gael)
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That is great. To round out this area, could the CRU do some analysis of the cost benefit of, hypothetically, every house in Ireland having battery storage, compared with the costs being incurred?
Mark Duffy (Fine Gael)
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I do not think there are grants for batteries at the moment.
Mr. Fergal Mulligan:
Well, there are grants for heat pumps, and it has doubled to €12,500, and for solar panels. Everybody buys this as a package and they get the grant. When I bought it, it was a grant for the solar panels and the whole package. The providers are pretty into doing it. As I said, though, I do not think there is a need for a grant for the batteries. Their cost has come down to a very cheap price anyway.
In terms of the cost-benefit analysis, I can attest to the savings I am making from the solar panels. They are definitely there. It is quite easy to do it in terms of the average domestic user. We can do that, but I can attest to the benefits outweighing the costs.
Mark Duffy (Fine Gael)
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I agree 100%, but it would be good to have a short body of work to understand the financial opportunities.
Mark Duffy (Fine Gael)
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I thank Mr. Mulligan.
Barry Heneghan (Dublin Bay North, Independent)
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I will be very direct because we have limited time and I will be looking for clear answers. I thank the witnesses very much for coming in and for the reply to my email on Monday of this week.
I went through the 47 recommendations from the committee’s pre-legislative scrutiny of the private wires Bill. I have prepared a full written response on how my Bill, which I have been working on for the last year and a half, will answer this need. I believe that the cleaner, faster and more workable approach keeps the CRU at the heart of regulation and in full compliance with the EU electricity directive. I am grateful that the CRU has agreed to meet me and I am looking forward to working with it to make sure that whatever we do in this House is for the benefit of the Irish people.
I will begin with the large energy user, LEU, policy, because this is central to the private wire debate and the Climate Change Advisory Council, CCAC, report that was published. It says, from my reading of the report, that data centre demand is cancelling out renewable gains and leaving Ireland exposed to global fossil fuel shocks. This question can be answered by Mr. Mulligan or Mr. Melvin. The LEU policy requires large energy users, including data centres, to demonstrate a pathway to using 80% renewable electricity. That is great, and it was in the programme for Government, but there is a six-year window to achieve it. Was that decision to choose the six-year timeframe within the CRU's control? Does it believe this duration is compatible with the urgency highlighted by the CCAC report?
Mr. Jim Gannon:
We can come back to the Deputy with more detail on that question. It is important to note that while that requirement has been put in place, and a period of six years has been placed on it because we believe that might be the time it would take to develop a wind farm once it is known that the data centre itself is going to develop, the detailed implementation will be down to both EirGrid and ESB Networks.
Barry Heneghan (Dublin Bay North, Independent)
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Okay.
Barry Heneghan (Dublin Bay North, Independent)
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Yes.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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The question is about the genesis of the six-year period. The Deputy is asking where this six-year period comes from.
Barry Heneghan (Dublin Bay North, Independent)
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Yes. Just to be clear, because this is the crux of the private wire debate we are having at the moment in the Chamber, is it being said the six-year period is based on system delays rather than on technical or regulatory necessity?
Mr. Fergal Mulligan:
It is up to six years. We obviously want them to get there faster. I believe data centre developers will also want to get there faster for commercial reasons to decarbonise in the context of their own social corporate responsibility. The reason it is running up to 2030 is because, as Mr. Gannon said, we have solar parks, and wind farm parks onshore and offshore. As the Deputy knows, the first offshore project is not there yet, with the first project due in 2029. That means that these data centres will be doing corporate power purchases-----
Barry Heneghan (Dublin Bay North, Independent)
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Yes, I am sorry-----
Barry Heneghan (Dublin Bay North, Independent)
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I am under time pressure. Just to be clear, and with respect, is the six-year window primarily a reflection of grid connection delays, yes or no?
Barry Heneghan (Dublin Bay North, Independent)
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Yes, I know, but it is central to hear that from the CRU for the debate.
Barry Heneghan (Dublin Bay North, Independent)
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I understand. I am being given a "Yes" and a "No". Regarding reaching that target of 80% renewables, in the context of systems, planning and grid sequencing - and I do respect the work that the CRU does - given the warning today that we are already exposed to fossil fuel shocks and the recent rise in the price of LNG, does the CRU accept that direct lines or private wires connecting new renewable sources straight to LEUs or industrial loads could reduce this timeframe from six years to three years, two years or maybe even six months?
