Dáil Éireann - Volume 673 - 04 February, 2009

Energy Prices: Motion (Resumed).

The following motion was moved by Deputy Simon Coveney on Tuesday, 3 February 2009:

That Dáil Éireann:

acknowledges that Irish households and businesses are burdened with some of the highest prices in the EU for electricity and gas;

recognises that energy costs are a key component of Irish economic competitiveness and that Ireland’s ability to develop and attract new business is suffering from high energy costs as reported by numerous business surveys by IDA Ireland, the Irish Management Institute and Forfás;

[520] notes that a discussion on reforming energy price regulation is currently ongoing between the social partners;

notes the decision of the Commission for Energy Regulation (CER) during July 2008 to grant electricity and gas price increases of 17.5% and 20% respectively, due to spiralling oil prices at $147 a barrel;

is disappointed at the failure to reduce energy prices in the most recent review of prices as oil has collapsed by over 80% to approximately $40 a barrel;

notes that approximately 10% of every electricity bill is directly attributable to energy companies being compelled by the regulator to factor in the cost of carbon (emitted during generation) into their electricity pricing, despite the fact that they themselves are not currently required to pay for carbon allowances for emissions (until 2013 when a carbon trading market will function across the EU);

emphasises the fact that the regulator is required to set prices at a level that will not only take account of the cost of generation, transmission and supply but also at a level that will encourage new entrants into the market in an effort to promote competition and in doing so is keeping energy prices artificially high;

is concerned that the current regulatory regime is now damaging Irish cost competitiveness and adding to the challenges of recession;

is encouraged by the potential of reforming the energy regulatory environment to deliver price reductions and improve economic competitiveness, while incurring no additional cost on the Exchequer;

recognises that the energy sector must be central to any economic recovery plan, in terms of more competitive pricing and the creation of significant numbers of sustainable job opportunities in an exciting and rapidly developing renewable energy industry; and

recognises the importance of prioritising the case to maximise funding available to Ireland from the EU Commission Economic Stimulus Package, to subsidise the cost of upgrading Ireland’s electricity grid and interconnection between Ireland, the UK and mainland Europe in the future;

calls on the Government to:

instruct the energy regulator to conduct, without delay, an extraordinary energy price review, as allowed by section 10 of the Electricity Regulation Act 1999 and section 7 of the Energy (Miscellaneous Provisions) Act 2006;

change the regulatory framework for at least a two year period, to prioritise achieving the lowest possible energy prices for households and businesses;

either introduce a windfall profits tax to recoup unearned profits from energy companies, who earn up to €300 million a year from charging consumers for carbon emissions, or alternatively instruct the CER to remove the charge for carbon altogether from bills for the next two years;

instruct the regulator to set a price ceiling for ESB and Bord Gáis prices and replace the current practice of setting a fixed actual price, in order to allow the ESB and Bord Gáis to supply cheaper energy;

require the energy regulator to hold more comprehensive public hearings with oral submissions from interested parties, including consumer groups, in advance of any new proposed price review; and

[521] immediately introduce the promised legislation to transfer electricity transmission assets from ESB to EirGrid.”

Debate resumed on amendment No. 1:

To delete all words after “Dáil Éireann” and substitute the following:

“— recognises:

the global energy challenges faced by all countries in providing a competitive, secure and sustainable energy supply;

that Ireland faces particular acute challenges as an island nation on the periphery of the EU, which has a 90% energy import dependency and limited indigenous fossil fuel resources;

that global fossil fuel prices, especially for natural gas, are the single largest cost component in determining electricity prices in Ireland;

that the analysis published in January 2009, by the Commission for Energy Regulation (CER) shows how meeting the Government’s long-term renewable electricity targets will put downward pressure on energy prices;

that Ireland has developed a robust energy regulatory framework, which is bringing new entrants into a competitive electricity market and will also serve to help lower energy prices;

the actions taken by the CER and the ESB to cushion the impact on consumers of continuing volatility in international fuel prices; these actions included the adoption of a two-phase approach to tariffs in 2008 and the unprecedented rebate of almost €400 million from the ESB for the benefit of all electricity customers;

