JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES díospóireacht -
Wednesday, 8 Mar 2006

Energy Policy Review: Presentations.

Chairman

The joint committee agreed at its meeting on 28 February, in accordance with section 2(a)(iv) of its terms of reference, to consider S.I. No. 78 of 2006 — Electricity Regulation Act 1999 (Market Arrangements for Electricity) (Revocation) Regulations 2006. I welcome Ms Regina Finn and Mr. Michael Tutty, commissioners from the Commission for Energy Regulation. Before inviting Ms Finn to make her presentation, I advise members that following her short presentation we will have a question and answer session.

I draw everyone's attention to the fact that members of the committee have absolute privilege but that this same privilege does not apply to witnesses appearing before the committee. The committee cannot guarantee any level of privilege to witnesses. Further, under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

Following our discussion with the Commission for Energy Regulation, we will also have a brief discussion with the Consumers Association of Ireland on the cost of energy to householders. I advise Ms Finn that we are almost at the end of our energy module. The committee has dealt in recent months with matters relating to fishing and yesterday was surfing the net in terms of discussions on broadband. We return today to discuss energy issues. We are nearing completion of hearings on the energy module and hope to complete it with a presentation from Commissioner Piebalgs on 21 March. We will then present our report. Perhaps Ms Finn will explain to members why this statutory instrument is being revoked.

Ms Regina Finn

S.I. No. 78 of 2006 was signed by the Commission for Energy Regulation with the consent of the Minister for Communications, Marine and Natural Resources and came into effect on 18 February 2006. The purpose of this statutory instrument is to enable the existing wholesale electricity market in Ireland to continue to operate until the introduction of the new single electricity market, SEM, for the entire island of Ireland. The single electricity market is scheduled to be introduced on 1 July 2007.

By way of background, the Electricity Regulation Act 1999 provided for the establishment of a wholesale market in Ireland. That market was to be transitional in nature. The then Minister issued a policy direction and, in accordance with this, the Commission for Energy Regulation developed the wholesale market arrangements, which are set out in S.I. No. 49 of 2000. The commission was required to review those transition arrangements with a view to amending them or introducing new arrangements that would apply in the wholesale market in Ireland. That review commenced in 2003-04,

S.I. No. 308 of 2003, which was designed to form the basis of a new wholesale market in the Republic of Ireland, was signed in 2003. This statutory instrument also provided for the repeal of the original regulations and that repeal was due to come into effect on 19 February 2006 at the latest. During the extensive consultation process on the establishment of a wholesale market, a new policy initiative arose. Ministers in Northern Ireland and the Republic of Ireland agreed to the establishment of an all-island energy market both for gas and electricity. The first step, which was agreed, was to establish a single wholesale electricity market for the island of Ireland. In those circumstances, the plans to introduce a new wholesale market just for the Republic were put on hold in order to develop an all-island wholesale market. Statutory Instrument No. 78 of 2006 essentially ensures that we can continue with the transitional market until the introduction of that all-island market.

The overall purpose of the single electricity market is to improve the operation of the market for everybody on the island of Ireland. The objective is to maximise both economic and energy supply benefits. Clearly, the larger the market the greater the efficiencies of scale and we can gain benefits in terms of how we dispatch electricity plant. We can jointly address issues such as renewable energy and energy efficiency and achieve island-wide efficiencies in infrastructure.

Part of the work that is ongoing at this stage is the development of the single electricity market. Following on from that, there is a range of other initiatives that Ministers and regulatory authorities have committed themselves to progress, including all-island gas markets, harmonisation of retail markets and harmonisation of network operation.

That policy initiative is set out in a signed document and covers a work programme up to 2010 and beyond. Broadly speaking, that is the purpose of the statutory instrument that was signed. It allows us to continue that transitional market until the new market.

Chairman

I thank Ms Finn. I wish to advise the committee that Mr. Tom Reeves has conveyed his apologies for not being able to attend. I believe he is chairing an EU energy regulators' meeting today.

Ms Finn

That is correct.

Chairman

How will this new all-Ireland market affect the electricity or energy market now? For example, am I right in saying that three people have left the marketplace quite recently? How does the commission intend to attract new generators to the market?

Ms Finn

There have been reports of people leaving the electricity market but that is not the case. For example, there was talk of Statoil leaving the electricity market but it was in fact just a minor investor in one plant. Therefore, we have not had major exits from the market. In so far as the all-island market goes, however, one of the objectives of going for a larger market is that it will provide a greater incentive for new investment because the scale of the market is larger. There are approximately 1.9 million customers in the Republic of Ireland and another 700,000 in Northern Ireland. When we add those together the market is obviously greater and the more critical mass there is, the greater the incentive for market entry. That is one issue.

The second issue is that the new market is designed differently from the existing markets, North and South. It is designed as a gross pool market. The current market is bilateral, which means that a new generating company who might invest has to find a supplier with which to contract and sell the power that generator is producing. The new market provides for a gross pool into which all electricity will be traded and, therefore, generators have a ready-made market for their electricity, which makes entry easier.

Similarly, on the supply side, suppliers have an easier source of supply so that removes certain potential barriers to entry. Together, those two features — the larger size and the design of the market — are designed for new entry into the market.

Chairman

What is Ms Finn's assessment of the OECD report, published on 2 March, which sets out, in chapter 2, the economic survey of Ireland concerning electricity generation and liberalisation of the market?

Ms Finn

I do not have the report in front of me. I apologise because I did not know the Chairman wanted a response to it. Are there particular issues to which the Chairman wants the commission to respond?

Chairman

Did Ms Finn read it?

Ms Finn

I have read it but I do not have it in front of me now.

Chairman

We will return to it.

Deputy Eamon Ryan

Deputy Fiona O'Malley had asked for Ms Finn to attend the committee and I am glad she did. Having read the regulation I was not too sure what she was referring to. Therefore, the explanation is useful. While I do not want to stray too far from the topic, the discussion allows us to ask some questions on recent and current events concerning competition and its regulation in the energy market.

My understanding was that, regardless of whether we were to move to an all-Ireland market, we were moving towards a pooling arrangement here. I would be interested to know why we have not decided to go with that arrangement on a non-interim basis. Why have we stayed with this bilateral arrangement? Even if it is for 18 months or so, my understanding is that the pool arrangement was not as complex as the previous model we examined — the nodal point market system. Why have we decided not to therefore go ahead with the pool system?

In recent months it has been reported that companies in the existing market have lost a fortune because of what they see as the inefficient, inequitable nature of the market. To give a specific example, one of the few suppliers to the public, Airtricity, pulled out of the residential market for a number of reasons. One reason was that it had difficulty obtaining supply, which was partly connected to the fact that it does not have connectivity with the North. As the dominant supplier, the ESB had the lion's share of any such connectivity and could bring in green, hydro or other power from Scotland. In discussions with myself and other spokespersons, Airtricity contended that the current market system, which we are seeking to increase, put it in an almost impossible position. That is because one operator, the ESB, had a day-to-day knowledge of what plant capacity was available because it has such a dominant position in the market. Other players, for example Airtricity, did not have such a position but had to buy power on what may be termed a "top-up and spill" price basis in order to supply their customers. That "top-up and spill" price has been remarkably erratic over the last six months to the extent that companies were having to purchase power at a significant loss.