Mr. John Melvin:
I suspect the Deputy knows more about the private wire aspect than I do. I was not here on 25 April, but I welcome the report. I know there are approximately 47 recommendations in it. Direct lines are already in the legislation, and private wires could well be an amendment of that piece. The idea behind this is that entity A can call for a connection and find a way to build it itself to do so faster involving a connection to a wind farm, for example, and a proximate power generator. Can that be done quicker? The trigger will be pulled by entities to do direct lines and-or private wires if they believe they can do it quicker because these entities tend to have corporate requirements to meet their own renewable targets. The idea is that if people believe it can be done quicker, then they will use this legislation once it is in place. That is the idea.
Barry Heneghan (Dublin Bay North, Independent)
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The difference between the Government Bill and my Bill is that I want the CRU to be the single sheriff in town.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I am sorry, Deputy, but there is another speaker to come in.
Barry Heneghan (Dublin Bay North, Independent)
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I am just wary of the time, and this is very important for the debate. They are running down the clock.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Hold on a second, Deputy.
Barry Heneghan (Dublin Bay North, Independent)
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Yes.
Barry Heneghan (Dublin Bay North, Independent)
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That is brilliant. I really appreciate that answer because it is very important to the debate. I want to confirm, then, that the CRU agrees in this regard, yes or no, and no ifs, buts or maybes. Does the CRU accept the principle that maybe generation-on-demand or generation collocated with and directly connected to an entity, without waiting for the grid reinforcement queue, can result in the delivery time being significantly shorter, and, therefore, help us to reach our targets?
Barry Heneghan (Dublin Bay North, Independent)
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That is brilliant.
Barry Heneghan (Dublin Bay North, Independent)
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Brilliant. I really appreciate that. I thank the witnesses.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I thank Deputy Heneghan. I have a few of my own questions. To pick up on Deputy Ó Cearúil’s point in relation to the market, the CRU is saying that the Irish market is working. Clearly, however, the pan-European market is problematic. Would the CRU agree? We have seen the Eurostat data, where there is a cost of €40 per megawatt hour, I think, versus €10 per megawatt hour in Hungary. I know there are other issues at play. The market in Ireland may be working but the pan-European market is not.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I am referring to the range of prices we see across Europe. It is enormous. I know there are also structural issues.
Mr. Fergal Mulligan:
There is the pan-European aspect, but embedded within that overall context, Hungary and Romania have completely different economies in a completely different state of growth and everything else. We are comparing digitalisation in Ireland versus digitalisation in Romania and all those sorts of things, including demand and supply. It is really difficult to compare apples and oranges. Again, the dispersed nature of our population must be contrasted with a highly dense population of hamlets and cities.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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There are a lot of local factors.
Mr. Fergal Mulligan:
There are a lot of local factors, including macroeconomic and structural ones on the ground. There is also the cost. I think Ireland is leaping ahead in terms of investment, which will be recovered through bills. Are those other countries really investing in the billing that will be required for their country? I am not sure.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I have a second point on this issue. Generation was mentioned. What single thing would the CRU advocate for to reduce the cost of generation in Ireland? Forget the network, I am just asking about generation costs in terms of the price of wholesale electricity.
Mr. John Melvin:
I will briefly answer the first question. In defence of the European mechanism, the electricity market has marginal pricing, which sometimes gets a lot of criticism, but it is that marginal pricing that sends the signal of when is a good time to use the cheap renewable electricity, whatever time of the day that might be. It is about the type of issues Deputy Whitmore was discussing. The difficulty of getting electricity from one part of our small island to the other is real and drives costs. The European context has created a better way to share electricity between neighbours. For example, even though the UK has left the EU, we still have a shared electricity interconnection with GB, and that trades very efficiently.
When they have cheaper electricity than us, it allows us to very efficiently import that. Spain is an example of a country that was exposed to the gas price when Russia invaded Ukraine. In the intervening period, it has increased the amount of renewables it has and has found ways to get those renewables to the market and to customers.
Deputy Daly was speaking to the push to build out renewables, connect them to customers and operate the system in a way that allows the electricity to safely and securely get to customers, which is what will bring us to the point of being no longer so exposed to fossil fuel prices. It is not one bullet. It is a combination of all of those things, plus interconnection, whereby if we do not have nuclear here, we can import low-price nuclear power from other places. If we have excess renewables and it is the middle of the night, we can export that to jurisdictions on the Continent. It is a combination of everything.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Even on the generation side, it is a combination of all those factors.
