Robert Troy (Longford-Westmeath, Fianna Fail) | Oireachtas source

I am taking this matter on behalf of my colleague, the Minister for the Environment, Climate and Communications, Deputy Eamon Ryan. I thank Deputy Cahill for raising this important topic.

The most immediate factor affecting electricity prices in Ireland is the continuing upward trend in international gas prices where we are a price taker. In Europe, wholesale natural gas prices have been on an upward curve since the second half of 2020. This feeds directly through to retail electricity prices, as the wholesale price of electricity correlates strongly with the price of gas. This increase was cited by many suppliers as one of the main reasons they increased their prices recently. The wholesale cost of generating electricity makes up approximately 40% of the final retail price.

The Government is acutely aware of the impact on households of increasing energy costs and its primary response is to utilise the tax and social welfare systems to counter the rising cost of living, of which energy costs are one of the biggest drivers. To address this directly, budget 2022 increased the weekly rate of fuel allowance by 5%. Increases to the qualified child payment, the living alone allowance and the income threshold for the working family payment have also been announced.

The position of successive Governments for almost 20 years has been that competitive energy markets result in greater choice for consumers and businesses in terms of suppliers, products and prices and to support competition to drive down prices.

Operating within an overall EU framework, responsibility for the regulation of electricity and gas markets is solely a matter for the Commission for Regulation of Utilities, CRU, the independent energy regulator. The CRU was assigned responsibility for the regulation of the electricity and gas retail markets under the Electricity Regulation Act 1999 and subsequent legislation. The CRU, the independent energy regulator, has a wide range of economic, customer protection and safety responsibilities in both energy and water. In line with long-standing policy on deregulating price setting, the CRU ended its regulation of retail prices in the electricity market in 2011 and in the gas market in 2014. Given that prices are no longer regulated, they are set by all suppliers as entirely commercial and operational matters by them. Each such company has its own different approach to pricing decisions over time, in accordance with factors such as their overall company strategic direction and developments in their cost base. Data from approved price comparison sites show that consumers can make significant savings by switching energy suppliers. Accordingly, one of the main thrusts of Government policy on energy costs is focused on the competitive market. Government policy has supported competition to drive down prices.

Based on CRU data, active customers who switched supplier or renegotiated with their current supplier every year for the last four years could have saved €704 on gas, €1,097 on electricity or €1,696 on their dual-fuel costs. A recent CRU survey found that more than half of electricity and gas consumers have switched supplier at least once. As part of its statutory role, the CRU also has consumer protection functions and monitors energy retail markets to ensure that competition continues to develop for the benefit of the consumer.

As part of its statutory functions, including under SI 630/2011, the CRU carries out various market monitoring and reporting functions in association with its responsibility to ensure that the market operates competitively for the benefit of the consumer. Under that statutory instrument the CRU may take actions that it considers necessary to ensure that final customers benefit from competition in the supply of electricity and gas.

Measures introduced by the CRU include a stipulation that electricity suppliers provide customers with an estimated annual bill, highlighting the yearly average electricity bill for a particular electricity supplier rather than just the discounted offers. Additionally, suppliers must issue a written notification on an annual basis to prompt consumers who have been on the same tariff or a non-discounted tariff for more than three years to consider switching.

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