Simon Coveney (Cork South Central, Fine Gael)
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Question 1: To ask the Minister for Communications, Energy and Natural Resources if he plans to change the electricity price regulation structure here to allow the ESB to compete on price in the domestic household market; and if he will make a statement on the matter. [10713/09]

Seán Power (Kildare South, Fianna Fail)
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The Commission for Energy Regulation has statutory responsibility for the regulation of electricity prices under the Electricity Regulation Act. In 2006 the CER ended the regulation of ESB tariffs for large energy users. Some 90% of business has now switched to independent suppliers. The CER has made clear that it intends to exit from the regulation of ESB retail prices when sufficient competition has taken hold in the domestic market. This is in line with overall EU requirements for the internal energy market.

I welcome the fact that the benefits of competition in electricity supply, which have previously been confined to large industrial and commercial customers, are finally available to domestic consumers. The entry into the domestic electricity market of two new suppliers, Airtricity and Bord Gáis Energy, demonstrates that Government and regulatory policy to encourage competition in electricity generation and supply is paying dividends for consumers.

The independent suppliers are offering discounts of between 10% and 14% on ESB tariffs. These discounts will apply even after the 10% reduction to ESB prices now proposed by the Commission for Energy Regulation. Customers will then be able to avail of reductions of up to 24% on current ESB tariffs.

The independent suppliers are also offering domestic consumers fresh choices, such as the proportion of renewable electricity they purchase, as well as alternative billing arrangements.

In recent weeks, domestic customers have been switching to the independent suppliers in unprecedented numbers. However, it is important to remember there are close to 2 million domestic electricity customers and that ESB still retains some 95% of the market share.

The regulation of ESB tariffs will only continue until competition has taken firm hold in the market. Energy price regulation is designed to ensure that a dominant player cannot engage in uncompetitive, short-term pricing practices, which could undermine or drive out emerging competition. The CER will continue to review overall energy tariff structures over the coming months taking account of global fuel prices, the importance of regulatory and market certainty for the energy sector, and the competitiveness challenges facing industry.

Simon Coveney (Cork South Central, Fine Gael)
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Why is it still necessary to keep a set price in the domestic electricity supply market? Why is the Government preventing ESB from competing with the two new competitors that have entered the market in recent months? Will the Minister of State correct himself? He stated the CER is responsible for regulation policy but it is not. The CER is responsible for setting prices; the Government decides on policy on the advice of CER. Could the Minister of State give a timescale for the introduction of a directive that will require the CER to allow for open competition in the domestic electricity supply market so we can see these three major companies competing with one another to drive prices down? Currently, regulation is keeping ESB prices artificially high because it is not allowed to compete aggressively with two other companies that have entered the market and that are capable of dealing with that competition.

Seán Power (Kildare South, Fianna Fail)
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We all agree competition is necessary and that ESB had a monopoly for too long. Both Airtricity and Bord Gáis, however, are recent entrants to the domestic electricity market. Bord Gáis Energy has advised that in excess of 80,000 customers have switched and while that volume of change-over exceeded expectations, the numbers remain small in comparison to the domestic market of 2 million consumers.

Simon Coveney (Cork South Central, Fine Gael)
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How many customers must switch before the Government takes action?

Seán Power (Kildare South, Fianna Fail)
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The intention was to make it attractive for other companies to enter the market and provide competition. To achieve that we had to provide a guarantee for new entrants. If ESB was allowed to compete on price in the early days of competition in the domestic market, it could seriously undermine the new market entrants. For that reason the new entrants had to be given some certainty about the future. It was important to give them an indication that it was a viable proposition.

Simon Coveney (Cork South Central, Fine Gael)
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What percentage of the domestic electricity supply market must new entrants take before ESB is allowed to compete with them? Currently we are deliberately undermining ESB market share in the domestic power supply market to facilitate competition. Currently it is a no-brainer; why would anyone stay with ESB if he could get the exact same service for 10% to 14% less? A phone call is all that is needed. The ESB is being put at a significant disadvantage deliberately by the Government and the CER. How long will that policy remain in place? From what the Minister of State has said, the only way to measure it is a percentage of market share going to the opposition. What is that percentage?

Seán Power (Kildare South, Fianna Fail)
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I cannot give a percentage but it will be reviewed as the market develops. At this stage it is not necessary to decide what the figure will be.

Simon Coveney (Cork South Central, Fine Gael)
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The ESB might like to know what it is.

Seán Power (Kildare South, Fianna Fail)
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Of course it would but it was important to have these measures in place if we were going introduce competition. The regulator admitted in recent consultation papers its intention to withdraw from regulation when sufficient competition develops in the market. Competition is in its infancy and we will have to see how it grows. We are talking about 80,000 customers in a few weeks compared to 2 million in the market place. More progress is necessary and it is too early to make any decisions. It is a short-term strategy until there is real competition in the market place.