Seanad debates

Tuesday, 28 September 2021

Nithe i dtosach suíonna - Commencement Matters

Fuel Poverty

2:30 pm

Photo of Ossian SmythOssian Smyth (Dún Laoghaire, Green Party) | Oireachtas source

I thank the Senator Ahearn for raising these important matters. Government fully accepts that recent electricity and gas price increases will not be welcomed in light of the current economic environment. Increases to wholesale energy prices following rises in international gas prices have been the principal driver of these increases which have been impacting across Europe and are not just an Irish phenomenon.

First, it is important to recognise that these are not Government decisions. Price regulation ended many years ago. Suppliers compete with each other on prices and set their own prices accordingly, as you would expect in a liberalised market. Second, the independent regulator, the Commission for Regulation of Utilities, CRU, has functions in relation to these matters, including consumer protection and monitoring the market more generally.

Third, I will set out the long-standing policy on promoting competition in respect of these markets, and what Government is doing in regard to providing significant supports for household energy costs, both in terms of energy efficiency and welfare supports.

The most immediate factor affecting electricity prices in Ireland is the upward trend in international gas prices. In Europe wholesale natural gas prices have been on an upward curve since the second half of 2020. This feeds directly through to retail electricity prices as the wholesale price of electricity correlates strongly with the price of gas. To protect the most vulnerable, Government provides extensive supports for household energy costs via welfare schemes. Overall the Government envisages expenditure in excess of €700 million in 2021 on a number of measures to support households in meeting their energy costs. There are, for example, specific schemes aimed at those at risk of energy poverty, including the household benefits package and the fuel allowance. In addition, all the funds raised by increases in the carbon tax will be ring-fenced to protect those most exposed to higher fuel and energy costs. The best long long-term approach for Ireland to insulate consumers from volatility on international wholesale energy markets is to invest in energy efficiency and renewable energy and expand interconnection with European and neighbouring markets.

Turning to security of supply, the CRU also has statutory responsibility to monitor and take measures necessary to ensure the security of electricity supply in Ireland. It is assisted in its statutory role by EirGrid which is responsible for the day-to-day management of the electricity transmission system. The CRU has advised that it has identified specific challenges to ensuring electricity security of supply, which it is currently in the process of addressing. These challenges include lower than expected availability of some existing power stations; anticipated new power stations not being developed as planned; expected growth in demand for electricity, including due to the growth of data centres; and the expected closure of power stations that make up approximately 25% of conventional electricity generation capacity over the coming years.

A range of actions are being taken by the CRU and EirGrid to ensure security of electricity supply over the coming winter and the years ahead. The actions they are progressing include maximising the availability of future generation; developing new generation capacity, including temporary generation capacity in advance of winter 2022; making changes to the grid connection rules for data centres; and working with large energy consumers in order to, where possible, reduce their electricity demand during peak periods.

The Department of the Environment, Climate and Communications continues to work closely with the CRU and EirGrid to ensure security of electricity supply and minimise the risk of power cuts.


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