Damien English (Meath West, Fine Gael) | Oireachtas source

I apologise to Deputy Cowen and the Leas-Cheann Comhairle for being late. It was my fault as I understood I was due to respond to the second Topical Issue matter.

I thank Deputy Cowen for raising this important topic, which has informed a lot of discussion lately. I will take this matter on behalf of the Minister who is unable to attend tonight and sends his apologies. Some of the issues the Deputy raised go beyond the brief I received but I will bring back the Deputy's questions and try to get the answers he seeks.

The integrated single electricity market, I-SEM, is the wholesale electricity market on the island of Ireland and is jointly administered and regulated by a statutory single electricity market committee, comprising the two energy regulators and independent members. The original single electricity market was established in 2007 and is underpinned by legislation enacted in Ireland and the UK and Northern Ireland, with the original legislation enacted in 2006 with an underpinning memorandum of understanding between the Irish and UK Governments.

Operating within an overall EU framework, responsibility for the regulation of the electricity market is solely a matter for the Commission for Regulation of Utilities, the independent energy regulator. The CRU was assigned responsibility for this function following the enactment of the Electricity Regulation Act 1999, which states that the CRU shall account for the performance of its functions to a joint committee of the Oireachtas, and not to the line Minister. In 2018, the new I-SEM went live demonstrating Ireland's strong commitment to the integration of European electricity markets. The I-SEM promotes the interests of consumers by enabling greater competition through cost-reflective prices, while also securing a diverse, viable and environmentally sustainable long-term energy supply.

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 wholesale electricity prices as it strongly correlates 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 believes that competition is a critical means of exerting downward pressure on electricity prices and also towards ensuring diversity of energy supply to reduce our exposure to high and volatile external energy prices. Additionally, our heavy dependence on gas in the electricity mix underlines the need to maintain the focus on the limited controllable cost factors. Among the actions being taken are to increase the penetration of indigenous secure renewables in the Irish electricity system and to promote energy efficiency.

The Deputy will note that the CRU is accountable to a joint committee of the Oireachtas and not necessarily to the Government or the Minister for the performance of its functions.

The CRU met the Oireachtas committee most recently on 5 October and there are channels where these issues can be raised directly with it.

On security of supply, the CRU has statutory responsibility, under SI 60 of 2005, to monitor and take measures necessary to ensure the security of electricity supply in Ireland, which I believe is the concern of the Deputy. The CRU is assisted in its statutory role by EirGrid, the electricity transmission system operator. EirGrid monitors security of supply and reports to the CRU on future projections of electricity supply and demand. This is set out in EirGrid’s annual generation capacity statement, the most recent version of which was published in September. The capacity remuneration mechanism, CRM, is a measure designed to complement energy-only payments in wholesale electricity markets. The purpose of a CRM is to ensure long-term security of supply by ensuring that investors can recover their long-run marginal costs. This is particularly important in isolated island systems with high volumes of intermittent generation such as Ireland’s all-island single electricity market, SEM. The running of the CRM is solely a matter for EirGrid and the SEM committee as auctions were conducted by the transmission system operator, TSO, which is EirGrid in this case, according to the auction design and overall regulatory supervision of the SEM committee. There is no ministerial function regarding the auctions apart from securing state aid approval for the capacity mechanism which was obtained in 2017.

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