Mr. Jim Gannon:
I will make one intervention to illustrate how not simple it is. I do not mean this in any pejorative sense but one of the consequences of taking some thermal plant off our system has been as follows. A big generator spinning a big piece of metal brings stability to the grid. That power quality means when wind hops on and hops off or demand hops on and hops off, you do not have blackouts caused by changes in power quality because they keep momentum on the grid. Quite quietly over the past while, we have procured what are called low-carbon inertia services. Instead of having to burn thermal and carbon-based fuels to create stability on the grid, we have bought units that use lower carbon electricity to spin a flywheel. When the stability is required on the grid, they connect in a low-carbon way. It means we do not have to keep on nine units burning fossil fuels any more - we only have to keep on eight, then seven, then six and then four. Taking some of the thermal off, unless you have a back-up for some services that we do not generally talk about, and that is low carbon-----
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I need to watch my clock or I will get in trouble with the committee. I have a couple of other questions. Moneypoint was in the media recently. What is the CRU view on bringing Moneypoint back on?
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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On PR6, there are costs baked in. It is to do with the network, in the main, and the upgrade of the network, all of which is worthwhile. How long are those costs baked in? PR7 will come after PR6. At some stage the grid will be upgraded in line with what we need, and then the costs should start coming down. What is the story with PR7? Will we see a downward trajectory in terms of costs?
Mr. Fergal Mulligan:
Again, there is no simple answer. I will certainly not say costs will come down. The €18 billion the Cathaoirleach is talking about is a combination of capital costs and operating costs. Most of the capital costs are being spread over 50 years. While PR6 is a five-year framework, the majority of the costs are recovered up to 2050 or 2060.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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We are locked in on those, effectively.
Mr. Fergal Mulligan:
We are locked in on those, absolutely. If you spend €1 billion on a project and it is spread over 50 years, that is how it should be because all consumers benefit over 50 years. The operating costs, of course, are recovered in the year in which they are incurred. The offshore wind projects will come on stream in 2029. The programme of phase 1 and phase 2 could be €5 billion or €6 billion. That will be spread over 20, 25 or 30 years, while the wind farm project is generating electricity. PR7 will still have significant capital and operating costs, as PR8 probably will. As our economy grows, we will have more wind farms and solar farms, which will require more wires. I do not anticipate the €18 billion for the next five years coming down significantly. That does not necessarily mean prices will go up or down. Members may remember from December that PR6 did not lead to an exponential change in bills. It could have been between €2 and €3 per month, even though it is a huge number.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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It is as much the principle, in terms of------
Mr. John Melvin:
As people decide fossil fuel transport is too expensive and move to electricity-based transport and as people decide fossil fuels heating is too expensive and volatile and move to electricity-based heating, that electrification of heat and transport is built into these price reviews. We are building more wires to allow that but then we will be using those wires. There is a use planned for that additional investment.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Okay, thank you. We will do a second round because members have indicated. The Leas-Chathaoirleach will take the Chair for the second round.
Jennifer Whitmore (Wicklow, Social Democrats)
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Going back to the premise and genesis of the report, this was an examination of the retail sector. Was there any examination of competition in the wholesale sector? The CRU has determined the retail sector is pretty much following the same track as the wholesale sector, but there is a huge disparity between wholesale and retail - the highest in Europe. Did the CRU look at whether there is sufficient competition in the wholesale sector?
Mr. John Melvin:
This particular analysis, as the Deputy pointed out, focused on the retail space. In terms of the wholesale space, the island of Ireland has 1,500 MW of connection to GB. The key thing to track in that space is how our prices compare to GB. Our prices are often set by the price in Great Britain. We have been importing significant volumes of electricity from GB. Another way to say that is we have been importing lower prices from GB when we import. Is there space for further interconnection? Further interconnection is expected in late 2028 to connect us to the pan-European market. We are a small island and on any small wholesale market, one has to be vigilant for market power. In a larger continental space where you are connected to many other countries and can import competition from other jurisdictions, it is less of a concern. Last year, there was the addition of 500 MW of imported interconnection and in 2028 another 700 MW will be added. That is a key protection for consumers.
We have market monitoring. We have a market surveillance unit, a full-time team dedicated to watching what operates in all the various markets in the timeframes. We can and do take compliance actions where necessary. Clearly, we would not discuss that in any great detail but we can and do take compliance actions where we see matters that we are concerned about.
