Brian Cowen (Laois-Offaly, Fianna Fail)

I do not set prices, they are set by the regulators. There is an independent regulatory sector. The specific characteristics of an island market of this size mean that the electricity and gas sectors differ from those of the United Kingdom and other countries. The Government's long-term strategy is to continue to reposition the economy towards the production of more knowledge intensive goods and services. As these tend to be less energy intensive, this development should help reduce our exposure to international energy price developments. The regulator must also take into account investment returns in terms of the nature of the market in which investment is being made. As I indicated, the size and island nature of our market must be taken into account in terms of the major utilities.

The impact of higher energy prices on the economy will ultimately be a function of how economic agents, including policymakers, react. In the past, higher energy prices resulted in higher wage demands and increases in public spending, both of which had a detrimental impact on economic performance. There is now a greater awareness that we cannot compensate ourselves for these increases. We are, therefore, coming from a position of insufficient competition in the marketplace in certain areas. The purpose of independent regulation of the market is to meet EU requirements and facilitate competition. Interconnection between North and South and east and west should open up possibilities to reduce inflation in these areas.

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