Jan O'Sullivan (Limerick East, Labour)
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Question 79: To ask the Minister for Communications, Energy and Natural Resources the new measures he will take to ensure Ireland's cost of energy is tackled in view of concerns expressed by the commercial sector about the high cost of energy here; and if he will make a statement on the matter. [16656/10]

Eamon Ryan (Dublin South, Green Party)
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The Government recognises that the cost of energy in Ireland is a serious competitiveness issue facing the enterprise sector during this difficult period for the economy. The provision of secure, sustainable and competitive energy supplies is critical for the economy. Ireland's high energy costs, by comparison with much of Europe, are primarily due to significant dependence on volatile imported fossil fuels, particularly gas, as well as 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.

Recognising the concerns of indigenous business and the inward investment community, particularly in view of the difficult economic conditions, 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 rebates 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 rebates would continue for large energy users at their current level until October 2010 and would then be phased out over the following two year period.

In addition, arising from their review of prices last year, 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. Small to Medium businesses have seen further reductions in their electricity bills of 5.5% since October 2009 as the new CER tariff decisions came. The CER approved an average decrease in gas tariffs of 9.8% with effect from 1 October 2009, followed by a further 8% reduction in BGE's unit charges from 1 February 2010. These reductions were made possible by steady declines over recent months in wholesale gas prices in the UK market and also by appreciation of the Euro against Sterling. Business customers can also avail of the competitive benefits of value and choice by shopping around for alternative electricity and gas suppliers. Competition in the business electricity market has developed to such an extent that the CER has recently decided to end price regulation for ESB in this market segment.

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 CER is also close to completion of a 5-year review of electricity network expenditure. The review is designed to ensure that ESB and EirGrid make even greater efficiencies in operational and capital expenditure, thus minimising costs for consumers. CER will ensure that this review is rigorous notably in the interests of mitigating energy costs for business.

These measures are already 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. Gas prices also continued to fall with a result that gas prices are now 7% to 10% below the EU average in the two main consumption bands 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.