Jennifer Whitmore (Wicklow, Social Democrats)
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It was stated in the report that further work is required to make a more detailed assessment. What further work? What was not included in this interim report?
Mr. Fergus O'Toole:
That report was conducted in the timeframe we had. We will be delving deeper, not into any new areas but into the areas we looked at. We want to delve deeper into supplier cost and supplier margins. We gathered some information but there is more to gather on that. We want to look at some areas that were highlighted as potentially problematic, like the lower level of business switching. We want to look at sectors like pay as you go or customers who have not switched, those sticky customers. We want to look more at barriers to entry and exit and the cost for market entry. It takes time to track all the costs and how they compare to other markets. It is more about delving deeper into the areas we looked at. The consumer survey will be looked into as part of that. Why are businesses not switching? What problems do they incur?
What are the pay-as-you-go customers' views? Why are there sticky customers who never switch? It will support that further.
Jennifer Whitmore (Wicklow, Social Democrats)
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This report and its determination that the market is working well was really based on the same parameters that had been used in previous reports that also said the market was working well but there is now potential that CRU is going to dig deeper. This is not a fait accompli. It could be the case that there are problems identified in subsequent reports when CRU looks further into this issue.
Mr. Fergus O'Toole:
The analysis finds that, overall, competition is working well but there could be market segments or areas where there could be improvements and that is what we are going to dig into and find. If we have policy recommendations, that will improve competition we will be making and implementing them.
Pa Daly (Kerry, Sinn Fein)
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Mr. O'Toole just said there could be policy recommendations. Could he follow through on that a little more?
Mr. Fergus O'Toole:
For example, if we engage with elderly customers through the customer survey who we find never switched, is there something we can do to facilitate their better engagement in the market? Do we need to have clearer information? It could be as simple as that. Or, if businesses are not switching because there is not sufficient transparency in tariffs, are there changes we could make that would help them.
Pa Daly (Kerry, Sinn Fein)
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I received a copy of a bill this morning from someone and it was €801. On top of the mortgage they are paying it is the best part of €2,000 per month. That is a double-income family. When CRU's report says the market is working reasonably well, they do not believe it is working well for customers that are paying these extortionate prices. They see some suppliers increase their prices twice in the course of a summer, like last year. They blame standing charges but the price they increase is way more than the actual standing charges. Would CRU accept that the increases some of the providers have applied is in excess of the amount they are blaming it on?
Pa Daly (Kerry, Sinn Fein)
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Obviously, their desire to make extra profit would be a factor as well.
Mr. Jim Gannon:
We have heard this spoken about before. We committed to going away and talking to some of the suppliers about these things. When network tariffs increase, occasionally suppliers would say they would hold their prices. Coming into last summer there were some suppliers who had held their prices for their consumers. Then when the next round of network tariffs came along they increased rates but also took on some of the increase from the previous instance when they had decided to hold their prices for consumers.
Pa Daly (Kerry, Sinn Fein)
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One supplier increased again in the same summer.
Pa Daly (Kerry, Sinn Fein)
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Are witnesses satisfied with the amount of resources and staffing CRU currently has? Are there any extra powers CRU needs or would like to have to investigate so a serious attack on the size of bills can be achieved?
Mr. Fergal Mulligan:
On the resources, we have engaged over the last couple of years with our parent Department, the Department of Climate, Energy and the Environment. I am glad to say in recent weeks we received a letter with an extra sanction of 66 people meaning our head count will go up to 263 people.
Pa Daly (Kerry, Sinn Fein)
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Does that mean CRU was not happy with the amount of people it had before it received this letter?
Pa Daly (Kerry, Sinn Fein)
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Was CRU short staff up until now?
Mr. Fergal Mulligan:
We were short. We also outsource a lot of work to consultants and whatnot. We now have this allocation until 2030 and CRU will be sized on that basis. Regarding powers, members will never hear a regulator say they do not need more powers; of course we do. We engage with Departments on the area of extra consumer protection powers all the time and the NEAT process itself. We look at whether we should have more powers and where they might be. There are a lot of new powers coming our way in terms of artificial intelligence, the NIS2 directive, which relates to cybersecurity, and the critical entities regulation. We are getting a lot of new powers.
Lorraine Clifford-Lee (Fianna Fail)
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We have to move on to the next speaker. You are well over time.
Pa Daly (Kerry, Sinn Fein)
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Finally, in relation to the amount of network charges that were being paid by households, was CRU ever approached by academics or researchers about addressing that question?
