Brian O'Shea (Waterford, Labour)
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Question 79: To ask the Minister for Communications, Energy and Natural Resources the measures he will take to ensure the cost of energy here is tackled in view of concerns expressed by the commercial sector; and if he will make a statement on the matter. [43367/09]

Bernard Durkan (Kildare North, Fine Gael)
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Question 89: To ask the Minister for Communications, Energy and Natural Resources if his attention has been drawn to the fact that energy costs are a major contributory factor affecting economic recovery here; if he has examined ways to reduce these costs at least in line with prices in the most competitive EU member states; if he has measured the degree to which alternative energy sources might be examined to bring this about; if he has sought or received any advice from the ESB or Bord Gáis on such issues; if it is possible for the ESB and Bord Gáis to further reduce energy prices in an effort to alleviate the effects of the current economic climate; and if he will make a statement on the matter. [43370/09]

Eamon Ryan (Dublin South, Green Party)
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I propose to take Questions Nos. 79 and 89 together.

Ireland's high energy costs, by comparison with much of Europe, are primarily due to significant dependence on imported fossil fuels, particularly gas, as well a requirement for very significant investment in energy infrastructure, following two decades of under-investment in the networks. The under-investment in networks and power generation posed real risks to security of supply which had become a major concern for enterprise. Ireland also faces structural challenges, including geographic isolation, a small and widely dispersed population and lack of economies of scale in power generation, which lead to a higher cost base in Ireland than in competitor countries.

In the current economic downturn, indigenous business and the inward investment community have become even more concerned about energy costs. The Government has put in place a number of measures to mitigate the cost of energy for business.

All electricity users benefitted in 2009 from direct subsidies totalling €567m. These were made up of an ESB rebate to consumers of €315m, a repayment of certain Public Service Obligation (PSO) levies of €87m and the deferral of some network revenues until after October 2009.

The Government agreed in July that these subsidies will continue for large energy users at their current level until October 2010 and will then be phased out over the following two year period. In a number of cases this will see businesses paying up to 40% less for electricity compared with what they were paying in 2008.

In addition, arising from their mid-year review of energy prices, the Commission for Energy Regulation (CER) lowered electricity prices for all customers by 10% and gas tariffs by an average of 12% for domestic and SME gas customers from May 1st 2009.

The CER's most recent pricing decision approved an average decrease in gas tariffs of 9.8% with effect from 1 October 2009. The decrease was made possible by the downward shift in recent months in wholesale gas prices. Small to Medium businesses have also seen further average reductions in their electricity bills of 5.5% from 1 October as the new CER tariff decisions came into effect.

The CER also recently announced that the Public Service Obligation (PSO) Levy will be zero for 2009/2010. The PSO is the mechanism through which we support the security of our energy supplies, including peat, and the development of wind power in Ireland.

The level of capacity payments, that compensate electricity generators for their long run costs, will also be 15% lower in 2010 compared with 2009. This represents a direct saving to all electricity consumers in 2010.

Taken together, these actions will benefit all businesses, including both large energy users and SMEs, by significantly reducing the level of energy costs they would otherwise face in 2009/10.

Working with the CER, my Department is also investigating the scope for further permanent structural changes to our electricity tariffs that will benefit business. These changes include some rebalancing of network tariffs from 2010, as well as recovering carbon windfall gains from electricity generators.

The CER is also about to commence work on a 5-year review of network expenditure. These reviews are designed to ensure that ESB, EirGrid and BGE make even greater efficiencies in operational and capital expenditure, thus driving down costs to all consumers. CER will ensure that this review is rigorous in the interests notably of mitigating energy costs for business.

The Government remains firmly committed to increasing competition as the best means of exerting downward pressure on electricity prices, and also towards ensuring diversity of energy supply to reduce our exposure to high and volatile external energy prices. Significant progress has been made to date, most notably with the all-island Single Electricity Market now in place, the sale of ESB generation capacity, entry of new players and new generation capacity coming on-stream in the Irish market.

The development of supplier competition in the Large Energy User (LEU) market has meant that since 2006 the CER no longer regulates prices for this sector. ESB Customer Supply now supplies less than 10% of this market. The four main independent suppliers are Energia, Bord Gais, Airtricity and the independent ESB Independent Energy. The Enterprise community acknowledges that there is a robust competition in the LEU supply market with the suppliers very actively competing for customers.

There is also active competition between electricity suppliers in the SME market and companies can avail of discounts of up to 10%-20% simply by switching suppliers. Already approximately 60% of SMEs have made this switch and are experiencing the benefits.

Energy support programmes, offered by Sustainable Energy Ireland (SEI), are proving very successful in helping businesses reduce their energy usage and hence their costs. In the past two years SEI has given free advice and training to over 1500 businesses in the SME sector and has advised that every single business has identified immediate savings, typically greater than 10% of costs. Total business cost savings from the programme already total close to €60 million per annum, which is in addition to savings of a similar scale in the SEI Large Industry Energy Network.

Firms in this Network include some of Ireland's major employers and represent a significant proportion of Irish export income as well as accounting for 61% of all industrial energy use. In addition to the significant annual savings achieved by firms in this network, Irish industry is also developing an international reputation for its efficiency activity.