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Energy Prices

Dáil Éireann Debate, Wednesday - 19 January 2022

Wednesday, 19 January 2022

Questions (155, 156, 157, 158, 159, 160, 161, 162, 163, 164)

Barry Cowen

Question:

155. Deputy Barry Cowen asked the Minister for the Environment, Climate and Communications if his attention has been drawn to the fact that the day ahead market accounts for over 80% of volumes in the single electricity market and is the key wholesale electricity price benchmark in Ireland. [2043/22]

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Barry Cowen

Question:

156. Deputy Barry Cowen asked the Minister for the Environment, Climate and Communications if his attention has been drawn to the fact that dispatchable generators such as gas and coal-fired plant offer in their power to the day ahead market, in price-quantity pairs with escalating price levels for various proportions of their generating capacity; and if his attention has been further drawn to the fact that the maximum offer price in these price-quantity pairs is an important parameter in these bids given that it may either set or contribute to setting the day ahead market price. [2044/22]

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Barry Cowen

Question:

157. Deputy Barry Cowen asked the Minister for the Environment, Climate and Communications if his attention has been drawn to the fact that ESB owned plants of Aghada, Coolkeeragh, Poolbeg and Dublin Bay are amongst the most efficient gas-fired electricity generating stations in Ireland and as such are key to the delivery of reliable and low-cost electricity to Irish consumers. [2045/22]

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Barry Cowen

Question:

158. Deputy Barry Cowen asked the Minister for the Environment, Climate and Communications if his attention has been drawn to the fact that plants (details supplied) significantly increased their maximum offer prices in July and September 2021 [2046/22]

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Barry Cowen

Question:

159. Deputy Barry Cowen asked the Minister for the Environment, Climate and Communications the trading strategy of the ESB for generating plants (details supplied); and his views on whether it is appropriate in the context of the secure delivery of fair priced power to Irish consumers. [2049/22]

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Barry Cowen

Question:

160. Deputy Barry Cowen asked the Minister for the Environment, Climate and Communications if he requested the Commission for Regulation of Utilities or another party to undertake an analysis of the impact of the bidding behaviour of the ESB in Q3 of 2021 (details supplied) [2050/22]

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Barry Cowen

Question:

161. Deputy Barry Cowen asked the Minister for the Environment, Climate and Communications his views on the impact of the bidding behaviour of the ESB (details supplied) on Irish consumers. [2051/22]

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Barry Cowen

Question:

162. Deputy Barry Cowen asked the Minister for the Environment, Climate and Communications if he requested the Commission for Regulation of Utilities to examine the extent of the market power of the ESB in the single electricity market and the degree to which it is negatively affecting Irish consumers. [2052/22]

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Barry Cowen

Question:

163. Deputy Barry Cowen asked the Minister for the Environment, Climate and Communications if he plans to act to reduce the extent of the market power of the ESB in the single electricity market, for example, by requiring it to sell generation plant or to prohibit it from bidding to build new dispatchable generation plants. [2053/22]

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Barry Cowen

Question:

164. Deputy Barry Cowen asked the Minister for the Environment, Climate and Communications the reason for his assertion that the generator bidding behaviour of the ESB does not bear responsibility for a material proportion of the cost rises. [2054/22]

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Written answers

I propose to take Questions Nos. 155, 156, 157, 158, 159, 160, 161, 162, 163 and 164 together. 159, 160, 161, 162, 163, 164, 158, 157 and 155  together.

The all-island Single Electricity Market, which operates in Ireland and Northern Ireland, is overseen by the Single Electricity Market Committee. The Single Electricity Market Committee consists of the Commission for Regulation of Utilities, their Northern Ireland counterparts and an independent member. The market operates independently from me as Minister with the Commission for Regulation of Utilities being solely accountable to a Committee of the Oireachtas.

I understand that the regulatory authorities have a number of measures in place in the Single Electricity Market to mitigate market power. These include controls on generators’ bidding under certain circumstances, an obligation on ESB to sell a proportion of its generation output forward based on prices and volumes set by the regulatory authorities and ring-fencing, which is a regulatory measure that is used to separate generation and supply activities within certain vertically integrated companies that have the potential capability to exert market power. While my Department does not monitor the activity of market participants, I understand that the Commission for Regulation of Utilities, through a Market Monitoring Unit monitors the behaviour of market participants in the Single Electricity Market to ensure open and transparent competition.

The Commission for Regulation of Utilities has processes and procedures in place that allows issues or complaints to be raised.  Any such issues would be investigated and, if breaches of competition rules were established, appropriate actions would be taken as set out in the licence terms and conditions which could include financial penalties. While such investigations are confidential, if any enforcement actions were taken, these would be made public.

Within the Single Electricity Market there are markets for energy, generation capacity and system services. The energy market includes day ahead and intraday markets. Generators bid into these markets based on market rules, a number of which the Deputy has referenced. The market price is determined by these market rules as the marginal cost of generation capacity required in each half hour of the day. The day ahead market made up 86% of the overall energy market in the last three months of 2021 – down from 93% the previous year – and thus provides a key wholesale electricity price benchmark.

The market price is reduced when there are greater levels of lower cost generation in the market. During periods when there are large amounts of renewable generation – such as on windy days – the market price reduces. Combined-cycle gas turbines are the most efficient fossil fuel power stations and so generally have a lower operating cost than other less efficient power stations. As a result, they are generally operating ahead of other power stations which may have higher operating costs. ESB owns and operates four of the ten combined cycle gas turbines currently in the Single Electricity Market. Continued reliable and safe operation of existing, and the development of new, generation capacity is vital to ensure security of electricity supply and provide value for money to consumers.

The high electricity prices being seen in Ireland and across Europe are a direct result of the significant increases in natural gas prices. The price increases have impacted gas and electricity consumers across Europe and are not unique to the Single Electricity Market in Ireland. In order to reduce the burden on households, the Government has increased the winter fuel allowance by €5 per week and plans to provide €100 support to every residential electricity consumer in Ireland to help alleviate the impact of these higher prices.

As the Single Electricity Market is operated independently from me as Minister and my Department, the oversight of its operation is a matter for the regulatory authorities. I have not raised any concerns with the regulatory authorities in relation to any specific market participants.

If the Deputy, market participants or others have any concerns in relation to the operation of the electricity market in Ireland, I would suggest they raise these matters directly with the Commission for Regulation of Utilities which has processes and procedures to deal with and examine any issues raised.

Question No. 156 answered with Question No. 155.
Question No. 157 answered with Question No. 155.
Question No. 158 answered with Question No. 155.
Question No. 159 answered with Question No. 155.
Question No. 160 answered with Question No. 155.
Question No. 161 answered with Question No. 155.
Question No. 162 answered with Question No. 155.
Question No. 163 answered with Question No. 155.
Question No. 164 answered with Question No. 155.
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