Paddy Burke (Fine Gael)
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I welcome the Minister of State, Deputy Joe McHugh.

Tom Shehan (Fine Gael)
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I also welcome the Minister of State, Deputy Joe McHugh. The issue I raise relates to the energy regulator. Heretofore, the only time I was aware of the energy regulator was when the ESB or Bord Gáis applied to it for a price increase. The regulator was seen to do its job in that when Electric Ireland applied for a 21% increase in charges it was only allowed to introduce an increase of 14%. The energy companies do not have it all their own way. However, I have become concerned in recent months in particular. Approximately 40% of this country's electricity is produced from gas. The price of gas has dropped by approximately 30%, yet there has been no reduction in the cost of electricity to the consumer. That is the reason I call on the Minister to intervene. I understand the regulator is an independent entity, but energy producers can seek price increases from the regulator, and on behalf of the people I ask that the Minister seek a decrease in price from the regulator, given that the price of gas, from which 40% of electricity in this country is produced, has fallen by approximately 30%. Accordingly, there should be a decrease in the cost of electricity to the consumer. I cannot understand why that has not happened.

Joe McHugh (Donegal North East, Fine Gael)
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I thank Deputy Sheahan for raising this timely issue, especially in light of the publication of a new climate change Bill this month. If and when enacted, it will become the first climate change Bill this country has ever had. We are looking to 2020 and 2050, at our energy mix and our reliance on fossil fuels. It is important that we begin this conversation.

The Government is acutely aware of the financial challenges faced by families and businesses from high electricity prices. However, it is important to note that the electricity and gas markets are commercial, liberalised and competitive and they operate within national and European regulatory regimes, supported by legislation.

Responsibility for electricity and gas market regulation is a matter for the Commission for Energy Regulation, CER, which is an independent statutory body. The CER is focused on actions to mitigate costs for business and residential consumers, such as rigorous scrutiny of network costs, deeper integration with European energy markets and the delivery of a truly competitive market in the interest of customers. The commission continues to monitor the electricity and gas markets to ensure that competition continues to develop and that customers benefit from competition. The Department liaises with the CER on these matters on an ongoing basis.

At a national level, electricity and gas prices are no longer regulated by the CER. The competitive energy market results in choice for consumers and businesses in terms of suppliers, products and prices, and this exerts downward pressure on prices.

The reduction in wholesale gas prices since the beginning of 2014 has led to a reduction in the wholesale electricity price. It should be noted that wholesale electricity prices tend to reflect the price-setting fuel in the market, which is natural gas, not crude oil. It is worth noting that only 1% of electricity was generated from oil in 2012. Lower wholesale gas prices in 2014 compared to 2013 should have a knock-on impact on retail prices, and that is reflected in the latest EUROSTAT figures published by the Sustainable Energy Authority of Ireland, SEAI, on 9 December last. However, I should caution that wholesale gas prices have been rising since the summer of 2014 and this rise is likely ultimately to feed through to retail electricity and gas prices.

The SEAI report shows that all business consumption bands in electricity and gas experienced reductions in average prices in the first half of 2014, ranging from 0.7% to 4% for electricity and 6.7% to 12.9% for gas. Similarly, in the first half of 2014, EUROSTAT figures show a reduction of 5.7% in the average price of gas in the residential consumption band with the largest share of the market. The average price of electricity in the residential consumption band with the largest share experienced a reduction of 1.3%.

Electric Ireland, the larger supplier of electricity in this country, reduced its unit rate for domestic customers by 2% in November 2014. Consumers can, and in many cases have, mitigated electricity and gas prices by shopping around to get the best possible price and service deal from suppliers. I encourage people to continue to do so. Measures such as comparison websites, approved by the regulator, are there to assist people in this endeavour. Even if customers wish to remain with their existing supplier, they should contact that supplier and insist that they be placed on the best possible offering.

I realise that energy supply companies have not automatically passed savings on to their customers, but I expect that savings will feed through to domestic prices in due course.

