Michael McGrath (Cork South Central, Fianna Fail)
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23. To ask the Minister for Jobs, Enterprise and Innovation the implications for competitiveness of Irish business of continually rising energy costs; and if he will make a statement on the matter. [42730/13]

Richard Bruton (Dublin North Central, Fine Gael)
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Energy costs in Ireland are influenced by various drivers, including global gas and oil prices, exchange rate fluctuations, the small size of the Irish market, geographical location and low population density.

The most important factor affecting energy prices in Ireland is the continuing upward trend in international gas prices. In Europe, wholesale gas prices have been on an upward curve since 2009. This is driven by events in the Middle East, North Africa, Japan and by 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.

The trend of increasing gas prices in European wholesale markets underlines the need to maintain the focus on continuing to address controllable costs factors, to increase the penetration of indigenous renewables into the Irish energy system and to take action on improving energy efficiency in businesses. There are supports available to companies from the Sustainable Energy Authority of Ireland, Environmental Protection Agency and Enterprise Ireland to help enterprises improve their resource efficiency, including energy efficiency.

As part of the Action Plan for Jobs 2012, Forfás undertook a study to identify changes in the operation of sectoral regulators that would enhance cost competitiveness. The sectors examined in the report are energy, telecommunications, transport, waste and water. The report, which was published in April, also assesses Ireland’s cost performance in these sectors relative to our key competitor countries and the drivers of costs, in particular those that are within and outside our control in each of the sectors studied.

The study finds that in many cases, policy actions have a more significant impact on cost competitiveness than regulatory changes. The report suggests that there are a number of areas where changes to the operation of sectoral regulators could have a real and positive impact on cost competitiveness. These changes relate to the focus of regulatory mandates, the level and adequacy of resources, enforcement powers and sanctions available to the regulators, and the efficiency of the appeal process.

On foot of the Forfás report, the Government published a new Policy Statement on Sectoral Economic Regulation on 22nd July last. Included in this Policy Statement is a commitment that the forthcoming White Paper on Energy will include a regulatory mandate review, with a view to introducing legislation in 2015 for mandate reviews and hierarchy of objectives. The introduction of a hierarchy of objectives across all regulators will allow for the inclusion of competitiveness objectives, as well as taking account of both business and household consumer issues and competition objectives.