I would be interested to hear Ms Finn's perspective as to whether she thinks that market system is, as certain players would say, inequitable and difficult for such players to operate in. What is the commission considering doing between now and the establishment, in 2007, of an all-island market to remove some of the incredible price volatility of recent times? It appears much of the volatility was due to volatility in gas prices. In addition, certain producers may have availed of the volatility to scale back their own production and sell gas at the spot market price, which was lucrative. How does our market system deal with such market traits, which are not to the benefit of Irish consumers?

Ms Finn

The Deputy has covered three broad areas. The first question the Deputy asked was why not go to a pool system in the interim and then go to an all-island market. The main reason for that is that it would involve high costs and a large overhead on the industry. We have consulted with the industry throughout the process and I do not think any player in the market would favour developing a set of systems and processes, including IT systems, and incurring the cost of those for one market in order to make the transition to a new market because they would be different. The pool that was being designed initially for the Republic of Ireland is different, as the Deputy mentioned, to what is now being developed on an all-island basis.

The pool that is being developed on an all-island basis must take into account the ability of Northern Ireland generators and suppliers to operate in that pool, as well as ones in the Republic of Ireland. Therefore, to change the market twice in such a short period would impose huge costs and a huge burden of work on everybody. There would be general agreement among the industry that it would not be the best way to go.

The second issue raised relates to how the current market is operating. Deputy Eamon Ryan referred in particular to Airtricity's exposure to high purchase prices in top-up and spill. In a report on 24 February we published the conclusions of our investigation. The market is a bilateral contracts market and the players are aware they must contract bilaterally. Airtricity, which is a supplier, also has a generation arm and contracts with itself for a certain amount of power, but it has contracted more customers and sold more power than it produces, so the Deputy is correct in that it must source its power elsewhere. One of the areas from which it sources power is the UK, and it brings it in over the interconnector with Northern Ireland. Capacity on that interconnector from the North to the South is sold via auction by the Northern Ireland Authority for Energy Regulation, the NIAER. Nobody in the South has control over that auction. There was an auction process in which Airtricity bid, but it did not bid enough in that open auction to get all the capacity it wished. In those circumstances Airtricity has sought to find other sources of power and it has purchased top-up in the market.

Top-up is an imbalance power product. It is meant to be available to all suppliers to ensure they can balance out between what they have bought and what they have sold, and it is designed to be a small amount of the market. However, in November and December of last year, the amount of top-up traded in the market went from 2% to about 20%, a significant rise. A number of factors contributed to increasing the price of that top-up, the primary one being the increase in international fuel prices. Deputy Ryan mentioned increases in gas prices in particular. The cost of top-up to independent suppliers and everyone purchasing it increased. The price, which is effectively that of wholesale electricity in Ireland, closely followed trends and price increases around the EU. In the UK, Germany and France, prices were going up at exactly the same time. Therefore, the trend was similar. Airtricity was exposed to purchasing that power because it had not secured direct bilateral contracts for the power it had sold ahead to its customers. Therefore, the company had quite a high bill to pay for its top-up in that period.

Deputy Eamon Ryan

This issue is technical and complex and not easy to understand but in a bilateral market is there a certain problem whereby one supplier knows on a real time, day-to-day basis where the market is in terms of what sort of power is available, while another supplier only finds out that information several weeks later, when the contracts are already closed?

Ms Finn

One of the issues we were asked about was the position of independent suppliers in terms of knowing their volumes of top-up and the price of top-up because that price moves dynamically with fuel prices. We are concerned to ensure that independent suppliers get information as close to real time as possible about their liability for top-up. However, it does not happen that certain suppliers in the market get different information from the independent suppliers. The ESB public electricity supply does not buy top-up and spill. ESB Power Generation is responsible for providing the top-up and spill and it is the grid which is responsible for what plant is dispatched. Deputy Ryan is correct in saying this is a technical issue and I could go into a lot more detail if he would like me to.

Deputy Eamon Ryan

No.

Ms Finn

We have looked at the information available and are satisfied that no market player abused its position in the market. There was what one might call a perfect storm of events, including Airtricity not securing power bilaterally, fuel prices going up at the same time, and a tight capacity margin on the Irish system, which together, we believe, drove those prices high and left companies who were relying on what is effectively a spot market exposed to spot prices.

Deputy Eamon Ryan

What is to stop a supplier, a producer or generator who had contracted gas forward, obviously at a price lower than the spot market price, which went through the roof, to take the clever step of selling the gas to the spot market, cut back on the generation and make a profit in that way?

Ms Finn

The Deputy is talking of generating companies who have bought gas ahead. The gas market is an internationally traded commodities market and players are free to trade what gas they have on that market. A generator which did what the Deputy suggests would then be exposed to the top-up prices to fulfil its contracts because that generator would, one presumes, have bilateral contracts with a supplier to supply power to customers. Accordingly, if a generating company decided to do that, which it could, it would then have to also source power elsewhere itself in order to meet its obligations under its contract.

Deputy Ryan asked what we intend to do about the market between now and the single electricity market. The CER is particularly aware of the need of independent suppliers to be able to source power, particularly in a bilateral contracts market. One of the initiatives we have taken, and on which we have published a consultation paper, is to make available some of the green power, the energy that ESB public electricity supply is contracted to buy. It has been required to buy that electricity under the various AER schemes but the company is willing to make that power available to independent suppliers, so that is an additional source of power. We are making that available through a standard VIPP, a virtual independent power producer auction.

This is an auction model. We have published a consultation paper on that and are awaiting comment back. We expect it to assist and make additional power available to independent suppliers, particularly suppliers of renewable sources of generation. Furthermore, the North-South capacity auction has been re-run again for 2006-07 and it is my understanding that certain independent suppliers have secured more capacity on that this time than they did last time. Accordingly there are a number of such measures we can and are taking to manage the transitional market through to the new SEM, the single electricity market.

Deputy Durkan

I accept the all-island energy policy is likely to deliver economies of scale. However, I wonder if that will be sufficient to introduce degrees of competition, but particularly, if it will be possible in the course of the pursuit of that market to efficiently deliver to consumers a product which is competitive from their point of view. We repeatedly hear complaints in that area. Regular reference is made to rising international fuel prices, but there is difficulty gaining access to the market in order to supply, and the industrial consumer has difficulty competing with his or her competitors on a European scale, given the prices which prevail elsewhere.

