Bernard Durkan (Kildare North, Fine Gael)
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Question 275: To ask the Minister for Communications, Energy and Natural Resources the degree to which he has had discussions with the energy regulator with a view to the reducing of energy prices as a means of stimulating the economy; and if he will make a statement on the matter. [43683/09]

Bernard Durkan (Kildare North, Fine Gael)
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Question 278: To ask the Minister for Communications, Energy and Natural Resources his views on encouraging a further reduction in gas and electricity prices in view of the need to make the economy more competitive by way of reducing energy costs; and if he will make a statement on the matter. [43686/09]

Eamon Ryan (Dublin South, Green Party)
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I propose to take Questions Nos. 275 and 278 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 regulation of ESB customer supply electricity tariffs and BGÉ gas tariffs is the statutory responsibility of the Commission for Energy Regulation (CER) under the Electricity Regulation Act 1999 and the Gas (Interim) Regulation Act 2002.

The CER has exited from the regulation of tariffs for large energy users. In the electricity sector more than 90% of business has switched to the independent electricity suppliers. In the gas sector around 88%, in volume terms, of business has switched to the independent gas suppliers. Approximately half of these large commercial customers are on variable tariffs. As a result the substantial reductions in wholesale electricity and gas prices are already being reflected in their tariffs.

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.

In July, the Government agreed 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 some cases this will see businesses paying up to 40% less for electricity compared with what they were paying in 2008.

I welcome the fact that the 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.

I also welcome the CER's most recent pricing decision, which approved an average decrease in gas tariffs of 9.8% with effect from 1 October 2009, with no change in electricity tariffs for domestic consumers. The decrease was made possible by the downward shift in recent months in wholesale gas prices.

It should be noted that major savings, in excess of these sums, are also available to domestic electricity consumers who decide to switch electricity suppliers and some 20% of customers have availed of these opportunities so far. In addition, there are a number of concrete actions that any customer can take to reduce their electricity consumption and hence their electricity bill as advised by Sustainable Energy Ireland (SEI) and reinforced by the "Power of One" campaign.

Small to Medium businesses are also seeing further reductions in their bills of 5.5% as the new CER tariff decisions come into effect and deliver further benefits to business.

The CER has also recently announced that the 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 to 2009. This represents a direct saving to all electricity consumers in 2010.

Taken together, these actions will benefit all consumers of energy, including large energy users, SMEs and domestic consumers, 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 BGÉ make even greater efficiencies in operational and capital expenditure, thus driving down costs to all consumers. The 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.