that the recently falling market price of gas and coal was integrated into the CER tariff decision effective from 1st January 2009, resulting in a small average reduction in electricity prices; and

that most large energy users are already offered fuel variation tariffs which track either natural gas prices or single electricity market prices and have therefore experienced significant recent reductions in electricity prices;

commends the Government for:

its commitment to accelerated delivery on its energy policy priorities, including ongoing investment in energy infrastructure, ambitious targets for renewable energy to ensure diversity, a radical improvement in energy efficiency, and the continued focus on ensuring a competitive, transparent energy market which works for consumers;

tasking the CER to immediately review options for a possible early reduction in electricity and gas prices for businesses and domestic customers;

its prioritisation of electricity interconnection and grid development including the East-West Interconnector and the inclusion of the Interconnector in the list of projects under the proposed EU Economic recovery package;

its committed work in Europe in support of an open EU energy market ensuring that Ireland’s energy policy interests are protected and reflected in EU energy policy developments;

[522] its work in partnership with the NI authorities on the development of an all-island single electricity market and common arrangements for gas;

its commitment to begin an equitable and transparent process involving all stakeholders to transfer the electricity transmission assets from ESB to EirGrid, the independent State owned Transmission System Operator;

its provision in the Finance Act 2008 of energy efficiency tax incentives which were significantly expanded this year, its provision of significant budgets for the Home Energy Savings Scheme and Warmer Homes programmes, and a range of energy efficiency programmes for large industry users, SMEs and the public sector; and

continuing its range of policy measures that will provide job creation, investment opportunities and more competitive energy supplies for the wider economy.”

—(Minister for Communications, Energy and Natural Resources).

  Deputy Joe Costello: I wish to share time with Deputy Joanna Tuffy.

I compliment Deputy Coveney and the Fine Gael Party on tabling this timely Private Members’ motion. I fully agree with the text of the motion apart from the final line to which the Labour Party has proposed an amendment.

The energy sector is central to the well-being of the economy. The price of gas and oil greatly affects the cost and competitiveness of our industrial products. Irish households are burdened with exorbitant fuel costs. Electricity prices jumped by 17.5% and gas prices by 20% in July 2008 because oil prices had spiralled to between $140 and $150 per barrel. The bottom fell out of the oil market months ago and the price of a barrel is now in the region of $40 and is likely to remain at a low level as the recession continues to bite and demand collapses. Despite this, the Commission for Energy Regulation, CER, has not seen fit to review the increases and give some relief to hard pressed householders.

The belated response from the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, yesterday when he indicated he expected a double digit reduction in fuel prices in 2009 is not good enough. It is unacceptable for the Minister to gaze into his crystal ball when no action has been taken. Prices should have been reduced long ago and the Minister is engaging in nothing more than a Pavlovian response to criticisms articulated in the debate on this motion.

Yesterday, the Government hit every public sector worker, even those on the minimum wage, with a sledge hammer by introducing a new tax on their gross income. In such circumstances, it is unacceptable that energy costs to the taxpayer and business are much greater than they would be otherwise if a decent Minister was in charge of the system. It is ironic that the Government’s movement towards greater competition in the energy market has produced the opposite effect and energy has become more expensive.

Ireland is dependent on imports for approximately 90% of its energy needs. Without nuclear power or significant fossil fuel resources, it is imperative to establish and secure new sources and channels of energy supply. The gas conflict between Russia and Ukraine demonstrated the vulnerability of Europe’s gas supplies. In this respect, it is essential that the east-west interconnector between Ireland, North and South, the United Kingdom and mainland Europe is developed with all haste. Funding of €1.4 billion is available from the European Union to complete this project. Through its economic stimulus package, the EU is making this fund available to help subsidise the cost of the interconnector, to upgrade Ireland’s electricity grid and to assist in the development of an all-island single electricity grid and market. Ireland must fully and urgently engage with the EU and draw down this money as quickly as possible and not deal with it in the way it has dealt with the money available from the European Investment [523] Bank for small and medium size enterprises, which it has not yet begun to draw down after four months.

