Written answers

Wednesday, 20 April 2005

Department of Enterprise, Trade and Employment

Energy Costs

9:00 pm

Photo of Paul GogartyPaul Gogarty (Dublin Mid West, Green Party)
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Question 92: To ask the Minister for Enterprise, Trade and Employment if his Department has carried out an analysis of the impact of energy price inflation on businesses in various sectors here; and if his Department has carried out any studies that simulate the effects of energy crises on these businesses. [12195/05]

Photo of Micheál MartinMicheál Martin (Cork South Central, Fianna Fail)
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Last year the National Competitiveness Council, NCC, identified electricity costs as one area of concern in the context of overall cost competitiveness in the economy. In its Statement on Prices and Costs 2004, the NCC noted that in the three years to September 2004 electricity prices for industry have increased by approximately 40%.

My Department has carried out a review of the issues from an enterprise policy perspective. The review looked at the sensitivity of industrial and services sectors to electricity costs as a business cost. The findings are contained in a study, which is published on my Department's websiteat http://www.entemp.ie/publications/trade/2005/electricitymarket.pdf.

The study focused primarily on the two principal concerns of industry, namely, the supply capacity of the electricity market and the current unit cost of electricity. While my Department has not carried out a simulation exercise in the event of an energy crisis, the paper examined the price sensitivity of the enterprise sector to electricity prices. The study found that within manufacturing industries such as the pharmaceutical, electronics and the food, beverage and tobacco sectors there are a number of firms, which are particularly sensitive to increases in the unit cost of electricity. In terms of the service industry, tourism and research and development were also sensitive to electricity tariff increases.

In relation to the electricity market, the Minister for Communications, Marine and Natural Resources has announced plans for a review of the sector. This review will examine the institutional arrangements and market structures and assess their appropriateness. The impetus for this review stems from the perceived difficulties relating to ESB's dominance and the need to attract new entrants and develop competition in the sector. On Monday, 21 February 2005, the Minister for Communications, Marine and Natural Resources formally invited tenders from European and Irish consultancy firms to carry out this review. I understand that the Minister will announce the outcome of the tender process in the near future.

My Department has forwarded its study on Ireland's electricity market to the Department of Communications, Marine and Natural Resources, as an input to its review of the electricity sector.

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