I propose to take Question Nos. 101 and 377 together.
Responsibility for the regulation of the retail electricity and gas markets is a matter for the Commission for Energy Regulation (CER), which is an independent statutory body. Prices in the electricity retail market are fully deregulated and similarly for gas, except in the case of BGE tariffs for domestic consumers. Customers can therefore avail of competitive offerings from electricity and gas suppliers. Prices are set by suppliers and are commercial and operational matters for them. I have no statutory function in the setting of electricity or gas prices.
Electricity and gas costs in Ireland are influenced by various drivers, including global gas and oil prices, the costs of capital, exchange rate fluctuations, the small size of the Irish market, geographical location and low population density. Global gas and oil prices are by far the most significant factor in the case of Ireland. Prices have risen sharply since the start of 2011 driven by events in the Middle East, North Africa and Japan and demand from China and India. Ireland is at the mercy of international fossil fuel prices which dictate the retail price of electricity.
At a national level, the competitive energy market in place helps put downward pressure on prices. In addition, we must focus on all possible additional actions to mitigate costs for business and domestic customers, including rigorous regulatory scrutiny of the network costs component of retail prices.
I am committed to working with enterprise and with the energy sector to ensure that the costs of energy are as competitive as possible. In this context, promotion of energy efficiency measures is an area within our control where action can be taken to reduce energy costs.
Energy efficiency represents a significant opportunity for both businesses and households to reduce their energy costs. There are energy efficiency measures in place to assist both business and domestic energy consumers, with significant funding allocated to them. The Energy Efficiency Fund, which I announced in February and which will commence funding specific measures in the near future, will assist energy efficiency projects in the public and commercial sectors.
Promotion of indigenous sustainable sources of energy will help offset the impact of volatile fossil fuel prices. The Government has a target of 40% of electricity being generated from renewable sources envisaged by 2020. Good progress has been made in meeting this target and its realisation will introduce more certainty in the energy fuel mix as well as boosting security of supply.
The latest analysis of Eurostat data on electricity and gas prices is presented in the most recent report of the Sustainable Energy Authority of Ireland on electricity and gas prices report, covering the period January to June 2012. The price statistics are presented in the usual format, that is for a number of different business and domestic consumers differentiated by consumption level, as set out by Eurostat. This report is publicly available.
Most household electricity consumers saw increases of between 1.9% and 2.8% in price for the first half of 2012, compared to the previous 6 months, with Ireland’s position in the EU rankings varying from 5th most expensive for those consuming small amounts to 9th for the larger consumers. In broad terms, for 89% of the residential electricity market, there was little change in the EU rankings from the previous six month period, except for the very largest household consumers comprising 9% of the market whose position dis-improved three places to 9th most expensive.
In the first half of 2012 most business users saw price increases ranging from just under 2% to 8.4%. Only very small users saw a price decrease of 6.7%. This meant that in the various business user categories, depending on the level of consumption, prices ranged from around 99% to 115 % of the EU average.