However, all supply companies offer competitive deals to customers who switch or engage with their suppliers. For example, a customer can go online today and achieve a discount of approximately €150 per annum by switching from the standard rate electricity offering. A customer can achieve a discount of more than €150 on gas by switching from the standard rate. That equates to a saving of more than €300 a year by switching electricity and gas suppliers. However, I fully appreciate that some customers, particularly older and more vulnerable people, are reluctant to switch or feel unable to do so . In this situation I urge all stakeholders, including the energy companies and the regulator, to make the more vulnerable customer categories aware of the most competitive offerings available and to facilitate their transition to the best value deals in the market.

The Minister for Communications, Energy and Natural Resources is scheduled to meet the chief executive officers of the various energy supply companies next week to outline the Government's concerns regarding these matters and to impress on them the need to offer their customers the best value available in a competitive, liberalised market. I will convey the Senator's observations and suggestions to the Minister in advance of that meeting which will provide an opportunity to have a broad-ranging discussion. As the Senator correctly pointed out, if prices in certain sectors are going down there has to be a knock-on effect for customers. I thank the Senator for raising this matter.

Tom Shehan (Fine Gael)
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The Minister of State said in his reply, "The CER is focused on actions to mitigate costs for business and residential consumers". My problem is that this is not being done for the consumer. I refer to the recommendation that consumers should switch providers. In my understanding of economics and business one does not chop and change because there is an expectation that the supplier will look after its customers. I note that the Minister of State urges that more vulnerable customer categories should be made aware of the most competitive offerings available to facilitate the transition to the best value deals in the market. That is not looking after the customers and that is my concern and complaint. Reductions are not being passed on. For example, gas prices have fallen by 27%. I could line up 100 people in the morning and I do not think any one of them will tell the Minister of State that his or her electricity bill has dropped. I have documentation from a constituent which shows that his electricity bills have gone up. I refer to the Minister of State's remarks that some customers, in particular, older and more vulnerable people, are reluctant or feel unable to switch. They should not have to switch. The Commission for Energy Regulation, which is there to mitigate costs for business and residential customers, should insist and ensure that the electricity companies pass on the benefits of the reduced costs of gas.

Joe McHugh (Donegal North East, Fine Gael)
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I will provide the 2013 figures for the number of customers who switched providers. A total of 266,224 electricity customers and 117,002, gas customers switched providers. I take the Senator's point that certain categories of customers are used to working with their supplier and we should facilitate them. There is a role for the Commission for Energy Regulation to raise awareness for them. The Senator has been of assistance by raising this matter today.

The difficulty with the geography and the type of energy mix in this country means there is a significant 85% reliance on fossil fuels. We are working towards the target of a 40% increase in the use of indigenous renewables by 2020. However, the reality is that we are still relying 85% on fossil fuels, including gas and peat. For example, Italy has a similar reliance but it also relies on hydroelectricity for 25% of its fuel. Holland has a similar trajectory but it has its own oil and gas supplies.

While these are constraints, they are not excuses. We need to make a determined effort to ensure that we work towards a future use of a renewable mix. I attended a conference this morning in Carton House, Maynooth, which dealt with the topic of how to introduce more competition and how we can work with our counterparts. I was involved in efforts to set up a bilateral agreement between the United Kingdom and Ireland in my capacity as Co-Chair of the British-Irish Parliamentary Assembly. This did not come to pass but I do not think we should give up on the subject of interconnectivity, be it on a British-Irish basis, on a European basis or a connection with France. We need to consider all this mix. We must be conscious of the opportunities as well as the constraints. We have a single, all-island market which is creating more competition. Scottish and Southern Energy plans to launch a plant in County Wexford this year, next to Senator Cullinane's part of the world. There is plant in Cork, next door to the Senator's county, at Aghada and Whitegate, which was opened in 2010. The vast bulk of our purchase of gas comes from the United Kingdom. These are the challenges but they are not excuses in that we must continue to work towards facilitating more competition to ensure a downward pressure on prices for customers.

While the economy is moving in the right direction, people are still getting bills through the door. Senator Sheahan knows well the challenges faced by people. They will have a few more pounds their pockets at the end of this month but they still have bills such as car insurance, the tax bill, the television licence fee and the electricity bill. The Senator has raised a very important issue and I thank him.

Tom Shehan (Fine Gael)
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The word should go out from here this morning that more people changing their supplier is the only way to bring down the cost of electricity.

Paddy Burke (Fine Gael)
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We are way over time. This matter has taken 14 minutes.