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.