Lorraine Clifford-Lee (Fianna Fail)
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A yes or no answer, please.
Pa Daly (Kerry, Sinn Fein)
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It is about the amount of network charges being paid by householders compared with data centres.
Lorraine Clifford-Lee (Fianna Fail)
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I call Deputy Heneghan.
Pa Daly (Kerry, Sinn Fein)
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Will CRU make that available?
Lorraine Clifford-Lee (Fianna Fail)
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I am sorry but we are moving on to Deputy Heneghan.
Pa Daly (Kerry, Sinn Fein)
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Apart from those reports, are there any other reports from individual academics?
Lorraine Clifford-Lee (Fianna Fail)
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I am sorry we have to move on.
Lorraine Clifford-Lee (Fianna Fail)
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I am sorry. We have to move on to the next questioner, Deputy Heneghan.
Barry Heneghan (Dublin Bay North, Independent)
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I thank the witness for confirming that in principle. Regarding plug-in solar, this question is directed to Mr. Gannon or Mr. O'Toole. I want the apartment dwellers that I represent to be allowed, as is the case in other countries like Germany, to use plug-in solar. From the 2024 consultation, did CRU submit a consultation and, if so, what was the outcome? We see these systems being used successfully. What is CRU's opinion? Does it support the introduction of safe, certified, plug-in solar? If not, what precise technical issue does CRU have with it?
Mr. Jim Gannon:
I am pretty sure I am correct in saying that we did not submit a consultation response but generally we do not. We do always work with colleagues in the Department and other Departments on the development of policy when asked. In terms of plug-in solar, it has become significantly more popular in lots of different countries. It is especially popular with people living in apartments. There are a couple of important aspects. Does it suit our grid? It is not just about the technical safety standards within the Department but also to make sure that, when it is plugged in, our electrical standards are such that, if it is five, ten, 15 or 20 different apartments in the same block and not just one user's plug-in socket, the overall system can take it. That is in terms of technical and safety standards. That should be a technical analysis.
Barry Heneghan (Dublin Bay North, Independent)
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That is perfect. I appreciate Mr. Gannon's safety concern. That is his job. I am thinking of building a kit myself. Safety is exactly why other EU countries, especially German and the UK, use a certified microverter with the anti-islanding protection and simple plug-in compliance. I understand German plugs are different from ours but that can be changed on site. I also understand there might be older apartments that might not be viable. However, for the new apartment builds and social and affordable housing across north Dublin that I represent, when we see a system that could be brought in to reduce energy bills at the moment, will CRU commit to developing a certificate pathway so Irish households can legally use safe, regulated, plug-in solar technology that it is available in Europe?
Barry Heneghan (Dublin Bay North, Independent)
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CRU's priorities for 2025 to 2027 include supporting the transition to net zero and enabling efficient energy and competitive markets. That would really help with that.
Barry Heneghan (Dublin Bay North, Independent)
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To be clear, I am asking whether CRU would create a standard or whether it has a standard or an opinion to not block the technology for the Irish people.
Mr. Fergus O'Toole:
We took a bit of a look at this. The standards need to be pan-European. There is not a specific standard in Ireland. We have engaged with the NSAI on this. One of the safety issues is not just about the installation. There are also safety standards around registered electrical contractors. Imagine if someone goes into an apartment and thinks the power is off but there is a plug-in solar and it is a live wire. Those standards of how electrical contractors operate need to take into account these plug-in solar.
Barry Heneghan (Dublin Bay North, Independent)
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I 100% agree. It has been done successfully so could we use the German or UK model as a pathway for us?
Barry Heneghan (Dublin Bay North, Independent)
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I thank the witnesses.
Ciarán Ahern (Dublin South West, Labour)
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Sticking with plug-in solar, has the CRU been tasked yet with coming up with any regulatory framework for it? Is that on the CRU's agenda?
Mr. Fergal Mulligan:
My understanding is that, from a policy perspective, it is with the Department. The Department is thinking about how best plug-in solar can be rolled out, used, etc. The Department will engage with us then. We have a safety team. Our director of safety, Ms Loretta Joyce, is involved in that discussion about what the appropriate standards are. We oversee electricians in Ireland through the Register of Electrical Contractors of Ireland, RECI. They would be the people tasked with installing and maintaining these and they need to know what the standards are. That is something Mr. O'Toole alluded to.
