Dáil debates

Thursday, 15 January 2015

Topical Issue Debate

Energy Prices

4:35 pm

Photo of Alex WhiteAlex White (Dublin South, Labour) | Oireachtas source

I thank Deputy O'Mahony for raising this issue.

The Government is acutely aware of the financial challenges faced by families and businesses from high electricity prices. However, it is important to note - the Deputy has fairly acknowledged this although the consequences of it are a matter for debate - that the electricity and gas markets are commercial, liberalised and competitive and they operate within national and European regulatory regimes, supported by legislation.

Responsibility for electricity and gas market regulation is a matter for the Commission for Energy Regulation, CER, which is an independent statutory body. The CER is focussed on actions to mitigate costs for business and residential consumers, such as rigorous scrutiny of network costs, deeper integration with European energy markets and the delivery of a truly competitive market in the interest of customers. My officials continue to liaise with the Commission for Energy Regulation on all these matters. Indeed, there was a meeting earlier today in this respect. The commission also continues to monitor the electricity and gas markets to ensure that competition continues to develop and that customers benefit from competition.

At a national level, electricity and gas prices are no longer regulated by the CER. The competitive energy market results in choice for consumers and businesses in terms of suppliers, products and prices and this exerts downward pressure on prices.

The reduction in wholesale gas prices since the beginning of 2014 has led to reductions in the wholesale electricity price. It should be noted that wholesale electricity prices tend to reflect the price-setting fuel in the market, which is natural gas, not crude oil. It is worth noting that only 1% of electricity was generated from oil in 2012. Lower wholesale gas prices in 2014, compared to 2013, should have a knock-on impact on retail prices and this is reflected in the latest EUROSTAT figures published by the Sustainable Energy Authority Ireland, SEAI, on 9 December last. However, I should caution that wholesale gas prices have been rising since the summer of 2014 and this rise is likely ultimately to feed through to retail electricity and gas prices.

The SEAI report shows that all business consumption bands in electricity and gas experienced reductions in average prices in the first half of 2014, ranging from 0.7% to 4% in electricity and 6.7% to 12.9% in gas. Similarly, in the first half of 2014 EUROSTAT figures show a reduction of 5.7% in the average price of gas in the residential consumption band with the largest share of the market. The average price of electricity in the residential consumption band with the largest share experienced a reduction of 1.3%.

Electric Ireland, the larger supplier of electricity in this country, reduced its unit rate for domestic customers by 2% in November 2014.

I listened carefully to what the Deputy said about switching, but it remains true that consumers can and in many cases have mitigated electricity and gas prices by shopping around to get the best possible price and service deal from suppliers. I would encourage people to continue to do so. Measures such as comparison websites, approved by the regulator, are there to assist people in this endeavour. Even if customers wish to remain with their existing supplier, they should contact that supplier and insist that they be placed on the best possible offering.

I realise that energy supply companies have not automatically passed savings on to their customers, but I expect that savings will feed through to domestic prices in due course. However, all supply companies offer competitive deals to customers who switch or engage with their suppliers. For example, a customer can go online today and achieve a discount of approximately €150 per annum by switching from the standard rate electricity offering and also more than €150 on gas by switching from the standard rate. That equates to a saving of more than €300 a year by switching electricity and gas suppliers.

However, I fully appreciate that some customers, particularly older and more vulnerable people, are reluctant or feel unable to switch. In this situation I urge all stakeholders, including the energy companies and the regulator, to make the more vulnerable customer categories aware of the most competitive offerings available and to facilitate their transition to the best value deals in the market. I intend to meet the chief executive officers of the various energy supply companies in the very near future to outline the Government's concerns regarding these matters and to insist that they offer their customers, our citizens, the best value available in a competitive, liberalised market.

Comments

Owen Martin
Posted on 17 Jan 2015 1:07 pm (Report this comment)

There is too much focus on "switching suppliers". All suppliers have to pass on the levies and payment structures in place to pay for wind farms and the excess generation in the system.

What happened to the promises that wind energy would bring down energy prices ?

http://irishenergyblog.blogspot.ie/2015/01/what-happened-to-...

Why haven't the subsidies for Wind energy been scrapped in line with EU recommendations ?

http://irishenergyblog.blogspot.ie/2014/12/growing-calls-to-...

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