asked the Minister for Energy if he envisages a reduction in the cost of electricity after Moneypoint comes on stream this year.
Ceisteanna—Questions. Oral Answers. - Electricity Cost.
12.
It is assumed that the Deputy is referring to the price of electricity to the consumer. As the Deputy is no doubt aware, the ESB in December 1985 announced a price increase of 2.7 per cent on average. The determination of this price increase took into account the coming into operation by October 1986 of the first two units at Moneypoint. It is not expected that there will be any further increase in electricity prices before March 1987. In effect, this constitutes a real reduction in electricity price taking account of inflation. The Moneypoint project will not be fully commercial until after October 1987 when the third 300 MW unit at the station becomes operational. Its effect on electricity prices then will depend on the prices prevailing on international energy markets for oil and coal. Indications are, however, that the price of coal will remain very competitive in the long term and that this will have a beneficial effect on the price of electricity.
Would the Minister agree that it is questionable whether price increases in the future should be related to inflation? This is a time when everyone must cut production costs. Will the Minister accept that there has been a very marked decrease in oil prices in recent months? Prices are continuing to drop and some people say that oil could go as low as $10 a barrel. There has also been a drop in the price of coal. Instead of talking about no more price increases between now and March 1987, would the Minister take steps to have electricity prices brought down, in view of the far reaching changes that have taken place in coal and oil prices?
I assume that inflation will always be a factor in relation to price increases. There is a lead-in time in relation to outstanding contracts and the cost at which oil or coal is bought by the ESB. My Department monitor the situation very closely and have constant discussions with the ESB in relation to pricing structures. We should be heartened by the fact that there will not be a price increase. The price increase in December 1985 was very modest, only 2.7 per cent. If increases are necessary, it will be my intention to keep them as low as possible and to keep our energy costs competitive.
Would the Minister agree that if inflation runs at 4.5 per cent it should not automatically follow that the ESB or anybody else should get a price increase of 4.5 per cent?
Agreed.
I accept the Minister's point about the lead-in time, but the whole cost factor of fuel input to the ESB has drastically changed in respect of oil, coal and currency. There are three benefits coming together. It is not good enough for the Minister simply to say that there will not be any price increase. We should be looking for price reductions if we are to take advantage of these external benefits to bring down the cost of energy to industry and the domestic consumer. There is a real case for cost and price reductions throughout 1986. Would the Minister accept that point?
I accept a certain amount of what the Deputy is saying. It is a question for ongoing discussion between my Department and the ESB.