With regard to the three players who have left the marketplace, I am not sure matters are as simple as Ms Finn suggests. The fact of three players indicating their exit from the market for one reason or another is not a good sign. It is certainly not a good sign that the market is happy or that access to it is readily available. It could be an indication that the proposal was not commercially viable, or that the obstacles or hurdles to be crossed in the system made it intimidating.

This relates to another discussion we had in the past couple of days. I do not want to be critical of the regulatory authority but I have been known to be critical of it. So far in this country it has not worked, certainly not to the advantage of the consumer. We increasingly see situations where we are told that prices must rise before they can fall. That is an interesting scenario but it does not always appease the consumer, nor the electorate as we approach a general election. Those involved in that business get very sensitive around that time, it is a way of life with us. What is the CER's view on the issues of cost, access for competitors to the market and the fact that the regulatory process seems to work far better in other countries than it does here? What are the reasons for these difficulties? Do they arise because of the position of dominant players in the market and the failure of the regulatory authorities to tackle that dominance? Are they the result of ministerial failure?

Mr. Michael Tutty

We are disappointed when any operator leaves the market because we are concerned with ensuring that further operators will enter it. The residential market has only been open to competition since 19 February 2005. Prior to that, only the green suppliers were allowed to enter this market. The experience in other countries has been that the residential market is the sector most difficult to open up to competition. To some extent, the lack of competition is a reflection that prices are not so high as to attract independent operators. One issue in this regard is the difficulty of building up a residential portfolio. Airtricity has been doing it for several years and we hope it will continue to do so. There have been newspaper reports that it plans to exit the residential market but that is not our understanding. Its customers have been informed that prices may have to increase but that the company will continue in the market.

Our objective is to ensure that there is more competition. Part of the difficulty in securing this aim is the existing structure. When there is one dominant body in any market — such as the ESB in the electricity market and Bord Gáis in the gas market — it is difficult for new players to establish a foothold. The Minister is considering a consultant report on the energy sector. In commissioning this report, he acknowledged that it may be necessary for him to take action. The CER does not have the ability to take any action in regard to the ESB, for example, other than to control its behaviour and prices. We cannot move it out of different parts of the market in order to allow others in; that is not within our remit.

We are doing what we can to build a market that enables operators to compete. We helped to ensure that Airtricity, for example, entered the residential market before it was fully opened and we will use any possible mechanisms to help others enter it. At present, however, it is a difficult sector. The margin we allow ESB PES to charge residential customers is very small. For independents hoping to compete, there is not much of a margin to undercut ESB.

Deputy Durkan

Is it possible for up-and-coming competitors to compete on a level playing field in the industrial sector?

Mr. Tutty

Yes. Most high-energy users are not supplied by ESB PES. It is in this sector that effective competition has taken place and that independent suppliers have been doing all their business.

Deputy Durkan

Could independent operators supply at a more competitive rate if the costs involved were not as great?

Mr. Tutty

To which costs is the Deputy referring?

Deputy Durkan

This is the question that must be determined. What are the costs involved? Do they relate, for example, to access to the grid? We are continually informed that competitors are obstructed in every way possible. That is the charge. If it is the case, we must discover the solutions. Independent operators claim that there are extraordinary costs associated with entering the market. Deputy Eamon Ryan made reference to some of these. Are these costs an important factor in the difficulties experienced by competitors in entering the supply market or are operators waiting until prices increase and the market is more lucrative?

Mr. Tutty

We have worked to ensure that there is free access for all operators at all stages, including generation and in terms of full access to the grid, on the same basis and at the same cost. There is no barrier in this regard and there is now full freedom for suppliers to enter the market. On the residential side, the main problem is the cost of building up a customer base. One must set up the systems and do everything that is needed to get the supply mechanisms in place. Operators will not do so unless they are confident that there will be sufficient numbers of customers.

Deputy Durkan

Is there anything to prevent operators entering the generating business tomorrow and offering to supply the market? Are there no impediments — no unforeseen and undetermined overheads — to prevent a company entering the market and competing on a level playing field?

Mr. Tutty

I am not aware of any overheads, other than the normal costs of setting up a business, that would prevent operators entering the market.

Deputy Durkan

In regard to the effectiveness of the proposed all-island market, to what extent will it at some point become dependent on interconnectors across the sea to the United Kingdom and the European grid? What does Mr. Tutty envisage will happen in this regard? Given that on the Continent the grid is supplied overground, which is simpler to operate than an underwater mechanism, he might give some indication of the current capacity of the interconnectors and the numbers required for the future. I understand that DC connectors are in use elsewhere in Europe. What is the CER's plan in respect of meeting all market requirements here, being competitive and effective in so far as comparisons with other European states are concerned and ensuring security of supply?

Mr. Tutty

We have one interconnector linking us to the North, where there is a 500 MW interconnector to Scotland. The transmission system operators North and South have agreed to provide a second interconnector to the North. We have authorised them to do this on the basis that it can be expanded when required. It is being built not only to meet immediate needs but also to accommodate projected future needs. When fully developed, this second interconnector, in combination with the existing one, will provide at least three times the level of supply currently available.

We were asked by the Minister to develop an interconnector across the sea to Wales or elsewhere in the United Kingdom on a merchant basis or on a partly regulated and partly merchant basis. We informed members of progress in this regard when we last came before the committee. A consultant report identified that there is private sector interest into which we could tap. We gave this report to the Minister and await the go-ahead to make progress on that basis.

The Minister spoke in the past about the possibility of building two 500 MW interconnectors. Our contention is that we should build one such interconnector now and consider the timing of the second at a later date. Interconnectors are costly. A single interconnector with 1,000 MW capacity should not come into the system here or in the UK because should it fail, we would lose the total capacity at any one time. As the interconnectors must be in two different places, there are no economies in doing the two interconnectors at the one time. With an interconnector, one will have security of supply but one does not know whether one will use it as other factors come into play. If one starts to use it as the normal source of supply, then one will not have the security of supply. Usually the interconnector——

Deputy Broughan

Could it not be used to generate electricity for export?

Mr. Tutty

Yes, it could if we had enough electricity generation and spare capacity of wind energy. If we were exporting energy created by wind it would be used some but not all of the time. To some extent it is a matter of economics. An interconnector is a public utility. It may not be used but the consumer must pay the cost. At this stage we believe we should put in place a single 500 MW interconnector and we could consider a second interconnector later, but not spend all the money required for two interconnectors right now.

Chairman

Whose view is that?

Ms Finn

That is the view of the Commission for Energy Regulation.

Deputy Eamon Ryan

If we were to export wind power to the UK or Northern Ireland, and perhaps Northern Ireland is the most immediate market, would we not need a similar ROCS system to be able to benefit from its support systems or how would we switch back when the North-South support mechanisms open up?

Mr. Tutty

We are already trying to work out how the two different systems North and South will affect the all-island market. We have different systems. We are not responsible for those systems as we have not set them up. The Northern authority is not responsible at its end. That is an issue, but I do not think it will stop wind power flowing in either direction but it complicates matters that we have two different systems.

