Simon Coveney (Cork South Central, Fine Gael)
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Question 62: To ask the Minister for Communications, Energy and Natural Resources if he is satisfied that energy price reductions for gas and electricity represent an appropriate price reduction in the context of international energy markets; and if he will make a statement on the matter. [19118/09]

Eamon Ryan (Dublin South, Green Party)
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The regulation of ESB customer supply electricity tariffs and BGE gas tariffs is the statutory responsibility of the Commission for Energy Regulation under the Electricity Regulation Act 1999 and the Gas (Interim) Regulation Act 2002. The CER does not apply tariff regulation to large users of electricity or gas. There is enough competition at the upper end of the markets to allow customers to receive competitively priced offers without the need for price regulation. The majority of these large industrial and commercial electricity users are now supplied by independent suppliers. Many of these large industrial consumers are on tariffs directly linked to commodity prices or single electricity market prices. These companies have directly and regularly experienced the benefits of falling fossil fuel prices in recent months.

I welcome the CER's decision to reduce regulated electricity tariffs by 10% and gas tariffs by 12% from 1 May following the first-quarter review of tariffs it undertook at my request in light of the economic circumstances and the decline in fossil fuel prices. The commission's decision on electricity tariffs reflects the fall in international fossil fuel prices, which follows a period of sustained increases in oil, gas and coal prices. The CER's decision on gas tariffs reflects the lower gas costs, exchange rate developments and increased sales during the winter months due to the particularly cold weather. Under the regulatory regime, these tariff decreases would have taken place from 1 October. There is still scope for a further reduction in gas tariffs from 1 October if wholesale gas prices continue to remain low. The likelihood of a further reduction in electricity tariffs is limited.

The CER is required to assess the costs underlying regulated tariffs to ensure they are fully cost reflective. Energy prices have fallen by less than the overall fall in global fuel commodities because the CER took steps in 2008 to ensure that when international oil, gas and coal prices were increasing rapidly, customers were insulated from the worst effects of the spike in fuel prices. Additional information not given on the floor of the House. The CER's approach in 2008 took account of the emerging difficulties in the economy and the negative impact of large-scale price increases on business and consumers, including vulnerable customers. With the dramatic increase in gas prices, we faced potential electricity and gas tariff increases in the range of 30% to 40% from 1 October 2008. In order to prevent such dramatic increases the CER decided to adopt a two-phase approach to its pricing process. This involved a lower increase in the summer of 2008, which meant selling electricity and gas below the full estimated cost for that period. These costs then had to be recovered in 2009, but the potential price increase was offset by falling gas prices and an ESB rebate of more than €300 million negotiated by the CER for all electricity customers.

This approach meant that when fossil fuel prices were increasing exponentially in early and mid-2008, the CER decided on an increase of 17.5% in the price of electricity and 20% in the price of gas. These increases were significantly lower than the wholesale price of gas would have suggested. In contrast, some of our European neighbours saw much steeper price increases.

The comparatively high energy costs in Ireland have been an acknowledged issue for the enterprise sector for a number of years, despite the overall relatively low energy intensity of Irish industry. This concern has been exacerbated for business in the current economic climate. A range of policy actions are underway that aim to mitigate energy costs in the medium term as well as reviewing all possibilities to reduce the extent of the price differential for the enterprise sector. This work is of the utmost priority for my Department, working with the CER and all key players, in the very challenging economic environment for business.

Simon Coveney (Cork South Central, Fine Gael)
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When the Minister leaves office and his record is assessed, this will be his biggest failing. We are losing jobs by the week and international companies are openly saying they are leaving Ireland because of the cost of energy. The 2008 figures from neutral assessors of Ireland's energy prices show that only Cyprus has higher prices than Ireland for industrial electricity. Industrial electricity prices in Ireland have moved from being the European average to being 50% higher than that, and the position with household electricity prices is no better. Only Italy has higher prices, and prices in Ireland have moved from being nearly 30% below the EU average to being almost 30% above it. A great deal of this has happened on the Minister's watch. The position with gas prices is not much more optimistic.

There are specific things the Minister and the Government can do to reduce electricity prices and to ease the pressure on nursing homes that are turning off heating because they cannot afford the electricity bills. Is it the Minister's agenda to keep electricity prices high in order to try to reduce usage and encourage energy conservation as part of the climate change agenda or is he serious about trying to bring down energy costs in Ireland? A 12% reduction in gas prices between now and September is nothing like the reduction we need. According to the CER, wholesale gas prices account for 60% of retail gas prices for households in Ireland. Wholesale gas prices in the UK have gone from £1 per therm to 25p per therm in the past two weeks, but all we get is a 12% reduction in price. On electricity, we are getting a 10% reduction in price, but the Minister misled the House today. He said we are seeing a reduction in ESB prices because of a reduction in fossil fuel prices in the past year, but that is not true. The ESB has said, and the CER will confirm, that the electricity price reduction this month resulted from the ESB reducing its network and transmission charges. It has nothing to do with fossil fuel prices coming down.

