asked the Minister for Industry and Energy if he will make a statement on the operation of the fuel variation charge by the ESB; and if he has discussed the elimination of this charge with the ESB.
Ceisteanna-Questions. Oral Answers. - ESB Fuel Variation Charge.
11.
The on-going operation of the fuel variation charge is dealt with by the National Prices Commission who review the charge on a four-monthly basis and, therefore, I have not specific responsibility in relation to it.
The fuel variation charge was introduced as a procedure for dealing with wide and frequent fluctuations in the cost of fuels, particularly oil, which were occurring at the time and which have also been experienced more recently. Apart from the fact that this variable charge dealt with frequent fuel cost fluctuations more appropriately than the normal general review of costs, it was seen as demonstrating more clearly to consumers the effects which fuel costs, largely beyond the control of the ESB, were having on electricity charges.
Given the experience of oil prices over the past year or so, it does not appear to me that such a degree of stability in prices is in prospect that abandonment of the charge would be an appropriate course. However, I express this as a comment and not as a policy decision. I feel it is more appropriate that the operation of the fuel variation charge should continue to be dealt with by the National Prices Commission and in the context of price control procedures rather than that I should interfere in the matter.
Arising out of the Minister's statement that the fuel variation clause is there because of wide and fluctuating fuel costs, as the increases in fuel prices have levelled off over the last couple of months would he consider, before making a decision on the present price application, to have talks with the ESB about this fuel variation clause?
It can be said that the Department will adopt the Deputy's suggestion.
Would the Minister not agree that the fluctuation of which he speaks applies only to imported fuel and that when the ESB use natural gas there is no fluctuation, as this has been on contract over the last 20 years? This is now the major fuel being used by the ESB.
The Minister is ... The Deputy is probably aware——
Forthcoming events.
——that when the fuel variation charge was first introduced oil would have been the major fuel for electricity generation. The availability of natural gas has changed that somewhat——
Somewhat significantly.
——very significantly. This matter is being examined at present in the context of the fuel variation charge.
Is it not a fact that heavy fuel oil prices have collapsed in the past four months and further that the percentage of fuel oil being used by the ESB is coming close to 40 per cent and is therefore not a significant factor in the cost of electricity? In those circumstances where natural gas is now being used on an increasing basis by the ESB, the ESB and the Minister's Department have now the capacity to control the cost of electricity and in these circumstances should not the use of the fuel variation charge now be ended by the Minister's Department.
The Deputy has indicated that fuel oil has dropped in price, but it has been fluctuating.
Fluctuating downwards.
No, that is not true. There has been more recently a move upwards. I do not purport to be an expert on this but agree that the fuel variation charge has a bearing on the price of oil and fuel used in generating electricity. This matter is now being considered.
At a time when fuel prices have levelled off the ESB are looking for further increases.
A question, please, Deputy.
I am coming to the question.
Please come to it quickly.
Does the Minister propose to have serious discussions with the ESB about the staggering increases in the cost of electricity in the last few months, with another pending, at a time when fuel costs have levelled off?
The matter is under active consideration.
Is the Minister aware that the OPEC price of oil has been reduced by between ten and 15 per cent and that the spot market price for oil has been reduced by considerably more than that? In that context the charges currently being levied by the ESB are not acceptable. Because of that, the fuel variation cost should now be eliminated.
I daresay that the Minister is aware that the——
I have recently been promoted.
——the matter has been raised and brought to his attention.