Deputy Broughan

The delegates were explaining the trading and settlement code. Will there not be a single code for the whole island in July 2007? What we as representatives of the consumers will be asking is whether the consumer can expect significantly lower prices in the bigger market in July 2007 when we have an all-island code. The ESB will have only 45% of the electricity generation market.

Ms Finn

There will be one trading and settlement code and one market. Wind energy will be traded in the market on the same basis North and South. The ROCS systems and the AERs and the various support mechanisms are outside the market and will affect who buys what and money flows, but they will not inhibit or stop the way wind energy will be tradeable on the whole island. They are outside the trading and settlement code.

On the question of the overall benefits of the all-island market, the market with economies of scale and more efficient dispatch will certainly deliver efficiencies across the board in terms of costs in the medium to long term.

Deputy Broughan

When we get the annual price increases every September, can we expect lower prices?

Ms Finn

I am not predicting pricing at this stage.

Chairman

Is Ms Finn predicting that it will drive down prices for the consumer?

Ms Finn

I cannot predict what prices will be in July 2007. I am predicting that the all-island market will deliver more cost efficient prices to consumers in the medium to long term. It will be beneficial to consumers.

Chairman

Will Ms Finn explain what she means by cost efficient benefits for consumers? I take that to mean a reduction in prices.

Ms Finn

We believe prices in an all-island market would be lower than they would be if there were two separate markets operating independently, carrying its own full level of reserve.

Chairman

I ask Ms Finn not to drag out the answers. Is she telling the committee she expects to see a lowering of prices in an all-island market?

Ms Finn

I cannot give a yes or no answer because the answer is that the prices, we believe, will be lower than they would be if there were two separate markets. The reason I am giving a very precise answer is that if we were to continue with two separate markets, with the way fuel prices are going internationally, we could see price increases in both markets. At present prices in Northern Ireland have risen by 10.8% to end user customers. We cannot control fuel prices but we can control other costs in the all-island market and those costs will be lower than they would be in two separate markets.

Deputy Broughan

As Garrett FitzGerald used to tell us, the rate of increase will be falling.

Chairman

It is clear from what Ms Finn stated in her long answer that there will be no price reductions for electricity consumers.

Deputy Eamon Ryan

In fairness, Chairman, I do not think Ms Finn said that.

Ms Finn

That is not what I said. I stated that prices will be lower in an all-island market than they would be in two separate markets given fuel prices.

Chairman

Lower for the consumer.

Ms Finn

Yes, of course.

Deputy Broughan

It will be a happy day that we will have an all-Ireland energy——

Ms Finn

It is beneficial and if we were convinced otherwise, we would not be going down this road.

Deputy Eamon Ryan

If we were to know what prices would be in 2007, we would be out on the stock market and making a fortune for ourselves.

Senator Finucane

I welcome the representatives from the Commission for Energy Regulation. The Commission for Energy Regulation would not be flavour of the month with consumers because in many cases it has to announce bad news and take the flak, acting as a shield for Government. The report of the OECD assessment of the economic survey of Ireland 2006 published on 2 March 2006 states that Ireland has a legacy of policies that favour the interests of producers over consumers. It stated also that despite six years trying to liberalise the electricity industry, competition has not increased by much. We have seen the proof of that in our discussion. It identified the main problem as the dominance of the State owned Electricity Supply Board. Mr. Tutty referred to the Deloitte & Touche report on the energy market. At a previous committee meeting I asked the Minister whether the Deloitte & Touche report would be published but I could not get a direct answer from him at the time. Have the representatives of the Commission for Energy Regulation seen this report and its recommendations? I understand it contains certain criticism of the ESB and raises the break up of its dominance in the market. It may be unpalatable to produce the findings at this stage with the imminent opening up of the market in 2007. Will it be less of a necessity for the ESB to build new generating plants with the opening up of the all-island market in July 2007? Will the opening up of the all-island market end the dominance of the ESB in the marketplace?

Mr. Tutty

We have seen a copy of the Deloitte & Touche report but our lips are sealed as we have taken a vow of silence. We cannot do what the Minister would not do.

Senator Finucane

I do not see him being reticent about——

Mr. Tutty

In the all-island market, new plants will still be required. We have enough plant at present on the whole island, but given the rate of growth in the economy we will need more than what is already on the way, namely, the Huntstown second plant. We will need more by 2009-10 and within the single market it does not matter whether it is built in the South or the North.

The ESB will be in a less dominant position in an all-island market than in the Republic of Ireland market. In designing the systems for the all-island market we have looked at market power and how to ensure it is not abused. We have reached the conclusion that the ESB in the South, and its counterpart in the North perhaps, will have market power and measures will be required to ensure the market operates fairly. We are considering what those regulatory mechanisms should be. While it is coming down it is not at the point where it no longer has market power.

Deputy F. O’Malley

I welcome the delegation. It is always a pleasure to have the opportunity to question the Commission for Energy Regulation, CER, because this is an evolving market and the commission is subject to significant criticism which may or may not be justified.

One of the functions of the commission is to facilitate competition. It cannot take much comfort from seeing so many players leave the market. I like Ms Finn's phrase about the tight capacity margin in the Irish market in the interconnector North and South. It is unfortunate that the ESB was able to buy so much capacity there that it drove out Airtricity. Does the CER have a role in this auction where the dominant and financially stronger incumbent can name its price for capacity on the interconnector and force out smaller independent companies?

Ms Finn

We are responsible for auctioning South-North capacity. That North-South auction is run by our counterpart in Northern Ireland, which regulates the interconnector in its jurisdiction. Although we do not have a formal role, however, we liaise closely with that organisation. For example, during the last auction when it seemed after the first round that the independent suppliers were not getting sufficient power we discussed this with our counterpart which agreed to cap the amount of power any one player could buy. It did that voluntarily but we are in close discussion about the process.

Our Northern counterpart has re-auctioned capacity and we have discussed capping the amount any one player can get. That ensures that at least three players get some capacity. We have held similar discussions this time. Independent suppliers got capacity in this auction so the issue did not arise. We have a role in terms of co-operating and co-ordinating, and ensuring sharing of information. We have no jurisdictional role and no powers over that process.

Deputy F. O’Malley

I am concerned about how close we are to having a single market that works in the regulatory framework. Rather than considering a single market we should consider the Irish and United Kingdom markets as a single entity.

Mr. Tutty said there was a preference for two interconnectors rather than one. Does the commission see Ireland as having the generating capacity to export power? Was that part of its deliberations? I fear the commission does not see the great possibilities for wind energy but sees only energy coming into the country. I am worried that the commission does not regard the interconnector as a two-way provider. I believe we have a significant future in exporting energy if only we could be connected. Is export one of the criteria mentioned in the document the CER drew up?

