John Perry
Question:123 Mr. Perry asked the Tánaiste and Minister for Enterprise, Trade and Employment the steps which will be taken to address concerns (details supplied); and if she will make a statement on the matter. [3420/02]
Written Answers. - Electricity Prices.
The increases in the price of electricity announced in October 2001 were approved by the Commission for Electricity Regulation, which operates under the aegis of the Department of Public Enterprise.
In determining the appropriate tariffs the CER examined the charges and the costs underlying the charges for electricity supplied by the ESB. The likely effect of such increases on Irish companies would have been one of the factors taken into account by the commission in reaching its decision.
The result of the commission's review is an 8.6% increase in the average price of electricity. The percentage increases for the different categories of business customers are as follows: 3% for small businesses; 13% for medium sized businesses; and 14% for large businesses.
In addition, eligible customers can choose to have their electricity supplied to them by the ESB in its capacity as public electricity supplier or by one of the licensed independent electricity sup pliers. With effect from February 2002, electricity market opening will increase to 40% and approximately 1,600 customers, whose annual consumption is at least 1 gigawatt per hour, will be free to choose their electricity supplier. The market will move to full liberalisation in February 2005. The independent power producers will provide eligible customers with the opportunity to negotiate improved prices and, when new efficient power plants are constructed such customers will have the opportunity to source even more competitively priced electricity in the open market.
Aside from increases totalling 3.5% in 1996/97, Irish electricity charges have not increased in the past 15 years. In comparison, the consumer price index has increased by 51% during the same period resulting in a reduction of over 50% in real electricity prices over the same period.
Ireland currently has a shortage of electricity generation capacity and there is an urgent need for investment in transmission and distribution capacity. The price of electricity must reflect the economic cost of production and distribution. If prices were maintained at their current non-cost reflective levels, then, as happened in California, new generators would not enter the market, resulting in serious capacity concerns.