Ciarán Lynch (Cork South Central, Labour)
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Question 295: To ask the Minister for Communications, Energy and Natural Resources if his attention has been drawn to the case of retailers designated DG6 who fall into the category of low voltage maximum demand users and who have suffered increases of 20% to 30% in the cost of electricity as a consequence of the decision by the Commission for Energy Regulation; if he will consider taking action to redress this imbalance in view of the current economic climate and the underlying reduction in the cost of gas; and if he will make a statement on the matter. [2431/10]

Eamon Ryan (Dublin South, Green Party)
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The regulation of electricity network charges is the statutory responsibility of the Commission for Energy Regulation (CER), under the Electricity Regulation Act 1999. I have no function in setting these tariffs.

The CER reduced the network charges for all domestic and business customers from May 1st 2009 which resulted in an average decrease of electricity bills of 10.3%. This brought forward from the autumn an anticipated reduction in energy prices. At the time, the CER stated that the network charges would have to be increased from October. As a result distribution and transmission charges for all domestic and business customers rose from 1st October 2009.

For the majority of customers, including those on regulated ESB tariffs, the increased network charges have been more than offset by the overall reductions in energy charges arising from the decline in fossil fuel prices, with a result that low voltage maximum demand users (who tend to be small and medium size enterprises), who had remained on regulated ESB tariffs experienced an average price decrease of a further 5.5% from 1st October 2009.

Most SMEs in the LVMD category are with the independent electricity suppliers. The CER advises that some of these customers signed contracts with their suppliers that fixed their energy costs for a period but remained subject to changes in network charges. It is this category of customers that are experiencing a rise in their electricity bills. Although all electricity suppliers were fully aware that network charges were increasing in October, the CER advises that it has received complaints from some SME customers who consider that they had not been put on notice by their suppliers of the forthcoming change in network charges.

On foot of the complaints, the CER has launched an investigation into how these recent network charge increases were communicated to these customers by their electricity suppliers. It must be emphasised that the CER has no role in the terms of the contracts entered into by business customers with independent suppliers. I welcome CER's decision to investigate the matter.

According to the latest statistics on European energy cost competitiveness, published by Eurostat, Ireland's competitive position on electricity prices is improving considerably. Ireland registered the third largest price drop in electricity prices to industry over the 12 month period ending 30 June 2009. At the same time, 22 of the 27 EU countries experienced price increases. It is also the case that some of the larger industrial customers in Ireland paid less for electricity in Ireland than equivalent customers in Britain in the first half of 2009. Given Ireland's dependence upon imported fossil fuels, widely dispersed population and need for considerable catch up investment in the networks, this is positive news for these industrial customers from a competitiveness perspective.

Competition among the suppliers is a critical means of exerting downward pressure on electricity prices. For competition to be fully effective, business customers should be informed of all the options open to them. My Department, the CER and Sustainable Energy Ireland are working with IBEC to ensure that business is better equipped to understand and manage their energy bills. Business customers can now choose among a number of suppliers and the advice to them is ensure that they negotiate the best offer available.