Michael Moynihan (Cork North West, Fianna Fail)
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1. To ask the Minister for Communications, Energy and Natural Resources the actions he will take to address the increasing cost of electricity for customers and businesses; if his attention has been drawn to the great concern amongst multinationals at the recent increase in the PSO levy; and if he will make a statement on the matter. [31677/14]

Michael Moynihan (Cork North West, Fianna Fail)
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I congratulate the new Minister and Minister of State and wish them the very best in the Department of Communications, Marine and Natural Resources. I pay tribute to the former Minister, Deputy Pat Rabbitte, and the former Minister of State, Deputy Fergus O'Dowd, and thank them for their courtesy over the past two years. I hope we will have as good a working relationship with the new Minister and Minister of State as we had with their predecessors.

Could the Minister tell me what actions he will take to address the increasing cost of electricity for consumers and business customers, whether his attention has been drawn to the great concern among high-energy users such as multinationals in respect of increasing the PSO levy and if he will make a statement on the matter?

Alex White (Dublin South, Labour)
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I thank the Deputy for his kind words and I look forward to a fruitful relationship with him, the Opposition spokespersons and all Members of the House. I also join him in paying tribute to my predecessor, Deputy Rabbitte, for his stewardship in this role, and the former Minister of State, Deputy O'Dowd.

I am acutely aware of the financial challenges faced by families and businesses as a result of high electricity prices. However, it is important to note that the electricity and gas markets are commercial, liberalised and competitive, and operate within national and European regulatory regimes. As Minister, I have no statutory function in the setting of electricity prices. Responsibility for electricity and gas market regulation is a matter for the Commission for Energy Regulation, CER, which is an independent statutory body.

At a national level, the competitive energy market in place results in choices for consumers and businesses in terms of suppliers, products and prices. Such competition places downward pressure on prices. Consumers can seek to mitigate rising electricity prices by shopping around, and measures such as comparison websites, approved by the CER, exist to assist them. They can and should shop around to get the best possible price and service deal from suppliers.

The CER is focused on actions that can mitigate costs for business and domestic customers, including rigorous regulatory scrutiny of the network costs component of retail prices. Households can reduce their energy costs by being energy efficient. Indeed, there are energy efficiency measures to assist business and domestic energy consumers, with significant funding allocated to them. The energy efficiency fund, announced in February 2013, funds specific measures, including projects in the public and commercial sectors. In addition, the Sustainable Energy Authority of Ireland, SEAI, administers a number of grant schemes for homes under the better energy homes scheme, as well as assisting businesses.

The public service obligation, PSO, levy has been in place since 2001 and is the overall support mechanism for generation constructed for security of supply purposes, including the security of supply provided by using indigenous peat for electricity generation. The PSO also provides the support mechanism for the development of renewable electricity. The levy is designed to compensate electricity suppliers for the additional costs they incur by purchasing electricity generated by these producers.

The greatest driver for the proposed levy increase for 2014-15 is the lower predicted wholesale market electricity price, currently estimated to be some 10% lower than last year. This results in lower predicted market income for the PSO plants, which means a higher levy is required to cover the allowed costs. Lower wholesale electricity prices are currently resulting from the lower international gas prices evident since the spring. If these lower gas prices are sustained for the coming months, they should help to reduce the wholesale cost of electricity paid by suppliers and, in turn, enable suppliers to reduce their retail prices.

Michael Moynihan (Cork North West, Fianna Fail)
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I thank the Minister for his reply. One of the main energy suppliers in the Irish market, ESB, made a profit of some €425 million in 2013, an increase of 23% on the previous year. My understanding is that the CER is there to protect householders and businesses by ensuring there is a competitive market and helping them to secure the cheapest possible electricity. I am concerned that the commission is not doing its job. Indeed, if an energy provider can make close to €0.5 billion in profits on the backs of Irish householders and business owners, it seems clear the CER is not fulfilling its protective role.

In the past three or four years, whenever energy prices have risen on the wholesale markets, energy providers have immediately raised the cost for consumers. When wholesale prices go down, however, the suppliers claim they must wait until the reserves are used up before they can reduce retail prices. It is time the CER justified its existence in terms of how it sets electricity prices in a situation where a prominent energy provider made profits of more than €400 million last year. I understand the Minister's point regarding statutory powers and so on, but I urge him to take a hands-on approach to address this unacceptable situation.

Alex White (Dublin South, Labour)
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The Minister's role in this matter is very clearly delineated in law, as is the role of the Commission for Energy Regulation. That is as it should be in terms of the configuration of the different responsibilities residing in different entities. However, I note the Deputy's point in regard to prices generally. This issue is the subject of ongoing debate in a context where electricity prices in this country have historically been high compared with other countries. A long period without any price increases being granted to the ESB coupled with rapid growth in electricity demand resulted in a legacy of under-investment in energy infrastructure, both generation and networks. Accordingly, our current generation portfolio is older and less efficient than those of our neighbours, which sees plant performance suffer. A much higher level of investment is required and is being applied in our transmission and distribution systems.

Another point to note is that Ireland has possibly the highest dependence on fossil fuels in the EU, at more than 85%. Only Italy and the Netherlands have a comparable level of fossil fuel penetration. These are issues we must bear in mind when we survey the overall position in respect of prices.

Michael Moynihan (Cork North West, Fianna Fail)
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Notwithstanding his point regarding statutory powers and so forth, which I accept, does the Minister, as custodian for the public interest in this area, intend to engage with the CER on this issue? I am sure there is provision for the Minister to seek a meeting with the regulator to discuss its performance and convey the concerns of the public and business owners regarding decisions it has already made and the decisions it will be making on costs, the PSO levy and so on.

Alex White (Dublin South, Labour)
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To reiterate, there is no basis for the Minister in any way directing the CER. However, the Minister does, of course, have a responsibility in these matters in the public interest. On 6 June, the regulator published the proposed decision paper on the PSO levy for 2014-2015. That levy is of critical importance in the context of the issues the Deputy has raised. My predecessor wrote to the chairperson of the CER on 16 June noting that the proposed increase was very significant and that a reduction in retail prices might logically be assumed to follow on from falling wholesale electricity prices. The Minister further noted that although wholesale prices have fallen in recent years, consumers have not seen the benefit in lower retail prices. While acknowledging that other factors such as rising network costs may also affect retail prices, he noted that customers should be able to understand the relationship between wholesale and retail prices. The Minister concluded by expressing his confidence that the CER would take all appropriate action within the regulatory framework to ensure proper and effective price competition for the benefit of consumers. I intend to continue that approach as Minister in this portfolio.