What is the role of the private sector in respect of the two interconnectors Mr. Tutty mentioned?

Mr. Tutty

I will answer the last question first. The Minister and the Government asked us to consider the possibility of private sector involvement in the interconnector to the United Kingdom. We recommend building one at the moment. The private sector has made clear it is not interested in building it and taking the risk on whether it will be used. It will take some risks in a highly regulated environment and wants the Irish consumer to bear most of the cost.

Nobody on the UK side wants an interconnector or is willing to put up money to buy power from us. The United Kingdom regards this as something being built to meet Irish needs and if we export something from it that may be a bonus. We must carry the cost of this interconnector.

There is evidence that the private sector is willing to get involved in funding it and taking some risks. When or if we get the go-ahead to proceed on that basis we will design and run a competition. We want to keep the export idea open as a way to use it but to an extent that depends on whether there is capacity at the other end to import the energy.

There are few routes and locations that can take an interconnector from here. We must see which is the best route and will keep the export idea as something that should be possible and facilitated but would not hazard a guess at what the demand would be. Even if we had the wind energy there must be somebody on the other side who wants to import it.

Deputy F. O’Malley

The United Kingdom is reviewing its nuclear power option and we are adjacent to its large nuclear plants. My vision for the future is that instead of us asking the UK not to use nuclear power we provide wind energy to fill that vacuum. There is significant potential here. The commission does not support independent or green energy resources and opportunities in the same way. It would be far more beneficial for our Minister to tell the UK Minister that we are moving towards being able to offer wind energy and to ask whether the UK will take it from us rather than renewing the nuclear facility which causes so many difficulties between the two countries.

Chairman

I am conscious of the time available to us. Mr. Jewell from the Consumers Association of Ireland must also come before the committee.

Deputy F. O’Malley

I have one final question. Will the delegation comment on what I just stated because we need——

Chairman

Will the Deputy ask it in the form of a question?

Deputy F. O’Malley

Will the Commission for Energy Regulation agree that its functions include developing as many opportunities as possible for exporting energy, supporting independent industry in providing greater market options and developing the interconnector? Is the CER concerned that the transmission development plan submitted by the ESB or EirGrid is for 2006 to 2010, which is short term? Northern Ireland is building 400 kV lines, whereas we plan to build 220 kV lines. We are not preparing for the long term. Will the delegation comment on that?

Chairman

We will bank the questions. I must advise members who were not here at the start of the meeting that we must vacate the room at 2.15 p.m. Mr. Jewell from the Consumers' Association of Ireland must also come before the committee and I am keen to hear from him. I will ask Deputy Broughan to speak as he has not had a chance to do so.

Deputy Broughan

: I thank the Chairman. I was at another meeting. I will build on what Deputy Fiona O'Malley stated. The European Green Paper on energy, the possible basis for a common European energy policy, will be published today. In the discussions on this, Mr. Barroso and Mr. Andris Piebalgs, the Commissioner for Energy, spoke in terms of Ireland and the UK as a single region. They went so far as to state that in terms of regulation, the UK will be the lead regulator.

Has anyone in the Commission spoken to the CER about what might happen at European level? Our policy makers must decide how exactly we want to get involved in a common energy policy. Security of supply is critical for eastern and central European states. Will this have implications? A map of boxes such as Germany and Denmark and ourselves and the UK was laid out.

We have a support mechanism and the ROC system for wind energy, and two regulators on the island. Is that sustainable? Does the CER feel this committee should examine the concept of an all-island regulator or a new system of regulation? We read that in the UK the Tory leader, Mr. Cameron, will put a windmill on his roof. Has any analysis been done on how microgeneration involving householders and individuals taking personal responsibility for their own carbon production can be encouraged?

Every autumn when energy prices rise, our constituents are extremely upset, particularly people on low incomes. Approximately 1 million people are on benefit. People were deeply upset about the recent gas price increase and find it desperately hard to manage the bi-monthly bill. What analysis has the CER done on energy poverty? Older people will not use their oil or gas or turn on their electric heaters because of the price. Will the CER take that into account when making its recommendations this autumn?

Chairman

I must finish this meeting quickly so that another committee meeting can start. Committee members will complain at 2.15 p.m. that we should continue, and there will be a row among the members, which we are used to. Will Deputy Durkan ask a question or make a statement?

Deputy Durkan

I have a question.

Chairman

A brief question.

Deputy Durkan

Will the Chairman allow me 60 seconds?

Chairman

I will.

Deputy F. O’Malley

Deputy Durkan has 40 seconds remaining.

Deputy Durkan

The seconds are counting down. Deputy O'Malley is counting them quickly.

The CER has seen the Deloitte & Touche report. I presume it has not yet received instructions on whether it will proceed with the recommendations. The CER has also seen the OECD report, which suggests the break-up of the ESB into several factions. Will that be of benefit to the consumer? Will the economies of scale we discussed in terms of the generation and production of energy be lost in the break-up? What are the proposals for Aghada? I presume the CER has studied the EU Green Paper on secure energy for the future and that it is aware of the tendency for utility service providers to take on the role of a bank rather than a provider of services to the community. It is more profitable to own a toll road or a toll bridge than to own a bank. The same could happen regarding the ESB and energy providers. What effect would this have on security of supply?

Chairman

If Deputy Ryan wishes to speak, he must ask a question. We have steered off-course from discussing the statutory instrument and have gone up-country.

Deputy Eamon Ryan

I need half of the time Deputy Durkan required. How does the CER answer criticisms from certain wind producers that the proposal to force the ESB to sell on wind power will act as a subsidy for peat? The fixed price tariff for wind is below the market price and so cheap that it would lead towards a subsidisation of peat generation rather than a production of wind power.

Chairman

I ask the delegation to answer precisely.

Ms Finn

We will try to deal with as many questions as possible. The use of regional markets to move towards a fully integrated European energy market has been mooted for some time and continued in the recent proposals. Even if a move towards an Ireland and UK market were to be an objective, as it may be in the future, we must establish the market in Ireland in the first instance. Establishing an all-island market will be a first step towards considering regional markets. We may go down that road but it will be some time in the future.

As part of the ministerial framework policy agreement, the regulators were tasked with examining the feasibility of having a single all-island regulator. We are already committed to a joint regulatory decision-making process for the new market. That is essential for the single electricity market to work. We will put those mechanisms in place.

The matter of who would lead regulation if we were to have a British Isles regulatory system would be up for discussion and negotiation. We would not consider that any one jurisdiction should be a lead regulator. Our arrangement with Northern Ireland will be equitable and we expect that would be the position in any regional market.

Regarding the Deloitte & Touche report, we mentioned earlier that the CER is not in a position to impose or require structural changes on the ESB. However, we published detailed proposals on mitigating the ESBs market power in the all-island market. They are regulatory measures, which are second-best because structural measures are usually perceived as being the most efficient and best way to address dominance issues. Given that we do not have power over structural changes, we will put in place measures to deal with the dominance by the ESB in so far as regulatory measures can do so. It is an issue on which we are currently consulting.