The real challenge lies with the threat of climate change and the need to create a source and reservoir of sustainable energy. In mid-December, the European Council and European Parliament approved a historic climate and energy package which provides for a 20% increase in the use of renewable energy, a 20% reduction in carbon dioxide emissions and a 20% increase in energy efficiency by 2020.

Hydro-electricity is the original sustainable and renewable energy source in this country. Onshore wind energy is being developed in many areas but is not yet near its full potential. The Government must give full support to the development of this sector. Offshore wind energy is even less exploited. The European Union stimulus package makes available €500 million to help reduce the Union’s dependence on energy imports. The main potential lies with wave energy. An island nation is ideally positioned to benefit from harnessing wave and tidal energy. Such harnessing is expensive, complex and difficult and requires much investment and research.

On 19 February, European Union Energy Ministers will discuss energy solidarity and the EU strategic energy review. In the context of the €200 billion EU stimulus package for economic recovery of member states, Ireland should seek an allocation of funds for offshore wave and tidal energy research and its translation into a powerful and sustainable energy resource which we could, at some point, feed back into the interconnector to supply Europe with renewable energy.

  Deputy Joanna Tuffy: I propose to speak to the part of the motion which recognises that the energy sector must be central to any economic recovery plan and which refers to the creation of significant numbers of sustainable job opportunities. As Deputies will be aware, the Labour Party’s policy to address the current economic problems includes a proposal to put construction workers to work building badly needed school buildings. I will explain the connection between this proposal and the motion. The Government’s programme includes a commitment to require the public sector to lead the way on energy efficiency with a mandatory programme of efficiency measures, including the sole use of energy efficient lighting and heating in offices, schools and hospitals and other public buildings, to produce 33% energy savings by 2020. This commitment was made because Ireland is required under EU directives to make public buildings 33% more energy efficient by 2020.

Two directives on energy efficiency and energy performance of buildings, respectively, include a key requirement that the public sector must assume an exemplary role. The latter directive is specific on public buildings, including school buildings. Ireland has some 4,000 school buildings which must be made more energy efficient if we are to meet EU requirements and realise the commitment made in the programme for Government.

The Government has adopted policies, including the recommendations of the White Paper on energy, which include a commitment to make public buildings, including school buildings, 33% more energy efficient. The national energy efficiency action plan contains a similar commitment. The programme for Government includes a commitment to ensure new school buildings are more energy efficient. The energy efficiency requirement applies to old buildings as well as new buildings.

The Government has done nothing to meet its commitment on energy efficiency in public buildings. It has not produced a plan and has instead placed the onus for making school buildings more energy efficient on schools without providing funding for this purpose. The summer works programme, which some schools used to cover the costs of insulating buildings, replacing [524] windows and so forth, was abandoned in 2007. The funding available to schools would not cover the costs of changing light bulbs.

The standard of many of our old school buildings is poor. A report submitted to the Department of Education and Science last year found that a high proportion of school buildings are in poor condition. In a large number of them some or all classes are in prefabricated buildings. One school in my constituency has been using only prefabricated buildings for 14 years. These buildings waste heat and are cold in winter and hot in summer. Heating costs are substantial because they are energy inefficient, are not insulated and have thin walls. If the Labour Party proposal is put in place jobs can be created and people can be working and contributing to the tax system as they will be able to buy things in the economy.

If money is put into school buildings it will help us to meet our targets to reduce carbon emissions. If we do not meet these targets we will have to spend money on carbon credits or fines to the EU for not meeting our requirements. Money is saved by saving energy in buildings. The Government has made commitments but is doing nothing about them. We need to do something about building schools and making our school buildings more energy efficient.

  Deputy Mary Alexandra White: I wish to share time with Deputies Collins, Nolan, Brady, O’Connor and Calleary.

  An Leas-Cheann Comhairle: Is that agreed? Agreed.

  Deputy Mary Alexandra White: The issues of economic competitiveness, which is raised day in and day out, and the reform of the energy market are at the heart of this Government’s vision for economic revival and renewed competitiveness. I support my colleague, the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan’s proposed amendment and would like to address the issues concerning the debate about the energy sector and its implications for price.