Ciarán Ahern (Dublin South West, Labour)
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Are there are any differences between the standard of our grid and that of Germany, the UK or elsewhere that might prohibit it?
Ciarán Ahern (Dublin South West, Labour)
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Sorry. I mean in terms of grid capacity, for example, to take on all of this additional plug-in solar.
Ciarán Ahern (Dublin South West, Labour)
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Therefore, there is nothing from the CRU's perspective standing in the way-----
Ciarán Ahern (Dublin South West, Labour)
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-----of a fairly prompt roll-out, you would hope, of plug-in solar.
Ciarán Ahern (Dublin South West, Labour)
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If Germany can go ahead without that, surely we could as well.
Ciarán Ahern (Dublin South West, Labour)
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The report here is great. It identifies issues as to why we have elevated retail prices. I suppose we are only looking for solutions to that now as well, and in the short term. We have spoken a lot about long-term grid infrastructure bringing on renewables, etc., and we discussed switching as potentially something that could help people reduce their energy bills, but is there anything else the CRU can do in the short term to help alleviate prices? People have suggested automatically switching people to the cheapest possible tariff to prevent these loyalty penalties that you hear about. Is that something the CRU would consider or is it something the CRU would need additional powers for? Are there any alleviating measures like that that we can take in the short term?
Mr. Fergal Mulligan:
In terms of the short term, there is no silver bullet to reduce at the level people would like, as in reduce your bill by 50% or 30%. There are lots of things through the national energy affordability task force, NEAT. There are lots of people working on the NEAT, including suppliers, the ESB, EirGrid and ourselves. There are a lot of brains behind this, over the past number of months and the coming months, to see what the immediate short-term solutions are that will alleviate some of the hardship for those people who need it most.
For everybody, there are short-term solutions around looking at their usage. To somebody who has a bill for €800, I would be asking what on earth is in that bill, what are they using and are they using energy that they should not be using. Going back to demand response, there are lots of things that I could be doing differently. Do not turn everything on at 5 p.m. in terms of cooking, washing and so on. People are doing that, and it is at double the rate that it could be three hours earlier. There are lots of things around education and information that we can do in the short term for people who may just not be using their electricity wisely, and that could save you €100 in a month. We do it. Everybody is doing it. There are lots and lots of initiatives.
There are other things around switching. There are the smart tariffs. If you are not using a smart meter, please use it. There are only 700,000 or 800,000 using smart meters. There are 2.1 million of them deployed. Why are 2 million people not on smart meters? We need people on smart meters, using a smart tariff and using their energy smartly. That is what we absolutely need. That should be done immediately.
Malcolm Byrne (Wicklow-Wexford, Fianna Fail)
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I agree with Mr. Mulligan. The CRU can be assured in terms of smart use. We do not vote here until nearly midnight. In terms of energy usage, we avoid peak times.
It is still interesting, with regard to the long-term solution. Essentially, the reason we are paying more for energy here in Ireland is we continue to rely on imported fossil fuels and we know what we need to do to get over that. The other reason is, as Mr. Mulligan said, the grid infrastructure.
I was quite interested in the point about settlement patterns. This could be a controversial view. The CRU explained about the wiring and connections. They amount to four times the per capita cost here in Ireland. I am wondering wow the CRU fits in with our overall spatial planning. This is when I talk about negotiating with Uisce Éireann because one of our big issues, as the CRU will understand, is around housing. We often cannot get houses in villages because of the fact there is not water supply. If we are going to reduce some of the costs there, it is about the input into that side.
Mr. Mulligan mentioned looking for specific additional powers with regard to consumer protection. He might mention what they are.
Mr. Jim Gannon:
There are certain things that are locked in in terms of where we are geographically and the topography of our grid, but there are also significant opportunities for us. How we plan our energy infrastructure and how we utilise spatial planning is critical, and that includes enterprise development. If we look at where we site enterprise, particularly energy-intensive enterprise, and how we bring all of the utilities there or bring those enterprises to the utilities, by which I mean transportation, broadband and dark fibre, water, electricity, gas and decarbonised gas where required, that deserves significant analysis and could reap real dividends, although maybe not in the short term. However, if we are talking about a generational change, it is okay to take ten, 20 or 30 years to make that sort of impact, and that is where you get that kind of impact on the topography.
