Written answers

Tuesday, 27 April 2010

Department of Communications, Energy and Natural Resources

Energy Prices

12:00 pm

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 69: To ask the Minister for Communications, Energy and Natural Resources the discussions he has had with the regulator with a view to ensuring that electricity consumers can directly avail of the full benefit of competition; the action required to bring this about having particular regard to the need to bring energy prices in this country at least on par with the most competitive throughout Europe in view of the particular economic needs at the present time; and if he will make a statement on the matter. [16553/10]

Photo of Eamon RyanEamon Ryan (Dublin South, Green Party)
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The Government is firmly committed to increasing competition as the best means of exerting downward pressure on electricity prices and also to ensuring diversity of energy supplies, with a particular focus on renewable energy, in order to reduce our exposure to volatile external fuel prices. The Government supports continued significant investment in Ireland's electricity and gas networks to further underpin security and reliability of supply. Government policy has resulted in significant progress in the development of competitive electricity markets, most notably with the all-island Single Electricity Market (SEM) now in place, the sale of ESB generation capacity and the entry of new international players such as Endesa and Scottish and Southern Electricity to the Irish and all-island market.

Ireland has a fleet of new, efficient and reliable gas-fired generating stations, with two more coming online in the next few months, as well as significant new wind generation capacity which is increasing competition further and exerting a downward pressure on prices. Falling gas prices in the UK market are also having a direct impact on SEM wholesale electricity prices.

Recognising the concerns of indigenous business and the inward investment community, particularly in view of the difficult economic circumstances, the Government has put in place a number of measures to mitigate the cost of energy for business. In 2009, all electricity consumers benefitted from direct rebates totalling €567m. In July 2009 the Government agreed that these rebates would continue for large energy users at the same level until October 2010 and would then be phased out over the following few years. These measures are having a significant impact on Ireland's international competitiveness. The latest comparative statistics available from the Sustainable Energy Authority of Ireland's publication show that Ireland experienced the third largest price drop in electricity prices to industry across the entire EU over the 12 month period ending on 30th June 2009. At the same time, 22 of 27 EU countries experienced price increases.

The Commission for Energy Regulation (CER) has a statutory function to advise the Minister on developments in the electricity and gas markets. In this context the CER engages on a regular basis, both with me and my Department, on issues relating to energy prices and competition. Working with the CER, my Department is also pursuing further permanent structural changes to our electricity markets that will benefit business. These changes include some re-balancing of network tariffs, as well as recovering carbon windfall gains from electricity generators.

The entry into the domestic electricity market last year of two new suppliers, Airtricity and Bord Gáis Energy, demonstrates that policy to encourage competition in electricity generation and supply is benefitting domestic as well as business consumers through, for example, discounts of between 10% and 14% on ESB unit rates. The independent suppliers are also offering domestic consumers alternative billing arrangements and options for the level of renewable electricity they purchase. On foot of the high rates of switching in all segments of the electricity market, the CER recently published a decision on the road map for ESB price deregulation. This is an important step on the path to developing a fully competitive electricity market in Ireland.

The CER has also committed to further consultations on important consumer measures including improving general customer awareness and encouraging active market participation across all parts of the domestic market. In this regard, my Department is also working on enhanced consumer protection and information provisions in the context of the transposition of the third EU internal energy market package of legislation, with the objective of ensuring that all consumers can benefit fully from the competitive electricity market.

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