Ciarán Lynch (Cork South Central, Labour)
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Question 309: To ask the Minister for Communications, Energy and Natural Resources if his attention has been drawn to the new practice of electricity supply companies of requiring a substantial deposit on new and renewing contracts; if consideration has been given to the detrimental effect on business, the restriction on competition and the risk to the deposit if the supplier should cease trading; and if he will make a statement on the matter. [32818/11]

Pat Rabbitte (Dublin South West, Labour)
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Responsibility for the regulation of the electricity and gas markets is a matter for the Commission for Energy Regulation (CER), which is an independent statutory body. I have no statutory function in the setting of electricity supply contracts in the business or domestic sectors.

The setting of supply contracts is a day to day operational matter for electricity supply companies. These contracts are governed by the CER's guidelines for suppliers' Codes of Practice, Customer Charter and Terms and Conditions of Supply for Household Customers.

My Department is advised by the CER that suppliers have always had requirements regarding the provision of deposits in advance. Due to the general economic situation, it is possible that suppliers are strictly applying these requirements as standard, whereas in the past they may have waived them.

One of the main reasons that electricity and gas suppliers require deposits is that their customers consume the energy supplied in advance and pay in arrears. Therefore suppliers must always meet the cost of providing the energy in advance of payment and consequently they run the risk of non- payment from their customers. This is in contrast to suppliers of other energy products, such as heating oil or Liquid Petroleum Gas (LPG), as customers are required to pay for these products in advance.

The CER is currently consulting on revised guidelines for suppliers' Codes of Practice, Customer Charter and Terms and Conditions of Supply for Household Customers. It has been proposed in the consultation process that in relation to household customers, the supplier should return a deposit after one year if the customer has met the supplier's credit terms.

In any commercial dealings, if a customer pays a deposit to an enterprise that subsequently goes out of business, that customer risks losing their deposit. If a business goes into liquidation, customers may end up as unsecured creditors, the last group to be paid by the liquidator.