It is vital this country has a medium and long term approach to the energy sector. The Minister’s work in several areas demonstrates that we have a stable and focused approach towards changing the sector to make it cleaner, greener and more competitive and secure.

History tells us of the previous massive under-investment in energy infrastructure, which I believe in part explains Ireland’s above average energy prices. I understand they are approximately 8% higher than other countries. It is encouraging that significant investment by semi-State companies in their futures is now forthcoming.

We also see a commitment to enhanced competition in the Irish energy market. The Minister’s examples of new providers on the market are worth mentioning and include Endesa, Virian, Eirtricity and Mainstream Renewable Power. They are all hugely positive examples of competitors who are willing to invest in Ireland and show confidence in the regulatory framework.

The recognition of the need to interconnect with other energy markets is vital. The arrival in 2007 of the all-Ireland market, the expectation of a North-South interconnector by 2011, an east-west interconnector by 2012 and a future regional electricity market encompassing these islands and the north west of Europe are important developments in strengthening our security of supply and competitiveness among suppliers.

The Government’s commitment to combating fuel poverty and energy efficiency are important in reducing the demand for energy in our country. The warmer homes schemes and [525] home energy savings schemes are vital for electricity customers. The Taoiseach’s announcement last night of an increase in funding in 2009 for energy efficient schemes is a testament to the Government’s commitment.

I am sorry Deputy Tuffy has left because I understand the summer works scheme is back. The €426 million being spent by the Department of Social and Family Affairs on combatting fuel poverty and increased provision in last year’s budget are vital components in Ireland’s drive to reduce energy consumption.

Perhaps the most important aspect of the medium and long-term energy policy of the Minister is to move to renewable energy. Make no mistake, the move to a green economy is happening. I was at a wind and solar voltaic site in Collon, near County Louth a few weeks ago which powered massive mobile voltaic interconnectors to create a surplus energy generator, replacing a 25,000 a year diesel generator.

The move is happening and the supports and grants the Minister is providing to the industry must be consolidated. I urge him to create micro-generation as quickly as possible for the market for all energy generators and to bring the original pioneers of the green economy, in particular the onshore wind providers, and grower of the last decade, with him as the move to renewables goes into overdrive. We have seen great targets for offshore wind suppliers but we now need to bring the price up to encourage onshore wind development.

The issue of price is the subject of tonight’s debate. The move by the regulator to extract a rebate of €300 million from the ESB was vital and welcome. I urge the regulator to be equally dynamic in his current review of options——

  Deputy Simon Coveney: It is the people’s money.

  Deputy Mary Alexandra White: ——for an early price reduction. I support the Minister’s amendment.

  Deputy Niall Collins: I wish to state the anger I felt and was expressed to me and other public representatives that the ESB voted for a price increase for itself when, in the last two weeks, my constituency and the neighbouring constituency of Limerick East experienced the loss of 1,900 jobs in Dell and 400 in Kostal. It is scandalous.

  Deputy Simon Coveney: The Government can change that. It is the main shareholder in the company.

  An Leas-Cheann Comhairle: Allow the Deputy to speak.

  Deputy Niall Collins: There is a bigger issue regarding the salaries of our entire semi-State sector but it is a matter for another day.

I welcome the comments made by the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan on his expectation of a double digit price decrease in the cost of energy from the Commission for Energy Regulation. Various speakers have mentioned competitiveness which is the theme of the day in many discussions. If we do not get our energy prices on a downward spiral we will not be at the races when it comes to competitiveness.

The issue I would like to address in this debate is wind generation of energy. We have to do more. We have it within our remit here to help, where at all possible, wind generation companies to try and achieve their targets and goals in a more timely manner. It currently takes approximately eight years for these companies to achieve a grid connection but their planning [526] permission only lasts for five years. I will provide an example in a moment from my own county of Limerick.

