Tuesday, 26 February 2013

Questions (416)

Bernard Durkan

Question:

416. Deputy Bernard J. Durkan asked the Minister for Communications, Energy and Natural Resources the extent, if any, to which procurement at EU level can be beneficial in the context of energy price reduction; and if he will make a statement on the matter. [10335/13]

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Written answers (Question to Communications)

The Government is most concerned at the impact of higher energy prices on residential and commercial consumers. It is the case however, that Ireland in the main, is at the mercy of international fossil fuel prices which dictate the retail price of electricity and gas, which is the key factor in the retail price of both electricity and gas. In particular, Ireland is a price taker for gas. Global gas and oil prices have risen sharply since the start of 2011 driven by events in the Middle East, North Africa and Japan and demand from emerging economies of China and India. There are clear indications that international oil and gas prices will rise further over the coming months. The Government remains firmly committed to increasing competition as the best means of exerting downward pressure on energy prices, and also towards ensuring diversity of energy supply to reduce our exposure to high and volatile external energy prices. This dependence on imported gas also underlines the need to promote and invest in renewable energy and energy efficiency.

Effective procurement of energy services can also lead to significant organisational savings. My Department is working closely with private and public stakeholders on a National Energy Performance Contracting Policy Framework (the Framework) to help companies procure energy-related services including energy efficiency retrofits, energy supply and behavioural improvements. Recent experience from programmes run by the Sustainable Energy Authority of Ireland demonstrates the substantial monetary benefits that good procurement can deliver. I expect to be in a position to publish the draft Framework within the next two months.

Ireland’s demand for gas is met almost entirely by imports across the gas interconnectors from Great Britain. The vast bulk of UK gas demand is currently being met by indigenous North Sea production and imports from Norway. Through the gas interconnectors Ireland has access to diverse sources of supply including UK indigenous production, Norwegian production and physical interconnection with mainland Europe. It is prudent, in light of Ireland’s dependence on gas imported from the UK, to work to reduce our reliance on this source. Bringing Corrib gas production on stream will further reduce our reliance on imports.

The European Commission recognises that Europe needs an internal energy market that is competitive and integrated with electricity and gas flowing where and when it is needed. The EU aims to fully integrate national energy markets to give consumers and businesses more and better products and services, more competition, and more secure supplies. In this regard I welcome the recent progress made on the SEM Market Integration Project, within the context that implementing the European Target Model is a positive development that will bring significant benefits to the consumers and producers of electricity on the island of Ireland. Of course actual physical cross border trading of electricity is only possibe to the extent that interconnectors can accommodate it and accordingly I welcome the recent completion of construction by EirGrid of the East West Interconnector (EWIC) a strategically vital infrastructure project.

I presided, last Friday, over the European Energy Council as part of Ireland’s EU Presidency and among the issues on the agenda was the Commission Communication on completion of the Internal Energy Market. This work will feed into the preparation of concrete and operational Council Conclusions on the further steps necessary for completion of the Internal Energy Market which I am aiming to bring for adoption to the June Energy Council.