Dáil Éireann Debate, Tuesday - 2 October 2012
348. Deputy Simon Harris asked the Minister for Communications; Energy and Natural Resources the level of price reduction expected for a three person family in typical accommodation as a result of the completion of the cross channel interconnector; and if he will make a statement on the matter. [41564/12]
View answerThe East West Interconnector is a 500mw High Voltage Direct Current (HVDC) interconnector linking the electricity grids of Ireland and Great Britain for the first time. The EirGrid project is of strategic national importance in terms of Ireland’s economic infrastructure.
Electricity interconnection improves security of supply, promotes further competition in the electricity market which in turn exerts downward pressure on electricity prices. Interconnection also facilitates the penetration of wind generation and the East West Interconnector will facilitate export of surplus electricity generation output.
I do not have a statutory function in the setting of energy prices, whether in the regulated or unregulated market. Responsibility for the regulation of the electricity and gas markets is a matter for the Commission for Energy Regulation (CER), which is an independent statutory body.
Prices in the retail business and residential electricity markets are now fully deregulated. Since 1 October, 2011 residential gas customers supplied by Bord Gáis Energy are the only segment of the electricity and gas markets where prices are still regulated by the CER. Prices in the electricity and gas markets, with the exception of residential gas customers supplied by Bord Gáis Energy, are wholly commercial and operational matters for the suppliers concerned. Ireland’s electricity and gas markets, both wholesale and retail, are characterised by vigorous competition regulated by the CER.
The domestic retail electricity market is a competitive market and consumers are able to switch their business between suppliers, who in turn purchase their power on the all island wholesale market, the Single Electricity Market (SEM). Overall electricity prices in Great Britain are lower than those in Ireland and, as might be expected in this situation, there has been strong interest from traders on the interconnector in importing power into Ireland from Britain. The interconnector in these circumstances is capable of carrying additional power into Ireland from a lower cost market, to the extent of 500MW, with that capacity representing more than that of an average modern power station. The interconnector therefore means that there can be even greater competition for existing generators operating in the SEM leading to additional downward pressure on the wholesale prices otherwise charged by generators.
It is difficult in the deregulated electricity market to identify the precise impact of the downward pressure on prices brought about specifically by the interconnector, as against the impact of any other factors at play in the wholesale and/or retail market. Accordingly, the impact on the price charged to any single household customer in the residential segment of the retail electricity market cannot be estimated.
