Wednesday, 10 October 2018

Questions (44)

Brian Stanley


44. Deputy Brian Stanley asked the Minister for Communications, Climate Action and Environment his plans to use his powers under the Electricity Regulation Act 1999 to issue a policy direction to the Commission for Regulation of Utilities regarding energy supply markets and its resultant effect on prices for householders. [41192/18]

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Written answers (Question to Communications)

The Government, or I as Minister, have no statutory function in the monitoring or setting of electricity prices.

Responsibility for the regulation of the gas or electricity markets is a matter for the Commission for Regulation of Utilities (CRU). It is an independent statutory body, and solely accountable to a committee of the Oireachtas for the performance of its functions. Under the current Oireachtas Committee formations, the CRU is responsible to the Committee on Communications, Climate Action and Environment where these matters are discussed as the Committee sees fit.

Consistent with European energy policy, the electricity and gas markets in Ireland are commercial, liberalised, and competitive. The position of successive Governments has been that competitive energy markets result in greater choice for consumers and businesses, in terms of suppliers, products and prices. Competition exerts downward pressure on suppliers’ prices.

One of Commission’s statutory functions is to carry out market monitoring to ensure that competition continues to develop and that customers benefit from competition. As part of its market monitoring work, CRU last year concluded that Irish energy markets are competitive.

Recent announcements regarding electricity price increases reflect that since the final quarter of 2016, average international natural gas prices have increased sharply. They have, more or less, continued to rise through 2017 and on to Quarter 3 2018, with day ahead prices in August  being 50% higher than 12 months earlier. Consistent with the upward international gas price trend, average wholesale electricity prices have increased in like manner. After an initial delay, the effect of this protracted rise in the wholesale electricity price since end 2016 has been observed in the retail market, with all significant Irish electricity suppliers announcing household customer price increases.

Section 10A of the Electricity Regulation Act 1999, as amended, sets out the procedure under which I, as Minister, may give “general policy directions”. The legislation sets out details on the tasks and inter-alia restrictions, timelines and consultation requirements with the independent regulator and Oireachtas. Energy markets in Ireland operate within a European regulatory regime in which Member States must guarantee the independence of National Regulatory Authorities, which are expressively forbidden from taking direct instructions from government, or any public body. The regime also restricts policy directions in the form of general policy guidelines in certain areas that are prescribed regulatory duties and powers in the EU Third Energy Package.  A policy direction in this matter is therefore not being considered.

Question No. 45 answered with Question No. 32.