Mr. Tutty

My recollection is that the legislation requires a five year development plan to be drafted and that is being done. On the question relating to the 400 kV lines versus the 220 kV lines, there are some 400 kV lines in the Republic and at least one more is planned for the north county Dublin area. The type of line built is dependent on needs. The higher the value of the line the more difficult is the planning process in that regard. On nuclear issues, I do not believe the UK regard wind energy as a complete substitute for nuclear energy or thermal plants as wind does not blow all the time. The UK has its own wind and may welcome ours from time to time but it still has to look at its basic needs in terms of generating stations.

On green power versus subsidising peat, I do not believe that is possible. Peat is bought at a certain price regardless of what is happening with wind energy. The excess over the best new entrant price goes into the public service obligation by way of levy.

Deputy Eamon Ryan

That all goes to peat.

Mr. Tutty

It goes to the generating stations.

Deputy Eamon Ryan

Yes, it goes to the peat generating stations.

Mr. Tutty

If, in selling on or auctioning the green power as is proposed, the money gained in that regard rises above the best new entrant price, it will be used to reduce the public service levy, most of which goes to peat. If we can reduce the levy by having a surplus elsewhere the consumer pays less.

Deputy Eamon Ryan

It is wind paying for peat.

Mr. Tutty

No, it results in the consumer having to pay less of a levy.

Deputy F. O’Malley

Deputy Ryan is correct.

Mr. Tutty

Under the current system, the peat will be paid for regardless of what happens. If the levy can be reduced by any other mechanism it also means the consumer does not have to pay as much.

An ESB proposal for the building of a plant at Aghada has been received by the Commission for Energy Regulation which must consider whether it should go ahead. Some months ago, we stated that there was no need from a security of supply and competition point of view to give the go ahead for that plant. The outcome will be dependent upon what other proposals are coming through. We will, in the near future, require the building of another plant in order to meet our needs in 2009. If not located at Aghada, it will be built elsewhere. The proposals in that regard remain in the melting pot.

Deputy Eamon Ryan

Perhaps the CER would take account of the Deloitte & Touche report when making that call.

Chairman

We are meeting today to discuss a statutory instrument and not other issues relevant to the energy market.

Deputy F. O’Malley

We have had a useful discussion.

Chairman

The discussion has been excellent.

Deputy Eamon Ryan

It is crucial that we discuss such decisions.

Chairman

I know that. We must finish our meeting by 2.15 p.m. We will come back to the Commission for Energy Regulation on those issues at a future date. I thank Ms Finn and Mr. Tutty for attending.

I welcome Mr. Jewell and apologise the delay in getting to him. While our discussion on the statutory instrument was supposed to last only 15 or 20 minutes unfortunately it branched out into other areas of energy policy about which members need to ask questions. I appreciate this shortens the time for our discussion with Mr. Jewell but we must vacate this room by 2.15 p.m. I thank Mr. Jewell for forwarding to the joint committee his submission which outlines the position of the Consumers Association of Ireland. I also thank him for his engagement with the committee on other occasions. I now invite him to make a five minute presentation following which we will have a question and answer session.

Mr. Dermott Jewell

I thank the committee for the opportunity to make this presentation. Interestingly many of the points I will make were touched on in the committee's earlier discussions which I had the pleasure to hear.

Consumers find themselves in a difficult situation in a highly technical and complex area which understandably leaves many of them, having engaged in the process, with a glazed expression. There are two consumers, the domestic consumer and the business consumer and two costs. Very often costs are passed on twice to the domestic consumer. As stated in the submission, domestic consumers do everything they, as individuals, can do to look after the environment by paying taxes and taking on board information and advice given to them including cutting down, cutting out and cutting back where they can. They also listen to and support the Minister and those elected to represent them in taking action on their behalf. However, that is often difficult because they can be ill-advised and ill-informed resulting in a bewilderment which does not allow them to act effectively or progress.

Consumers are aware that renewable energies and energy conservation are required immediately. However, they need to be shown how to get involved in this and to be provided with incentives, both real and monetary, to do so. That must be our starting point for future progress given there is little real interaction with the consumer except the regular issuing to them of a bill. Consumers need better attention paid to them not more complex data and discussion into which they have no input or cannot understand. They are aware that the cost of providing energy is expensive given they, like their neighbours in other jurisdictions, are faced with increases in fuel, heating, gas and electricity prices. Only last week the European Competition Commissioner, Mr. Neelie Kroes, acknowledged this when he stated that the European Commission will need to act decisively to try to remedy the malfunctions in the energy market.

Interestingly a report received by the Commission deals with issues that are reflective of Ireland's situation, namely, that wholesale markets generally maintain the high level of concentration of pre-liberalisation periods. In other words, the dominance of the incumbent of more recent times remains in that consumers are denied choice and there is no significant cross-border competition. However, that may change here in our own jurisdiction from what is proposed in the future. There is, without a doubt, a lack of transparency. So many of the price increases we have taken on in recent years for the average consumer demonstrate and explain that eloquently. We know that prices are often not determined on the basis of effective competition but no ways have been put forward to improve that situation.

In the decade from 1992 to 2002, electricity usage alone increased by 60%. Residential consumption in that period rose 22.5%. These figures are significant. The transport sector is our biggest energy consumer followed by residential at 24% and industrial at 20%.

What can consumers do? For the best part, they go with the norms on a personal basis and intervene by walking or cycling. They try to cut back by taking a shower instead of a bath, and not overfilling the kettle. These are basic scenarios for them.

Deputy Broughan

I am sorry to interrupt Mr. Jewell but I wish to raise one point concerning the people he ably represents. Does he know any consumers who had an alternative provider to the ESB? We have heard about Airtricity withdrawing but some time ago Mr. O'Connor told us that we could have such a company. Does Mr. Jewell know many consumers who effectively had any choice? That is my basic point. Does he know anyone who had an Airtricity energy line?

Mr. Jewell

We sought some figures as part of a survey and came up with very few who had any form of alternative service provision. Interestingly, one of the points the Deputy made was that when it comes to areas where there are alternatives for the individual in micro-generation or mini-generation, which might serve communities, there is a lack of information. Every individual must physically put in a significant effort to find any form of information on those areas. It is extremely difficult.

Deputy Broughan

Why does Veridian, for example, not offer householders a supply?

Mr. Jewell

We have asked the company and it has come back on so many of the points saying that it is not feasible to do so. It is not so much that there is no profit but it is certainly not a financially viable proposition. That provides an extraordinarily difficult situation.

