Simon Coveney (Cork South Central, Fine Gael)

The scale of the challenges Ireland must face collectively has been brought into sharper focus today. After months of indecision, prevarication and failed attempts at consensus building with the social partners, this afternoon's announcements by the Government will further concentrate the public mind on the enormous difficulties we face in steering a course through recession and fiscal collapse.

Reductions in public spending are necessary, but they are only one element in a much broader series of challenges that require new thinking and brave choices. Cutting expenditure is painful but it is primarily a budgeting correction exercise due to blatant mistakes by the Government in the recent past. Cost cutting, however, will not create a single new job, improve competitiveness, boost consumer confidence or encourage much needed new economic activity.

If we are to prevent unemployment levels climbing to 20%, not 10% as some are predicting, if we are to avoid serious political and social upheaval and an uncontrollable downward spiral in taxation revenue that leads to State bankruptcy, then we need to launch an anti-recession fight back, effective on many fronts.

Even today, with all the build-up and grandstanding in the Dáil, we have heard little from the Government on the urgent need for public sector reform, economic stimulus proposals tackling cost competitiveness and practical job protection measures to reassure those losing jobs, never mind job creation initiatives. All the energy and focus to date has been on saving €2 billion this year and little else.

That is not enough. Fine Gael's Private Members' motion is targeting a key policy change in the energy sector, that is to reduce energy prices for businesses and the consumer. Politically, this should be a much-needed good news story if the Government had the political will to support us. That, however, seems too much to hope for.

This motion is a clear statement by Fine Gael that not every policy response to counteract recession needs to involve pain for people. This is actually a pain-relieving measure and, after today's announcements, should be welcome. This is not a general motion on energy and should not be treated as such. We will have that debate another day. It is not about interconnection, grid development or long-term renewable targets or grant aid for energy conservation projects. This focused motion is about one matter — price. It is about the cost to home owners and businesses of electricity and gas and how it is regulated, as a response to recession hardship and job losses.

The motion recognises energy costs as a key component of economic competitiveness. Ireland's ability to develop and attract new business is suffering directly due to consistently high energy costs. It is not just Fine Gael that is saying this. Business leaders are saying it, along with the IDA, the Irish Management Institute, unions in the social partnership process and the latest Forfás report on competitiveness. That shows Ireland with the second-highest industrial electricity prices in the EU, with only Italy ahead of it. We are out of line in terms of energy costs and while people accepted that when times were good, it is no longer excusable in the times we now live.

Even before last summer's price hikes, energy prices here were not competitive compared to our neighbouring EU countries. We saw ESB and gas prices rocket by 17.5% and 20%, respectively, last September due to a price review in July when oil prices had spiked to $147 a barrel. The collapse in international oil and gas prices since then, we are told, prevented a further price increase this month, which we are supposed to welcome. However, with oil prices today hovering at around $40 a barrel, I do not accept that immediate energy price reductions are not justified, despite the fact that our latest energy price review was only two months ago.

Our motion is not simply a call for energy price reductions due to the international oil and gas prices, although that is contained in it. We are seeking a much more comprehensive restructuring of our energy price regulation model through the Commission for Energy Regulation to reflect new realities in Ireland.

I will address some of the specific proposals. The Minister regularly asks the Opposition for constructive suggestions. We are attempting this and the Minister will note there is no political reference to Government incompetence or an attempt to have a go at the Government in the motion. It contains suggestions that we want the Minister to take on board — I welcome his decision to take one on board already.

We call on the Minister to instruct the CER to conduct, without delay, an extraordinary energy price review as allowed by law. I understand the Minister has done that this evening, which I welcome. The reason for such a review would be clear to everybody. For many years electricity prices in Ireland have been set taking a number of considerations into account. One of the main factors has been to encourage new entrants and competition into the Irish energy market. The sole focus of the regulator for at least the next two years — which will be recessionary — should be to reduce the price as much as possible to boost Irish competitiveness with regard to costs in business and to try to bring some relief to hard-pressed consumers and home owners.

We want to change the regulatory process that switches the focus away, temporarily, from trying to facilitate and encourage competition by encouraging new entrants into Ireland by keeping prices artificially high to prioritising consumers and what they pay for energy. That may be a subtle shift in wording but it would be a major shift in the priorities considered by the CER when it calculates prices in its reviews.

Rather than setting an actual price for energy producers to charge its business and domestic customers, we want the Minister to instruct the regulator to set a price ceiling for ESB and Bord Gáis prices. Speaking to Bord Gáis and the ESB, as the Minister does, he would get the message that they could be supplying power more competitively and cheaply to business customers but they are not allowed to do so because their price is kept artificially high in order to protect competitors. That was an understandable policy when the ESB was in such a dominant position that we needed to keep prices high to attract competition to Ireland. The ESB now only produces 50% of all energy in Ireland and is in a far less dominant position, so we should encourage it to compete on price for the sake of businesses and consumers so we can bring prices down.

It is about time Ireland started to get the benefits of competition in the energy market as to date, consumers and businesses have been paying the cost of trying to introduce competition to the market, particularly the energy generation sector but also in the supply area. We have seen none of the benefits of that competition with regard to price. There has been an increase in choice and service and we have seen new entrants come to the market, which is welcome, but in the current economic climate we particularly need to see direct price benefits from competition.

The only way to do this is to allow Bord Gáis and the ESB to compete on a price basis. The competitors will not like that but it is about time we prioritise consumers and general business people across the country over competitors in the energy market. The Minister should seriously consider the matter.

The Minister must set some rules for the regulator in terms of how price reviews are assessed. There has been a sea change in the area over the last six months and the last price review had a public hearing. It did not go far enough in giving the consumer and consumer representatives a sufficient voice at the table for making the case for price reductions, particularly from the perspective of those least well off and suffering as a result of energy price inflation.

Speaking to people off the record, whether in the ESB or Bord Gáis, they are likely to tell us that they expect a double-digit percentage reduction in price at some stage later this year when there is a price review. That indicates both ESB and Bord Gáis could undertake an immediate price review without any difficulty or pressure on the bottom line. That is why we want such a review rather than having the usual line that we cannot have regular reviews as it will lead to the inability of businesses to plan ahead financially with their energy bills. There is not a business in the country that does not want a price review. It is nonsense that we should be waiting six or 12 months to have another review. I welcome the Minister's initiative in that area.

I wish to discuss a slightly more controversial matter for this Minister. I have repeatedly raised the matter of unearned profits made by energy generators on the back of businesses and consumers with this Minister. This comes from the fact that they are required through regulation to factor the price of carbon into electricity pricing. I do not mind how the Minister deals with this issue but it is unacceptable for him to continually not deal with it, which is what is happening.

On a voluntary basis, the ESB has voluntarily returned a €300 million rebate to try to keep energy prices down. It has not made much difference to its bottom line, which demonstrates how comfortable the company is. The other 50% of generators in the country have not given anything back. Let me be clear that everybody in the country is paying an extra 10% for their electricity bills currently because — although it is not shown on the bill — they are paying for the cost of the carbon produced when the energy is generated.

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