Catherine Byrne (Dublin South Central, Fine Gael)
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Question 104: To ask the Minister for Communications, Energy and Natural Resources the reason the industrial electricity price here has moved from the European average in 1998 to nearly 45% above the European average in 2008; and if he will make a statement on the matter. [18737/09]

Eamon Ryan (Dublin South, Green Party)
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Ensuring a competitive and sustainable energy supply is a key policy objective for the Government. Energy costs are a major concern for all sectors of the economy. There is a range of factors which have contributed to Ireland's higher than the EU average increases in electricity prices over recent years. • Historical reasons – A long period without any price increases granted to ESB, coupled with rapid growth in electricity demand, resulted in a legacy of under investment in energy infrastructure – both in generation and in networks. • Natural Resources and Fuel Mix – Ireland has the highest dependency on fossil fuels in the EU (over 85%). Only Italy and Netherlands have a comparable level of fossil fuel penetration and they both also have relatively high energy prices. • Geographical Isolation – Given our lack of natural resources, fossil fuels required for generation must be imported. Our isolated geographical position at the periphery of Europe raises the cost of this transportation over and above what is paid by other European countries. • Market Scale - Given the small size of our electricity market and lack of interconnection, Irish power generation plants tend to be smaller than those on the continent. This gives rise to diseconomies of scale relative to Europe, which also contributes to a higher than average cost of electricity. • Population Dispersion – Ireland's population demographics are dissimilar from most of our European neighbours. An extremely wide but low rural population density means that connection costs for rural energy customers have been cross-subsidised by urban dwellers and costs are higher for the maintenance and operation of the electricity distribution system.

The Government's Energy Policy Framework and the Programme for Government set out the actions being taken to improve the competitiveness of energy supply. We must use energy far more efficiently, deliver on our ambitious renewable targets and progress vital strategic energy infrastructure such as the East West Electricity Interconnector. Initiatives in all these areas are being progressed and substantial progress has been made to date in relation to their delivery.

In addition, since the introduction of the All-island Single Electricity Market in 2007, the transformation of the Irish electricity market from an ESB monopoly to a competitive market has considerably accelerated with the involvement of additional players in power generation and supply. There are now four large independent suppliers, actively competing in the unregulated sector of the energy market, which also put downward pressure on energy costs over the medium to long term.