When will the Minister take seriously the issue of energy prices as well as his other agenda, which I support, on climate change?

Eamon Ryan (Dublin South, Green Party)
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I utterly refute the nonsense the Deputy is peddling, that those of us on this side of the House want higher energy prices. That is ridiculous. It has no foundation in fact. It is pure political spin. Everything we are doing is to achieve sound energy policy, to bring prices down and to help Irish industry.

Simon Coveney (Cork South Central, Fine Gael)
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So why are our prices the most expensive in Europe?

Eamon Ryan (Dublin South, Green Party)
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I want that just as much as Deputy Coveney.

Simon Coveney (Cork South Central, Fine Gael)
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The Minister does not.

Eamon Ryan (Dublin South, Green Party)
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Excuse me. That is ridiculous.

Simon Coveney (Cork South Central, Fine Gael)
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In two years in his job, the Minister has never said our electricity prices are too expensive.

Eamon Ryan (Dublin South, Green Party)
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Everything we are doing is aimed at reducing prices in line with sound energy policy. It was intervention from the political system on this side which caused the regulator and the ESB to work towards achieving these reductions.

Simon Coveney (Cork South Central, Fine Gael)
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After we hounded the Minister for a month.

Eamon Ryan (Dublin South, Green Party)
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The competition we are achieving means industrial users have seen an approximate 25% decrease in electricity prices.

Simon Coveney (Cork South Central, Fine Gael)
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Households are getting 10%. That sums it up.

Eamon Ryan (Dublin South, Green Party)
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We have a competitive electricity market which is due to sound energy policy rather than soundbites that mean nothing and have no substance. The development of renewables is a way of bringing down electricity and gas prices, as well as tackling climate change. The Deputy does not seem to get the message that tackling climate change does not have to be expensive; it saves us money.

Simon Coveney (Cork South Central, Fine Gael)
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We get it. The Minister can do two things at the one time.

Brendan Howlin (Wexford, Labour)
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Please allow the Minister to continue without interruption.

Eamon Ryan (Dublin South, Green Party)
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We are meeting our targets for the development of renewables, including wind energy project connections. While the United Kingdom has languished with low single figures, we are at a figure of up to 13% and will meet the 15% target next year.

Simon Coveney (Cork South Central, Fine Gael)
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Consumers will pay.

Eamon Ryan (Dublin South, Green Party)
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If one talks to people who know something about what is happening with electricity prices, they say this is bringing down prices. We have introduced a single electricity market - an all-island system. This gives a clear indication of what is happening and shows that prices are coming down due to a more competitive market with increased use of renewables and by having a Government which knows something about energy policy. This means lower prices, more competition and clean supplies.

Simon Coveney (Cork South Central, Fine Gael)
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As usual, we do not get a clear statement from the Minister that electricity is too expensive in Ireland.

Eamon Ryan (Dublin South, Green Party)
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I could not have been more clear.

Simon Coveney (Cork South Central, Fine Gael)
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The Minister says we are achieving our targets and that competition is working, which is rubbish. Competition is not working in Ireland, which is why, compared to other countries - our competitors - Ireland is becoming more expensive. The party represented by the Minister of State, Deputy Conor Lenihan, should realise this and take the Minister in charge, if necessary, because his other agendas are resulting in job the closure of businesses that should not be closing and job losses. Energy is too expensive in Ireland for both businesses and households.

Eamon Ryan (Dublin South, Green Party)
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I want cheaper energy supplies; as such I am committed to bringing down energy prices. The way to do this is by developing renewable energy sources, which represent the cheapest, most secure and cleanest supplies we have.

Simon Coveney (Cork South Central, Fine Gael)
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There are things we can do immediately.

Eamon Ryan (Dublin South, Green Party)
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To do this, we need to build a grid. Instead of opposing it, which the Deputy's party has done consistently-----

Simon Coveney (Cork South Central, Fine Gael)
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No, it has not.

Eamon Ryan (Dublin South, Green Party)
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-----it might support the policies we are adopting which would bring down prices and help the country by having a vision for the future, rather than focusing on short-term political gain.