Deputy Whitmore posed a challenge to us to say what the one or two key things we would do were. The Cathaoirleach also posed that challenge to us. One of the key things that we have described here is about sustainable demand and flexibility. That is at heavy industry level, at grid level through batteries, and also people in their homes with their EVs and naturally timing their demand. Flexibility is the cheapest way to address security of supply, the cheapest way to bring down generation costs, given that you do not need it, and the cheapest way to increase resilience and decarbonisation. It is the single cheapest way of doing that. If we can do that, it avoids increasing the investment or avoids some of that increase in investment in the networks that there would otherwise be. Flexibility is core.
Malcolm Byrne (Wicklow-Wexford, Fianna Fail)
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On the consumer protection piece, very quickly.
Mr. Fergal Mulligan:
I am afraid I will not give the Deputy a straight answer on that and I would not waste the time of the committee suggesting changes in laws that we may not need. We are going to spend the next number of months going through the call for evidence from consumers as to what we should be doing. We will look at that and ask whether we can do it, or if we cannot, what we need to do, which has to do with powers. That could include prepay. It could be gathering data from the industry. We might say that we do not have enough powers to gather data from the industry, which is what people here want to hear. We will look for powers to do that. That is an area I would probably be conscious of looking at.
We just need to identify those top five things where we might need greater powers that will clearly make an impact on consumers. I do not have that list today. We will hopefully have it in the next few months.
Malcolm Byrne (Wicklow-Wexford, Fianna Fail)
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I might suggest we schedule a future meeting on that.
Naoise Ó Cearúil (Kildare North, Fianna Fail)
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Mr. Melvin referred to the Celtic interconnector, which is due to be completed in late 2028, and how, staying on the topic of competitiveness, there was a bigger market in Europe, there was more interconnection, etc. Does Mr. Melvin envisage that there will be increased competition upon the completion of the Celtic interconnector?
Mr. John Melvin:
Essentially, supply and demand come together in the market on the small island of Ireland. We are using the whole island because we have a single electricity market. When we are interconnected to France at the very same time that the market first gets together in Ireland, the French market will be there to the tune of 700 MW. Unless things change in terms of EU-UK reintegration, immediately after that timeframe, 1,500 MW of competition from Great Britain, GB, is available into Ireland.
That will increase competition in Ireland because French producers and consumers will be in our market, just like we have GB producers in-----
Naoise Ó Cearúil (Kildare North, Fianna Fail)
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Without predicting the future, it would be a fair assumption, based on basic economic principles of supply and demand, that beyond 2028 we would imagine the price of electricity will reduce.
Naoise Ó Cearúil (Kildare North, Fianna Fail)
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I am not asking Mr. Melvin to give guarantees.
Naoise Ó Cearúil (Kildare North, Fianna Fail)
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Sticking to the area of competition, and largely looking at affordability, during the invasion of Ukraine and the Covid-19 pandemic prior to that, we had energy credits. There continues to be an issue of affordability. I take Mr. Mulligan's point that affordability is not an issue across the board. It is particularly targeted in lower income households, for example. Notwithstanding that, energy is costing people more and they are naturally frustrated with the cost of electricity and gas and seeing their bills increasing on a monthly basis. What would be the best policy intervention for the Government to take to help households that are struggling? Would it be another energy credit or did that create too much volatility in the market? Are there other levers the Government should take?
Mr. Fergal Mulligan:
If I had the answer to that, we probably would not have a NEAT. We are advising as best we can within the NEAT on that very question, and a report will be published in due course.
The energy credits were universal. The Government has made it very clear - when Paschal Donohoe was in situ he made it very clear and the Minister, Deputy Jack Chambers, would say the same - that a universal credit is not on the cards. It is something that is very expensive, applies to people who do not have an affordability issue, endures year on year and is very difficult to remove. We have said at the table in the NEAT, and across the table everyone is in agreement, that a targeted measure is the most effective measure, and the most cost-efficient to the State, to invoke. What we are all struggling with is how do we do that in the most practical way that is implementable by companies that have lots of complicated systems – and billing systems are extremely complicated – that hits those people who need it most and does not hit people who do not need it. It is a very complicated thing to do. In principle, it is simple to speak of a "targeted measure" but implementing it in practice is extremely complicated.
We need to work very hard with ESB Networks, which has the 2.3 million meter point reference numbers, MPRNs, on its books. These need to feed into the retailers, of which there are many, that have the retail bill and code. Then we have the Department of Social Protection which has a cohort of vulnerable customers, pensioners and everything else. Between all these stakeholders, we need to come up with a solution but it is very complex. We all understand we have a short window to do it. We need to do it before winter, and that is what the NEAT is envisaging will be done.
