Catherine Murphy (Kildare North, Independent)
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To ask the Minister for Communications, Energy and Natural Resources if he will provide information on the exact formula used by the CER to calculate the Public Service Obligation levy; if he will outline the exact formula used to regulate energy prices; and if he will make a statement on the matter. [45393/12]

Pat Rabbitte (Dublin South West, Labour)
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I have no statutory function in the setting of electricity and gas prices, whether in the regulated or non-regulated parts of these markets. 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. Since 4 April 2011 prices in the electricity retail market have been fully deregulated. Price setting by electricity suppliers is a commercial and operational matter for the companies concerned. Business and domestic customers can now avail of the competitive offerings from a number of electricity supply companies.

With regard to gas, up until 1 October 2011 the CER has regulated the Bord Gáis Energy tariffs for its residential and smaller business customers but price regulation for the latter group ended at that point. The CER still regulates the Bord Gáis Energy tariffs for its residential customers. I have no function in the matter.

For Bord Gáis Energy’s residential tariffs, the allowed revenue is examined twice yearly. These examinations set the BG Energy tariffs for the following six months of the gas year. To set the prices that BG Energy may charge customers, the CER first determines the revenue that BG Energy needs to earn to meet costs efficiently. These costs include the cost of buying wholesale gas, transportation, BG Energy's own supply cost, profit margin and capital expenditure. The most recent Gas Tariff Review (CER/12/146) was published on 4 September 2012.

The timing for complete deregulation of the residential segment of the gas market, as has taken place in the electricity market, is an issue under active review by the CER. Full deregulation leading to further competition will keep downward pressure on prices for consumers. Ireland is however a price taker for gas.

The Public Service Obligation (PSO) levy is charged to all electricity customers. It is designed to support the national policy objectives of security of energy supply, the use of indigenous fuels (i.e. peat) and the use of renewable energy sources in electricity generation, as set out in legislation. The proceeds of the levy are used to recoup, inter alia, the additional costs incurred by electricity suppliers in sourcing, and ESB Power Generation producing, a proportion of their electricity from such generators.

Section 39 of the Electricity Regulation Act 1999 sets out the legal basis for the PSO levy in Ireland. Statutory Instrument No. 217 of 2002 made under Section 39 of the Electricity Regulation Act requires that the CER calculates and certifies the costs associated with the PSO and sets the associated levy for the required period. The PSO levy takes into account the estimated and actual costs incurred in undertaking generation activities which are covered in the relevant PSO legislation. Articles 8 and 9 of Statutory Instrument 217 of 2002 set out the methodology of the calculation of the components of the PSO levy and the estimation of the amount of the PSO levy by the CER.