Tuesday, 30 November 2010
Department of Communications, Energy and Natural Resources
Electricity Transmission Network
Question 28: To ask the Minister for Communications, Energy and Natural Resources the effect on electricity prices arising from the recent decision of the Commission for Energy Regulation to grant increased revenue to EirGrid and ESB Networks for transmission investment; and if he will make a statement on the matter. [44812/10]
The cost of operating, maintaining and developing the electricity transmission network, including capital expenditure on new infrastructure, forms part of every electricity consumer's bill. The independent energy regulator, the Commission for Energy Regulation (CER), has the function of regulating transmission revenues for EirGrid as the transmission system operator and for ESB as the transmission asset owner.
The CER has recently published a final decision on network revenues, following the third in its series of in-depth 5-year network reviews, to cover the period 2011 to 2015. This decision provides the framework for ESB Network and EirGrid revenues for the forthcoming period and is designed to provide incentives for delivering efficiencies as well as allowing for significant new infrastructure investments.
The efficiency measures provided for in this decision include 2.5% annual productivity improvements, as well 5% reductions in payroll costs from both ESB Networks and EirGrid. The CER will also propose new incentivisation mechanisms (the detail of which will be further developed with ESB Networks and EirGrid), which will focus on, for example, speedier delivery of grid connections for renewable Generators. This networks decision also allows for transmission capital expenditure of €1.45bn within the period. In approving this amount, the CER was conscious of the need for value for money and identified significant efficiencies in the capital expenditure programme.
This much needed investment in strategic energy infrastructure will underpin security of energy supply, enhance competition in the all-island electricity market and facilitate the delivery of renewable electricity infrastructure to help meet Ireland's legally binding renewable energy targets.
Transmission charges are set to increase over the next 5 years on foot of this investment programme. The CER has indicated an increase of approximately 3% in transmission charges in October 2011. However, as transmission charges currently make up around 7% of domestic customers' bills, this will have a relatively small impact on a customer's overall bill. The delivery at least cost of this infrastructure investment is crucial to enhancing competitiveness in the Irish economy and delivering on the Government's smart economy agenda.