Tuesday, 12 May 2009
Dáil Eireann Debate
73. Deputy Richard Bruton asked the Minister for Communications, Energy and Natural Resources if he is satisfied the 12% reduction in gas prices between May and September 2009 is adequate in view of the collapse of wholesale gas price in Britain; and if he will make a statement on the matter. [18733/09]
74. Deputy Paul Connaughton asked the Minister for Communications, Energy and Natural Resources if he is pursuing a deliberate policy of keeping energy prices high in an effort to force consumers and householders to reduce energy usage; and if he will make a statement on the matter. [18744/09]
109. Deputy Brian O’Shea asked the Minister for Communications, Energy and Natural Resources the new measures he will take to ensure Ireland’s cost of energy is tackled in view of concerns expressed by the commercial sector on the high cost of energy here and in view of his failure to tackle this high cost for business; and if he will make a statement on the matter. [18783/09]
I welcome the decision taken by the Commission for Energy Regulation (CER) to reduce electricity tariffs by 10% and gas tariffs by 12% from May 1st, following completion of the review of regulated tariffs, which I requested in February last. The Commission’s decision on electricity tariffs is reflective of the decline in international fossil fuel prices, which follows a period of exponential increases in global oil, gas and coal prices.
The CER’s pricing decision on gas tariffs is due to the much lower gas costs than forecast, exchange rate developments, and particularly as a result of increased sales during the winter due to the particularly cold weather.
The reduction in regulated energy prices is less than the overall fall in fuel commodities, because the CER took steps to ensure that when international oil and gas prices increased exponentially in 2008, consumers were insulated from the worst effects of these increases.
In taking this approach, the CER took account of the emerging difficult economic situation and the potential impact of high price increases on business and consumers, including vulnerable customers. This approach meant that when fossil fuels were rising very significantly in early and mid-2008 the CER decided to implement an increase of 17.5% in the cost of electricity and 20% in the cost of gas. When the CER made this decision, the wholesale gas price had more than doubled in the previous 12 months.
I would point out again that the CER has exited from the regulation of tariffs for large energy users. In that sector around 90% of business has switched to the independent electricity suppliers. Approximately half of these large commercial customers are on variable tariffs. As a result the substantial reductions in wholesale electricity and gas prices are already being reflected in their tariffs.
It is the case that energy costs have been of concern to enterprise for a number of years. This concern has been exacerbated by the economic downturn and the overall serious challenges facing business. I have made it consistently clear that all possible action that can be taken must be taken to reduce energy costs for the enterprise sector. Energy policy actions are focussed on mitigating those costs where possible.
I have no direct role in the setting of energy prices, whether in the regulated or non-regulated sector. My policy objective is to secure sustainable and diverse energy supply at least cost for Irish business and consumers. The Government’s comprehensive range of energy policy actions are designed to deliver this objective. They include optimising all possible energy efficiency gains by industry and by householders.
The Government’s strategies for renewable energy development, energy efficiency programmes and delivering essential strategic energy infrastructure are all key to delivering sustainable competitive and reliable energy supplies.
Energy efficiency is the best energy resource of all, delivering pervasive benefits for the economy and society. The energy efficiency potential in the built environment, in industry, in power generation and in transport is growing all the time as technology and innovation delivers more solutions.
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