Written answers

Tuesday, 28 March 2006

Department of Communications, Energy and Natural Resources

Energy Sector

11:00 pm

Photo of John DeasyJohn Deasy (Waterford, Fine Gael)
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Question 228: To ask the Minister for Communications, Marine and Natural Resources if his attention has been drawn to the fact that Ireland has the seventh most expensive energy prices among the 25 EU member states; the action he plans to take to increase competition in the electricity and gas markets, thus reducing prices; his views on whether it will be necessary to unbundle the electricity and gas markets to allow operators from other EU states enter the Irish market; and if he will make a statement on the matter. [11974/06]

Photo of Noel DempseyNoel Dempsey (Meath, Fianna Fail)
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I am aware of varying energy costs within the European Union. I do not have any function in regard to the domestic pricing of electricity and gas, as this falls within the remit of the Commission for Energy Regulation, CER, the independent regulator for electricity and gas.

The conditions for competition are being created through progressive liberalisation of the electricity and gas markets. In regard to the opening of the electricity market, the position is that liberalisation of the electricity market has proceeded on a phased basis since February 2000 under the regulatory oversight of the CER.

In accordance with the Electricity Regulation Act 1999 (Eligible Customer) (Consumption of Electricity) Order 2003, on 19 February 2005, the market opened fully to competition. From that date, all customers have been eligible to source their electricity from any licensed supplier and the entire market became contestable. Scope now exists for all customers, household and non-household alike, to seek out keener prices in the competitive market. This is well in advance of the July 2007 deadline set down in Electricity Directive 2003/54/EC. The opening of the market has benefited customers by broadening customer choice and already some 42% of the market by volume is supplied by independent suppliers.

Since full market opening the CER has ensured that the support systems and processes are in place to enable new entrant electricity suppliers to serve any customer in Ireland. To date, suppliers have focused on larger customers because this was the first segment of the market to open to competition — a pattern that is very common in other newly liberalising markets. Over time, as suppliers target the domestic market, the CER expect to see those benefits extended to the domestic customer.

In regard to unbundling of electricity utilities, the Department is working to conclude outstanding matters to ensure that EirGrid plc becomes fully operational as a licensed transmission system operator, TSO, in the coming months. The gas market is at an advanced stage of opening. EU Directive 2003/55/EC of the European Parliament and of the Council concerning common rules for the Internal Market in natural gas provides for the opening of the market on a phased basis. The directive required market opening for all non-household customers from 1 July 2004 and this was done. Overall market opening by volume currently stands at 86%, comprising all industrial and commercial consumers. Provisions for the final stage of market opening — to all domestic consumers — are contained in the Energy (Miscellaneous Provisions) Bill 2006, as published. Again, this is in advance of the deadline of July 2007 set down in the directive.

A statutory instrument, European Communities (Internal Market in Natural Gas) (BGÉ) Regulations 2005, S.I. No. 760 of 2005, was signed into law last December. The regulations impose a legal obligation on Bord Gáis Éireann to unbundle its transmission and distribution system operators. Bord Gáis is currently taking measures to comply with this through the establishment of an independent system operator subsidiary.

In regard to both the electricity and gas markets, any company, regardless of the nationality of its parent company and which meets the requirements of Irish law may apply to CER for a supply, or, also in the case of electricity, generation, licence.

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