Pat Rabbitte (Dublin South West, Labour)

Responsibility for the regulation of gas prices is a matter for the Commission for Energy Regulation which is an independent statutory body. Bord Gáis Energy's gas tariffs for domestic customers and small businesses are still regulated by the Commission for Energy Regulation and reviewed each year. I have no function in the matter. Decisions on gas prices by the commission involves reviewing all the controllable cost inputs and forecasting the likely wholesale gas costs. The objective is to ensure that tariffs are cost reflective.

The largest component of gas prices is the wholesale global cost of gas. The last increase of 20% in regulated gas prices was in September 2008. Wholesale gas prices moved downwards from autumn 2008 until recent months. This has resulted in consistent reductions in gas tariffs for domestic and small business customers. However, wholesale gas prices have been trending significantly upwards in Europe in recent months. This is driven by geopolitical events in the Middle East and North Africa and high demand in Asia, including Japan, in the wake of the nuclear crisis. The regulator and Bord Gáis Energy estimate that increases in wholesale prices in October are likely to result in a significant increase in tariffs for Irish customers. The extent of the increase has not been quantified as yet but this should be seen in the context of a cumulative decrease of 27% for consumers since January 2009.

The regulator will undertake its detailed annual review of the Bord Gáis energy tariff during the summer months. This will involve assessment of Bord Gáis Energy's own submission on gas prices which will be made in June or July, followed by a consultation process. A decision by the regulator will follow in early September on whether any variation should be applied to the tariff from 1 October next.

The continued entry of new suppliers into the residential gas market, offering discounts on the BGE rates, shows that regulatory policy to encourage the growth of competition in gas supply pays dividends for consumers. Customers can also help to reduce the impact of rising prices by shopping around for the best deal. They can also take steps to improve the efficiency of their gas usage as this will deliver demonstrable savings.

The regulator is currently considering the timing for complete deregulation of the residential and small business segment of the gas market, as has happened in the electricity market. Full deregulation leading to further competition will keep downward pressure on prices for consumers. However, Ireland is a price-taker for gas and the outlook for the European gas market is for a continued rise in the commodity price.

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