Brian O'Shea (Waterford, Labour)
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Question 113: To ask the Minister for Communications, Energy and Natural Resources the new measures he will take to ensure that the cost of energy here is tackled in view of concerns expressed by the commercial sector on the high cost of energy and his failure to tackle this high cost for business; and if he will make a statement on the matter. [3439/10]

Eamon Ryan (Dublin South, Green Party)
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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. Structural challenges, including peripherality, a small and widely dispersed population and lack of economies of scale in power generation, also contribute to a higher energy cost base in Ireland than in competitor countries.

In the current economic climate, indigenous business and the inward investment community are concerned about energy costs. In response to this, the Government has put in place a number of measures to mitigate the cost of energy for business.

These measures, which include significant rebates to electricity consumers, have had a significant impact on our competitive position in energy terms. According to the latest statistics on European energy cost competitiveness, as published recently in Sustainable Energy Ireland's report – "Understanding Electricity & Gas Prices in Ireland", 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.

In addition, gas prices to Irish business with medium consumption levels have been falling since early 2008 and fell by 15.8% in the year to end June 2009. Gas prices to business in Ireland for the first half of 2009 were 7% to 10% below the EU average in the two main midrange consumption bands and just 1% above the EU average in the next highest band.

Working with the Commission for Energy Regulation (CER), my Department is also investigating the scope for further permanent structural changes to our electricity tariffs that will benefit business. Changes under consideration include some rebalancing of network tariffs from next autumn, as well as the possibility of recovering carbon windfall gains from electricity generators.

The CER has also commenced work on a 5-year review of electricity network expenditure. These reviews are designed to ensure that ESB and EirGrid make even greater efficiencies in operational and capital expenditure, thus driving down costs to all consumers. I am confident that CER will ensure that this review is very rigorous in the interests of mitigating energy costs.

Competition among suppliers is a critical 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, the 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 Gáis, Airtricity and the independent ESB Independent Energy. The Enterprise community has acknowledged that there is healthy 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 1,500 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 energy efficiency achievements.