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. Prices in the electricity retail market are fully deregulated. 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 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. The most important factor affecting electricity prices in Ireland is the continuing upward trend in international gas prices. In Europe, wholesale natural gas prices have been on an upward curve since the second half of 2009. This is driven by events in the Middle East, North Africa, Japan and by the significant growth in demand from China and India. This feeds directly through to retail electricity prices as most of Ireland’s electricity is produced at gas-fired stations.
The trend of increasing gas prices in European wholesale markets, and the underlying dependence on gas in the electricity mix underline the need to maintain the focus on continuing to address controllable cost factors, to increase the penetration of indigenous secure renewables in the Irish electricity system and to take action on energy efficiency in homes and businesses.
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.
Increasing use of indigenous sustainable sources of energy in electricity generation will help offset the impact of volatile fossil fuel prices. The Government has a renewable electricity target of 40% 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 Public Service Obligation (PSO) levy supports the security of our energy supplies and the development of renewable electricity in Ireland. Its legal basis and method of calculation are set out in the regulations made under the Electricity Regulation Act 1999. The PSO is levied on all electricity customers. It is set at €1.54/kVA per month for medium and large customers for the period October 2013 to September 2014. I have no plans to alter the PSO schemes at this time.
