Dáil Éireann Debate, Tuesday - 30 April 2013
95. Deputy Michael McGrath asked the Minister for Communications, Energy and Natural Resources the way he can help reduce electricity costs for the small and medium sized enterprise sector; and if he will make a statement on the matter. [20229/13]
View answer109. Deputy Brendan Smith asked the Minister for Communications, Energy and Natural Resources the way he can help reduce electricity costs for business; and if he will make a statement on the matter. [20238/13]
View answerI propose to take Question Nos. 95 and 109 together.
Responsibility for the regulation of the retail electricity market is a matter for the Commission for Energy Regulation (CER), which is an independent statutory body. Since 4 April 2011 prices in the electricity retail market have been fully deregulated. Business customers can therefore avail of competitive offerings from electricity suppliers. Prices are set by electricity suppliers and are commercial and operational matters for them. I have no statutory function in the setting of electricity 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 an opportunity for businesses to reduce their energy costs and improve their competitiveness. There are energy efficiency measures in place for SMEs. The Energy Efficiency Fund, which I announced in February, will assist energy efficiency projects in the public and commercial sectors, including SMEs. Another support is the SME programme administered by the Sustainable Energy Authority of Ireland (SEAI), under the Better Energy in Business programme. It helps 2,000 businesses improve their energy efficiency and competitiveness.
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 SEAI’s published report on electricity and gas prices in the period January to June 2012 and publicly available. The price statistics are presented for different business consumers, differentiated by consumption level.
The report shows that VAT exclusive electricity prices increased for small business by 3.1%, and for medium business by 1.8% over the previous six months. In contrast, the very smallest business users saw a price decrease of 6.7%. Prices for the three categories of business consumers range from 4th to 9th most expensive in the EU and these rankings have not changed significantly since the previous six months. The effects of the price drivers outlined earlier in this response tend to place Irish electricity and gas prices towards the more expensive position in the EU rankings.
