Written answers

Thursday, 3 February 2022

Department of Communications, Climate Action and Environment

Energy Prices

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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211. To ask the Minister for Communications, Climate Action and Environment the urgent actions currently being taken by Government to address the energy costs which have risen sharply recently; and his views on whether there will be a normalisation of household energy bills in the short-term. [5611/22]

Photo of Eamon RyanEamon Ryan (Dublin Bay South, Green Party)
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In line with long standing policy on deregulating price setting, the Commission for Regulation of Utilities (CRU) ended its regulation of prices in the retail electricity market in 2011 and in 2014 for gas. Given that prices are no longer regulated, they are set by all suppliers on a competitive basis as entirely commercial and operational matters for them. Each such company has its own different approach to pricing decisions over time, in accordance with factors such as their overall company strategic direction and developments in their cost base. The most immediate factor affecting electricity prices in Ireland is the continuing upward trend in international gas prices where we are a price-taker. In Europe, wholesale natural gas prices have been on an upward curve since the second half of 2020. This feeds directly through to retail electricity prices as the wholesale price of electricity correlates strongly with the price of gas. In Ireland CRU has indicated that the wholesale cost of generating electricity makes up approximately 40% of the final retail price. Various commentators, including the International Energy Agency (IEA), have stated that several demand and supply factors have contributed to a tightening of the European gas market, including most recently geopolitical tensions. While some of these conditions, for example weather related, can be expected to improve others are more unpredictable. The IEA states that international forward prices as of the beginning of January indicate that the high gas price environment is expected to last into 2022. Prices are expected to decline somewhat in the second half of 2022 on improving supply availability, although remaining well-above historical averages.

The best long-term approach for Ireland to insulate consumers from volatility on international wholesale energy markets is to invest in energy efficiency and renewable energy where Government supports are considerable. Cutting our dependence on fossil fuels and generating power from our own renewable sources will ensure a cleaner, cheaper energy future in the long term. In the nearer term, Government has further responded to the current price crunch by bringing in a suite of measures in Budget 2022 utilising the social welfare system to assist households, including the most vulnerable, with projected funding of €146 million. My own Department has allocated €109 million to the Sustainable Energy Authority of Ireland (SEAI) to provide energy efficiency upgrades to people in, or at risk of, energy poverty in 2022. In addition, a €215m Scheme has been approved by Government to credit all domestic electricity account holders with €100 in 2022.

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