Lorraine Clifford-Lee (Fianna Fail)
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Mr. Gannon has 25 seconds.
Mr. Jim Gannon:
I think Mr. Mulligan has covered everything. The key questions for any proposed or potential intervention are who falls within the bracket of who you are trying to target and what is the definition of that customer. Separately, what is the mechanism by which you get the support to them and how do you do that most efficiently in a way that you can track it and trace it? Third, how is that funded? Is it by the Exchequer or is it by other consumers? How do you make sure it has that impact and is funded in a way that is not inequitable for others, if I can put it that way.
Naoise Ó Cearúil (Kildare North, Fianna Fail)
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The fuel allowance and household benefit package are available. That covers 420,000 households. That is the start. The point the witnesses are making is that there is a cohort outside of that which is largely impacted as well. We do not know what exactly the number is. We are going on what we have from the Department of Social Protection.
Ms Bríd O'Donovan:
On the energy credit, because they were broad ranging, we saw the evidence that showed they gave short-term relief but the arrears levels crept back up again very quickly afterwards. That was partly because they were not targeted at those who really needed it. Instead, those who really needed that relief continued to remain potentially in arrears for a longer time. That is what we are trying to solve.
Lorraine Clifford-Lee (Fianna Fail)
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I have questions linked to that. I have been speaking to a charity that provides food and other services for people at risk of homelessness, homeless families and people in energy poverty. It told me there has been a huge increase in demand from working families looking for support around energy. The point Deputy Ó Cearúil made about a cohort falling outside of the typical at-risk of energy poverty customers is huge.
My specific question is in relation to the high rate of pre-paid customers for gas and electricity in this country. The costs of pre-paid electricity are very high. What is the commission doing to help energy companies to assist their customers to move away from the pre-pay meter system and move into something they can get a better rate? From speaking to people, they are nervous about moving away from a pre-pay meter. That could be an historical issue. What can be done to support those people and lessen the burden of high fuel costs?
Ms Bríd O'Donovan:
Pre-pay meters are not all bad. Some people choose them. There is lifestyle choice and there are hardship meters. The hardship meters are exactly the same hardware, but you go on to them if you fall into arrears when you are bill-pay and it would suit you better to go onto pre-pay. When you go into pre-pay there is a limit on the amount of arrears that get paid back, so when you are vending each week there is a limit on that amount. We have reduced that in the last couple of years right down to a very small amount. Now, when you vend, you get more new energy than you did before. We also have the discounted tariff, so if you have entered into arrears and you end up on a hardship meter, you get a discounted tariff automatically from your supplier and it is the cheapest tariff that is available from that supplier. The suppliers are required to put you on to that automatically. There is no sign-up or anything; the customer gets that automatically. Those are the main customers on pre-pay.
Lorraine Clifford-Lee (Fianna Fail)
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I am talking about people who might not be on a hardship meter but are cutting costs in other areas of their life, for example, cutting down on food and other costs, just to stay out of arrears.
Mr. Fergus O'Toole:
To add to what Ms O'Donovan said, one of the benefits of the smart meter roll-out is that smart meters can have a pay-as-you-go function as well. That means you do not have to have the cost of that additional budget controller that those companies use, namely, the higher standing charge and ongoing meter charges. There is one supplier at the moment which is offering that kind of lifestyle pay-as-you-go through the smart pay-as-you-go option, which is a cheaper option than the budget controllers. It is a relatively new function which has been brought online, and we are encouraging suppliers to roll that out and offer it to customers. That could create more competition in that space. The smart pay-as-you-go option that is there is already cheaper.
Lorraine Clifford-Lee (Fianna Fail)
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Is it the same as the normal smart meter?
Mr. Fergus O'Toole:
If a customer has a smart meter, it can switch into this pay-as-you-go mode and it can switch out. It does not cost anything. It is just the supplier sends a signal and it moves into that mode. It does not work exactly the same way as the products on the market now but effectively it is the same product. In this further competition review, that is one of the areas we want to delve into to see what the barriers are, what are the concerns of people who are on pay-as-you-go billing and whether they are aware of this other option? I do not think there is much awareness of it. That is maybe something we will try to raise. We will be digging into it further because those costs are high, the highest on the market.
Lorraine Clifford-Lee (Fianna Fail)
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I thank Mr. O'Toole and the other witnesses for coming. It has been a very helpful and informative session.