Dáil debates

Wednesday, 7 March 2012

3:00 pm

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 7: To ask the Minister for Communications; Energy and Natural Resources the extent to which energy prices here compare favourably with those other EU jurisdictions within the Eurozone and without, the extent to which opinion has been sought to identify the reasons for any disparities; if he can through the aegis of the Regulator put in place any measures to address identifiable factors affecting possible gas, petrol, diesel and heating oil in view of the necessity to achieve competitiveness and eliminate possible speculation on world markets; and if he will make a statement on the matter. [12848/12]

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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The Irish oil industry is fully privatised, liberalised and deregulated, and there is free entry to the market. There is no price control on petroleum products and it is government policy to encourage price competition and consumer choice. Responsibility for the regulation of the electricity and gas markets is a matter for the Commission for Energy Regulation, which is an independent statutory body.

Previous surveys have shown that prices charged by Irish retailers for oil products relate to the refinery price rather than to the price of crude oil. Prices at the pump reflect the volatile market price, as well as transportation costs, trends in euro-dollar exchange rates and other operating costs, together with the impact of taxation on oil products.

Figures produced by the EU market observatory for energy in its oil bulletin, in respect of prices in force on 20 February 2012, indicate that the price in Ireland of petrol and diesel - I think this is the point being raised by the Deputy - was lower than the EU average, and that the price of home heating gas oil was higher than the EU average. Such prices were inclusive of duties and taxes.

Ireland's electricity and gas markets, both wholesale and retail, are characterised by increasing competition, regulated by the CER. Competition puts downward pressure on prices, while we must acknowledge that global fossil fuel prices are a factor outside Ireland's control. Prices in the retail electricity market are now fully deregulated. Since 1 October 2012, the residential gas consumer segment is the only segment of the electricity and gas markets where prices are regulated. Prices in the electricity market and the unregulated part of the gas market are wholly commercial and are set by the suppliers.

While Ireland is a price taker for imported fossil fuels, we will continue to focus on any additional actions to mitigate costs, where possible, for business and domestic customers. This is essential for competitiveness, employment and economic recovery. I am committed to working with enterprise and with the energy sector to ensure the costs of energy for businesses are as competitive as possible.

Latest EUROSTAT data, published by the Sustainable Energy Authority of Ireland for the first six months of 2011, show that Irish electricity and gas prices are competitive by reference to the EU average for medium to large business customers.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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I thank the Minister for his comprehensive reply. Does any evidence exist of commodity speculation in the marketplace which might have a negative impact or assert upward pressure on energy prices in this country, given that we are importers? Can any special effort be made through the regulator to ensure there is every possible opportunity to reduce the price of oil, oil products and energy in this country in order to enable us avail of every opportunity to move towards economic recovery?

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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Deputy Durkan is probably correct that one can never rule out speculation in the oil market as a factor. The problem is that, ultimately, we are price takers. Until we find oil off our own coast, which many seem determined we will not, we will import it.

The latest figures from data published by EUROSTAT show that Irish electricity and gas prices are performing well by reference to the EU average for medium to large-size business customers. That is not to say they compare with the best, but they compare favourably with the average. The VAT-exclusive electricity price in Ireland for these business consumers ranged from 10% to 17% below the EU average and from 13% to 19% below the eurozone average. These customers accounted for 48% of the business electricity market. Prices for gas customers were below the EU average by 4% to 25% for most business gas categories.

Larger domestic electricity consumers, representing 64% of the domestic electricity market experienced price reductions between 6.1% to 7.6% over the period. The prices for these consumers were between 7% and 19% below the EU average.