Deputy Broughan

Does Mr. Jewell believe that the CER has done its job? Quis custodiet ipsos custodes means “Who will guard the guardians?” but we are supposed to do that, as is the Minister. One of the issues that arises is how efficient is the CER and what has it done for us? Has it done anything for us? It seems that prices for ordinary households are going up relentlessly by major amounts. Has Mr. Jewell taken any initiatives to examine whether the regulator is doing its job?

Mr. Jewell

There have been no specific initiatives except through our general lobbying against price increases and seeking an explanation for the extraordinary lack of transparency.

Deputy Broughan

Has Mr. Jewell drawn any comparisons with the energy regulator vis-à-vis ComReg? ComReg would say that it has relentlessly issued consultations and interacts with the public on mobiles and landlines. Yesterday, we were critical of ComReg’s powers as regards another part of this committee’s work. Does the CER reach out to householders or small businesses in the way ComReg does? Are there issues concerning the regulator’s performance?

Mr. Jewell

There are definitely issues with the regulator's performance. If one takes the comparison with ComReg, there is no interaction from the CER with consumer organisations or representatives that the CER initiates. ComReg has done and continues to do so very ably and the same applies to the Food Safety Authority of Ireland, where there is regular, ongoing and concerned interaction between consumer groups. They have advisory panels with consumers and it is very positive.

Chairman

Having heard Deputy Broughan's questions, the two of us must think alike.

Deputy Broughan

We do but in different parties.

Chairman

I had the same question for Mr. Jewell. I note from Mr. Jewell's contribution that the Consumers Association of Ireland was not consulted as a body and it has to make all the running in that regard.

Mr. Jewell

Yes.

Chairman

One of the reasons Mr. Jewell was invited here today was because the members felt so strongly about consumers. We felt we had to invite the association to present its views before the committee finalises its energy report. While we will not go back over all of it, is Mr. Jewell saying that support is coming from different arms of Government, statutory and independent bodies but not from the CER?

Mr. Jewell

Yes

Chairman

As Mr. Jewell knows, the committee is just dealing with the energy sector today.

Mr. Jewell

Indeed.

Chairman

Has Mr. Jewell had any consultations with the Department? Has he been invited to any consultations with the Department on the future of energy and its cost?

Mr. Jewell

The simple answer is "No".

Chairman

Are State services, such as Sustainable Energy Ireland, engaging with Mr. Jewell?

Mr. Jewell

No and that is the difficulty.

Chairman

They are not engaging with Mr. Jewell either?

Mr. Jewell

No. We must initiate every form of engagement. That is one of the greatest specific difficulties that an organisation such as ours encounters. Members of the committee will know that we have a high voluntary input, of necessity, but we need it. It is the only way we can try to maintain a relevant presence with such regulators who will not engage with us. It adds to the difficulty for the average consumer because there is nobody to fight, apart from legislators.

Deputy Broughan

Last year, we were faced with a 25% increase in gas prices and a 4% rise in electricity prices. The previous year, electricity prices rose by approximately 20%. Is Mr. Jewell saying that in the run up to that period, Mr. Reeves and the CER did not think it worth their while to talk to a consumers' body? Did the Consumers Association of Ireland have no input whatsoever into the level of increases that occurred in the 2003-05 period, the annual ritual of increasing energy prices?

Mr. Jewell

The Consumers Association of Ireland had no input whatsoever. Perhaps the ODCA did on behalf of consumers but the independent organisation that I represent certainly did not. Therefore, we have always been heard in a reactive role.

Deputy Durkan

In Mr. Jewell's submission I noticed a reference to the increases in electricity charges over the last couple of years, which we have all dealt with before. Can Mr. Jewell indicate how increased competition in the electricity market would affect prices for consumers? I have spent some time trying to take the lid off this issue. I am not saying this is a fact but it appears to me that whatever entrant goes into the market, the competition appears to be upward rather than downward to benefit the consumer. When will extra entrants to the energy market show a benefit for consumers? Will consumers reap that benefit or will it become an investment exercise, especially when there are low interest rates? Utility services can become liable to takeover through the sale of shares and dividends.

Mr. Jewell also mentioned the lack of micro-generation in this country. There was an interesting reference to the British Tory party leader who built a windmill at his house. Perhaps we should all examine that. However, the simplest way to reduce the cost of energy imports to the consumer or the Exchequer is, as Mr. Jewell said, reducing the consumption of home heating oil. It would be easy enough to cut consumption by 25% or 30%.

With regard to motor cars, one could reduce consumption by up to 50% much more easily by using energy labelling. The equation is simple. A four-litre engine in a vehicle travelling at 70 km/h for example will release a lot more carbon into the atmosphere than a vehicle with an engine half the size. In short, how does our unfortunate consumer down the line benefit from extra players on the field?

Chairman

I ask Mr. Jewell to bank those questions.

Deputy F. O’Malley

I read the presentation and realise this is the first time the Consumers Association of Ireland has been invited to attend. The bottom line involves the price increases consumers pay. I find it extraordinary that consumer interests are so much ignored. What does the association think could be done to have the consumer voice heard more clearly? I thought today that the association presentation would be made before that of the CER, in order that we would have the benefit of hearing the position of the association and then ask the CER about it.

It is often said to us that electricity prices were suppressed before pre-liberalisation in 1999. Does the association agree or what does it know about that situation? What is shocking is the rate of cost increases. There is a gas and coal element to that but it is not exclusive. The association makes the point that huge profits are being returned year after year, though we own the electricity company and end up paying. Does the association know if prices were suppressed or if there is any truth in that? Its insight would be useful.

Chairman

The Deputy said this is the first time the association appeared before this committee, but it has previously been in touch by telephone. As a committee we consult widely.

Deputy F. O’Malley

Yes. Good for it. The committee deserves credit.

Chairman

Mr. Jewell will answer the two sets of questions and then we will hear Deputy Eamon Ryan and Deputy Fitzpatrick.

Mr. Jewell

The question was asked if and how consumers would benefit from an element of competition. I like to think they would. They should do so, but what worries me was the response to the regulator with regard to an all-Ireland system, in terms of the introduction of changes, and price reductions for the consumer. The answer I took from the response was "No", but that consumers would not necessarily be any worse off. That is not the way forward.

Micro-generation is an opportunity for consumers to take control of, and responsibility for, their usage. If they can get that, change would begin and another form of change would be forced through the market against the providers who have the dominant position. The regulator must take a stance on behalf of the consumer with regard to the profits made, and why they are not somehow pumped back into the system to alleviate the horrendous regular increases for so many consumers who, as was pointed out earlier, cannot continue to afford them. That is another reality which seems to be ignored. It is very frustrating when price increases keep coming, with VAT added, and with the assumption that the money to pay will come from somewhere. That is no longer feasible, which is why we need some of the alternatives which will help consumers.

I do not know about the suspension of prices over a period of time but I would not be surprised if that had happened.

Deputy Broughan

Did Mr. Jewell agree with the Hunt report, which basically said that the capital cost for the ESB of renewing its generation structure was ultimately placed on consumers' shoulders?

