Michael Moynihan (Cork North West, Fianna Fail)
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89. To ask the Minister for Communications, Energy and Natural Resources the way he can bring about lower energy prices for domestic and business consumers; and if he will make a statement on the matter. [20511/13]

Pat Rabbitte (Dublin South West, Labour)
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Responsibility for the regulation of the retail electricity and gas markets is a matter for the Commission for Energy Regulation, CER, which is an independent statutory body. Prices in the electricity retail market are fully deregulated and similarly for gas, except in the case of Bord Gáis Electricity, BGE, tariffs for domestic consumers. Customers can therefore avail of competitive offerings from electricity and gas suppliers. Prices are set by suppliers and are commercial and operational matters for them. I do not have a statutory function in the setting of electricity or gas prices.

Electricity and gas costs in Ireland are influenced by various drivers, including global gas and oil prices, the cost of capital, exchange rate fluctuations, the small size of the Irish market, geographical location and low population density. Global gas and oil prices are by far the most significant factor. Prices have risen sharply since the start of 2011, driven by events in the Middle East, north Africa and Japan and the significant growth in demand from China and India. Ireland is at the mercy of international fossil fuel prices, which dictate the retail price of electricity.

At a national level, the competitive energy market in place helps put downward pressure on prices. In addition, we must focus on all possible additional actions to mitigate costs for business and domestic customers, including rigorous regulatory scrutiny of the network costs component of retail prices.

I am committed to working with enterprise and with the energy sector to ensure that the costs of energy are as competitive as possible. In this context, promotion of energy efficiency measures is an area within our control where action can be taken to reduce energy costs.

Additional information not given on the floor of the House

Energy efficiency represents a significant opportunity for both businesses and households to reduce their energy costs. There are energy efficiency measures in place to assist both business and domestic energy consumers, with significant funding allocated to them. The energy efficiency fund, which I announced in February and which will commence funding specific measures in the near future, will assist energy efficiency projects in the public and commercial sectors.

Promotion of indigenous sustainable sources of energy will help off-set the impact of volatile fossil fuel prices. The Government has a target of 40% of electricity being generated from renewable sources envisaged by 2020. Good progress has been made in meeting this target and its realisation will introduce more certainty in the energy fuel mix as well as boosting security of supply.

The latest analysis of EUROSTAT data on electricity and gas prices is presented in SEAI's published report on electricity and gas prices in the period January to June 2012 and is publicly available. The price statistics are presented for different business consumers, differentiated by consumption level.

The report shows that VAT-exclusive electricity prices increased for small business by 3.1%, and for medium business by 1.8% over the previous six months. By contrast, the very smallest business users saw a price decrease of 6.7%. Prices for the three categories of business consumers range from 4th to9th most expensive in the EU, and these rankings have not changed significantly since the previous six months. The effects of the price drivers outlined earlier in this response tend to place Irish electricity and gas prices towards the more expensive position in the EU rankings.

Michael Moynihan (Cork North West, Fianna Fail)
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We have previously discussed the price of energy in both the domestic and commercial markets. We spoke in particular about the profits of the ESB. Figures released recently indicated a fourfold increase in the company's profits in 2012. It was suggested previously that the half-yearly profits were unduly high compared to what would be expected in the second half of the year. The public is under severe pressure, as the Minister is well aware, at a time when an energy company that has a fourfold increase in profits is still looking for an increase in the product it is selling on the market. One could ask whether it is time to examine the structure for the Commission for Energy Regulation, CER, and whether it ultimately provides safeguards for homeowners or businesses.

Pat Rabbitte (Dublin South West, Labour)
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The matter goes back to the previous question from Deputy Tom Fleming, in that if we are to exploit our indigenous renewable resources, which will make a contribution in the area about which Deputy Moynihan is concerned, then we must generate the investment capital as best we can or ensure that we can remunerate the capital that is borrowed in the market in the normal way by, for example, the ESB. The ESB is a successful company and did return greater profits for last year than either the regulator or I anticipated. It has also taken a bigger hit in not just the dividend it has paid to the State but the super dividend which was part of the budget last year and which required the State companies to contribute an additional €100 million on top of that.

I am afraid it is the case, going back to the previous question, that the biggest driver in electricity costs is global oil and gas prices. The past two years have been exceptionally difficult in that regard for the reasons I mentioned about the circumstances in North Africa, the Middle East, what happened in Japan in terms of Fukushima, and the fact that both India and China have a voracious and growing appetite for energy. That has been the single biggest driver of prices.

Michael Moynihan (Cork North West, Fianna Fail)
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I understand that. The ESB is a public company and the Commission for Energy Regulation exists to protect the consumer. The Minister indicated that the profits surpassed the expectations of both the commission and the Department. Is it not the case that the commission should only sanction price increases that domestic consumers or businesses can pay that are necessary to give a profit to the semi-State company but not to give it an enormous profit?

Pat Rabbitte (Dublin South West, Labour)
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That is a layman's description with which I agree. The regulator observes a model that has been laid down from the outset and it makes its own call on these matters.

I accept Deputy Moynihan's contention that in circumstances where some consumers are under pressure in terms of energy prices it is difficult to reconcile this with seemingly very high profits. However, I have no doubt that the regulator is monitoring the situation. There are a number of factors, as I have said, that feed into this. Unfortunately, the global cost of gas, in particular, has had an enormous impact on prices in recent times. Our power generators are relying on gas in the main and it is hugely expensive, especially given the fact that we import more than 90% of our needs.