Noel Ahern (Dublin North West, Fianna Fail)
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Question 452: To ask the Minister for Communications, Energy and Natural Resources if he will clarify a matter in relation to a company (details supplied) selling electricity below that of the ESB; his policy on same; the reason the ESB cannot obtain permission to reduce prices likewise; the net loss of revenue to the ESB per 10,000 customers who sign over to the other company; the number of customers who have moved to date in 2009; if the ESB will require a subsidy to survive; and the further reason that the cap can not be lifted on the ESB to allow provision of free competition. [28744/09]

Eamon Ryan (Dublin South, Green Party)
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I welcome the fact that the benefits of competition in electricity retail supply, which have previously been confined to large industrial and commercial customers, are becoming available to domestic consumers. The entry into the domestic electricity market of Airtricity and Bord Gáis Energy demonstrates that policy to encourage competition in electricity generation and supply is paying dividends for consumers.

The independent suppliers are currently offering discounts of between 10% and 14% on ESB tariffs. These discounts apply even after the 10% reduction to the regulated ESB price announced by the Commission for Energy Regulation (CER) on 1 May. The independent suppliers are also offering domestic consumers other choices, such as the proportion of renewable electricity they purchase, as well as alternative billing arrangements. Domestic customers have been switching to the independent suppliers in significant numbers. To date in 2009, 196,815 domestic customers have left ESB. However, it is important to note that ESB still retains almost 90% of domestic electricity customers.

The net loss of revenue to the ESB per 10,000 customers who sign over to alternative suppliers is an operational matter for ESB. ESB is, and will remain, a commercially viable entity. There is no question of subsidising ESB's operations. Energy price regulation is designed to ensure that a dominant player does not engage in uncompetitive, short-term pricing practices, which could undermine or drive out emerging competition. The CER has signalled that it intends to cease regulating ESB Public Electricity Supply (PES) prices when sufficient competition has taken hold in the domestic and SME market. This is in line with EU legal requirements for the internal energy market. ESB's tariffs are set by the CER at a level that reflects the costs incurred by ESB in supplying that electricity. If ESB can reduce its legitimate costs then the regulator will permit them to charge a lower tariff. Below-cost selling of electricity or other anti-competitive practices is not permitted under the regulatory model.

The nature of regulation is to drive improved efficiencies and lower costs in areas that are under regulatory control. This is designed to benefit customers first and foremost. The CER will continue its review of overall energy tariff structures over the coming months taking account of global fuel prices, the necessity for regulatory and market certainty for the energy sector, and economic conditions.