Mr. Jewell

There is no doubt about that. That problem remains. If ever a situation was being talked up, this is one, because they are clearly telling us this will get a lot worse before it becomes at all better.

Deputy Eamon Ryan

As oil and gas run out, I am not sure in the long run how things are going to get better. I agree with what the association says in a report about the current structure in the emissions trading system in the European Union, where we have given a massive free carbon emissions allocation to large suppliers. To a certain extent, Irish taxpayers' money is now being used to set up a carbon fund which goes out of the country to pay for our carbon emissions. Given that criticism, would the association have any objection to the introduction of a carbon tax alternative, whereby the revenue on any across-the-board tax on fossil fuel would be used to reduce VAT, which would benefit consumers? Would it also support increases social welfare benefits in order that those caught in the poverty trap referred to would have some sort of relief and, importantly, would it support reductions in labour tax? Given such an allocation of funding from such a carbon tax, would the association support such a proposal as being more sensible than the type of carbon emissions trading system which it has criticised?

Mr. Jewell

The CAI council is currently examining the carbon tax situation to see if it might support the introduction of such a system. It is probably fair to say that 80% of the council would be in favour of such a carbon tax for the reasons pointed out by Deputy Ryan — it benefits the consumer and the system, and it would put much of the control into the hands of those who need it most. The quick answer to the Deputy's questions is "Yes", and I think the CAI will shortly pronounce on the issue.

Deputy Eamon Ryan

Thank you.

Deputy Durkan

We might not all agree with that. It was a shot across the bows.

Deputy Fitzpatrick

Politicians have been told for the past decade or so that competition will bring down prices. We have heard all the mantras about a level playing field and so on. However, by comparison with a year ago my utility bills, in line with probably everyone else, have increased by 30% or 33% in the past 12 months. One can forget about the 25% increase referred to because one has all the add-ons. Is competition the only model we should look at?

A representative from ComReg appeared before the committee. Should we not look at regulation as well as competition? All the companies being set up to provide extra electricity and power have huge capital costs which in the end must be funded by the consumer. Is there another model or has the CAI or anyone else looked at other models?

Mr. Jewell

We have not looked at any other model but badly need one in this area because what is happening on the regulatory side is not working for the consumer, probably because of the lack of interaction and the complete inability to contribute from the consumer side. If change is to take place, which it must, there must be a format, means or platform rapidly put together which would allow an open discussion of this nature to take place. Such a discussion, on costs, difficulties and the lack of competition has never taken place before under what appears to be very heavy regulatory system. It would probably be argued by almost all consumers that the regulatory system seems to work only to the benefit of the providers, not to the benefit of those seeking to have the supply from those providers.

Chairman

The OECD report of 2 March says the same. I understand the Consumers Association of Ireland is a private organisation. Is it a national organisation?

Mr. Jewell

Yes.

Chairman

How many members does the CAI have?

Mr. Jewell

We have approximately 8,500 members who are ordinary every day consumers.

Chairman

Is the association funded by its members?

Mr. Jewell

Yes, members pay an annual subscription for membership.

Chairman

Does the association receive any State funding?

Mr. Jewell

The association has received €63,000 in State funding during the past five years.

Chairman

From where did the funding come?

Mr. Jewell

It was given to us by the Department of Enterprise, Trade and Employment.

Chairman

Is the association represented on any statutory bodies?

Mr. Jewell

Yes.

Chairman

On what bodies is it represented?

Mr. Jewell

It is represented on the Food Safety Authority of Ireland, ComReg, Bord Bia and many others.

Chairman

Is the association represented on the Commission for Energy Regulation?

Mr. Jewell

No.

Chairman

I understand no provision has been made in that regard.

Mr. Jewell

No.

Chairman

Does the association have similar type organisations throughout Europe representing consumers?

Mr. Jewell

Yes, it does. They are spread right across Europe. An organisation called BEUC is the over-arching body for all European members.

Chairman

I take it these organisations are doing the same type of work as is being done in the national domain.

Mr. Jewell

Yes.

Chairman

If the committee were to give the association responsibility for energy, what would it do and what changes would it make in favour of the consumer?

Mr. Jewell

The initial priority would be to provide some form of interaction with the regulator. We would then try to find some solutions to issues such as the carbon tax and to examine some of the incentives, similar to those I mentioned, that would benefit the consumer as much as the State, namely, the reduction or abolition of vehicle registration tax, motor tax and a reduction on fuel for certain types of vehicles. That is the only way to bring about change.

Chairman

Is Mr. Jewell telling the committee — it is important to put this on the record in order that it can be noted by our consultant — that Sustainable Energy Ireland has not engaged with the Consumers Association of Ireland?

Mr. Jewell

Yes.

Chairman

Mr. Jewell told the committee that the Consumers Association of Ireland has had no contact with Sustainable Energy Ireland, the body charged with responsibility for introducing energy saving efficiencies in consumer households. Has the CAI made contact with Sustainable Energy Ireland?

Mr. Jewell

That is a fair question to which the truthful answer is "No".

Chairman

Can we take it the Consumers Association of Ireland will make contact with Sustainable Energy Ireland?

Mr. Jewell

Yes.

Chairman

Mr. Jewell also stated the association has had no contact from the Commission for Energy Regulation.

Mr. Jewell

That is correct.

Chairman

Has Mr. Jewell heard about its price increases?

Mr. Jewell

Yes.

Chairman

Has the association made contact with the Commission for Energy Regulation regarding consultations with it?

Mr. Jewell

No. The only form of contact which the association has had with it relates to the association's monthly magazine as it is with such agencies the association makes contact in terms of research. That is the only contact we have had with the CER. It has never made a formal request to meet with the association.

Chairman

By way of being helpful to the committee, perhaps Mr. Jewell would make contact with the CER to request it to arrange a consultation process. Such process does not have to be on a statutory footing. The committee would be interested in hearing if Mr. Jewell encounters difficulty in that regard.

The committee will shortly produce its report on energy policy. We thank Mr. Jewell for appearing before the committee today. He has given us a great deal of help and food for thought out of which I have no doubt will come a number of recommendations in relation to the matters raised by him today.

If there is no other business the committee will adjourn until 2.15 p.m. on Tuesday, 21 March 2006 when we will meet the EU Commissioner for Energy, Mr. Andris Piebalgs. Members are also invited to attend lunch at 1 p.m. in the Members' Restaurant.

Deputy Broughan

Will it be an open session?

Chairman

Yes.

Deputy Durkan

Who will be attending the committee?

Chairman

Mr. Andris Piebalgs, Commissioner for Energy, who has accepted an invitation from the committee to engage with it on common energy matters. I believe it will be an interesting session. The clerk will circulate the relevant information to committee members.

The joint committee adjourned at 2.15 p.m. until 2.15 p.m. on Tuesday, 21 March 2006.