I am acutely aware of the financial challenges faced by many families at the current time. However it is important to note that the electricity and gas markets are commercial, liberalised and competitive and that they operate within national and European regulatory regimes. As Minister, I have no statutory function in the monitoring or setting of gas or electricity prices. Responsibility for the regulation of these markets is a matter for the Commission for Energy Regulation (CER), which is an independent statutory body.
The lower wholesale electricity price is currently being driven by the lower international gas prices since spring 2014. This should reduce the wholesale cost of gas and electricity that suppliers pay and, in turn, enable those suppliers to reduce their retail prices. However, falling wholesale gas prices will have to be sustained over a long period to result in lower electricity prices, if at all. This is because of a number of factors, including supplier market strategies in hedging and price setting and the network tariff outlook for 2014/2015.
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, resulting in higher network costs. All things being equal, electricity and gas prices in Ireland will be higher than in other European countries due to the circumstances mentioned above. While electricity prices for the EU rose by only 2.8% for the category cited by the Deputy, the price increase in the Euro area was 4.2%. This is closer to the average increase in Ireland.
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, energy efficiency and customer switching. The position has improved on Pay As You Go Meter deployment and disconnection numbers are falling.
