Niall Collins (Limerick, Fianna Fail)
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93. To ask the Minister for Communications, Energy and Natural Resources the actions he will take to help lower the costs of electricity for small and medium sized enterprises; and if he will make a statement on the matter. [27837/13]

Pat Rabbitte (Dublin South West, Labour)
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Responsibility for the regulation of the retail electricity market is a matter for the Commission for Energy Regulation (CER), which is an independent statutory body. Prices in the electricity retail market are fully deregulated. Customers can therefore avail of competitive offerings from electricity and gas suppliers. Prices are set by suppliers and are commercial and operational matters for them. I have no statutory function in the setting of electricity prices.

Electricity and gas costs in Ireland are influenced by various drivers, including global gas and oil prices, the costs of capital, exchange rate fluctuations, the small size of the Irish market, geographical location and low population density.

The most important factor affecting electricity prices in Ireland is the continuing upward trend in international gas prices. Wholesale natural gas prices have been on an upward curve since the second half of 2009 driven by events in the Middle East, North Africa and Japan and the significant growth in demand from China and India. This feeds directly through to retail electricity prices as most of Ireland’s electricity is produced at gas-fired stations. Ireland it at the mercy of international fossil fuel prices, which dictate the retail price of electricity.

The trend of increasing gas prices in the European commodities market, and the underlying dependence on gas in the electricity mix underline the need to maintain the focus on continuing to address controllable cost factors, to increase the penetration of indigenous secure renewables in the Irish electricity system and to take action on energy efficiency in homes and businesses.

At a national level, the competitive energy market in place helps put downward pressure on prices. In addition, we must focus on all possible additional actions to mitigate costs for business and domestic customers, including rigorous regulatory scrutiny of the network costs component of retail prices.

I am committed to working with enterprise and with the energy sector to ensure that the costs of energy are as competitive as possible. In this context, promotion of energy efficiency measures is an area within our control where action can be taken to reduce energy costs.

Energy efficiency represents a significant opportunity for both businesses and households to reduce their energy costs. There are energy efficiency measures in place to assist SMEs. The Energy Efficiency Fund, which I announced in February and which will commence funding specific measures in the near future, will assist energy efficiency projects in the public and commercial sectors. Another support is the SME programme administered by the Sustainable Energy Authority of Ireland (SEAI), under the Better Energy in Business programme. It helps 2,000 businesses improve their energy efficiency and competitiveness.

Promotion of indigenous sustainable sources of energy will help offset the impact of volatile fossil fuel prices. The Government has a renewable electricity target of 40% by 2020. Good progress has been made in meeting this target and its realisation will introduce more certainty in the energy fuel mix as well as boosting security of supply.

The latest Eurostat figures show that electricity prices in Ireland increased for small business customers by 1.4% and for medium business by 6% in the second half of 2012 giving a ranking of 4th most expensive in the EU in both categories. In the case of the small business category, its ranking has dropped one place. In the case of medium businesses, the ranking is the same as in the previous six-month period. The effects of the price drivers outlined earlier in this response tend to affect Irish electricity and gas prices negatively, and in the case of electricity tend to place Irish prices towards the more expensive position in the EU rankings.