A disparity between five and eight years leads to delays and significant increased costs for the promoters of wind energy companies and we must sort out this problem. We must look at changing the Planning and Development Act to allow for a greater period of time for planning permission for these sites from five years to perhaps ten or 15 years. We could also look at including them under a system whereby strategic sites can go straight to An Bord Pleanála for planning permission, rather than having to go through local authorities.

In my county, Eirtricity has four sites under its control. One is developed and three are in development. It had to go through a tortuous programme to achieve an extension of planning permission for the three remaining sites. The total investment in the four sites is €276 million. There has a been a rates windfall for the local authority of approximately €1 million and a farmland rental windfall for the owners of the site of approximately €1 million. These companies also promote a community fund whereby the communities in the areas where there are developments are allowed to apply for funding for various projects. There are very positive spin offs. We need to do more to help them and can do so here.

The home energy saving scheme was mentioned. We need to do more to promote that and hopefully the opportunity will come quite soon. I understand in excess of €100 million will be made available over the next number of months through the programme for Government. Limerick was part of a pilot programme, along with Clare, north Tipperary and Dundalk and 457 household applied for inclusion in it, with approximately 258 taking it up. My office was inundated with people trying to get onto the scheme.

  An Leas-Cheann Comhairle: Deputy Collins has one minute.

  Deputy Niall Collins: The window of opportunity for people to be included in the scheme was too short. Hopefully the next time it is offered to the public we will see a greater window of opportunity for people to apply for the scheme.

Regarding schools, we have an opportunity, through our green agenda, to look at the recycling of rainwater. We had a debate in this House not so long ago on the application of local authority rates to schools and the problems it is creating for schools and boards of management. We need to introduce a scheme where we can offer grants to schools and boards of management to recycle rainwater to try and avoid the associated water costs which arise from local authorities.

  Deputy Simon Coveney: That is a good suggestion.

  Deputy M. J. Nolan: I welcome the opportunity to speak on this Private Members’ motion. It is extraordinary to think that a little over seven months ago we were speaking in the House and wondering what we were going to do as the price of oil reached $147 per barrel. It is now hovering at around $40 per barrel. The public is not seeing energy cost savings as a consequence of that fall in oil prices. Even though the ESB is doing a fine job, we must see more interaction between electricity prices for consumers and the cost of the oil and gas the ESB uses.

Representatives of EirGrid recently appeared before the Joint Committee on Communications, Energy and Natural Resources. They are professional and forward thinking in their work to ensure security of supply for electricity consumers. If we are to continue to attract foreign direct investment, such potential investors need to be assured that they are dealing with professionals when it comes to electricity supply. That is important in order to continue to [527] attract companies such as Intel, which are heavily dependent on a good supply of electricity from the ESB. If our economic recovery is to be addressed, we must have a competitive pricing structure for our energy costs. I am pleased to note the message from the ESB is that, as the Minister announced yesterday, there will be a significant decrease in electricity costs.

The ESB is examining the future of power generation in what is now a one-island electricity market. The current negotiations with planners and interested groups concerning a new interconnector with Northern Ireland are important. EirGrid will shortly be awarding contracts for a new east-west interconnector for us to link into the UK supply grid. We are currently producing just about the amount of electricity needed to meet demand, but hopefully in future electricity will become an import-export business. In that way, when demand is excessive here, we will be able to import electricity from Northern Ireland or Britain and vice versa.

Competition in the electricity market is important and I am pleased to note that new players are coming onto the scene here. Endesa has announced that it is investing €800 million in order to enter the Irish market. In addition, Bord Gáis, in conjunction with the ESB, is opening a new generating station in Cork.

The increase in the contribution of renewables is critically important and to this end the ESB is examining the area of wind power. I would like to see that sector being expanded. The company has good targets for wind power by 2020 and I wish it success in achieving them.

  Deputy Áine Brady: I welcome the opportunity to contribute to this debate on Ireland’s energy costs and the importance of improving our competitiveness versus that of other countries. In these challenging economic times, the focus of the Government must be on ensuring that we protect our existing jobs and attract as many new jobs as we can. In addition, we must protect the less well off as much as possible from the effects of this global recession. This debate gives the Government an opportunity to outline its policy platform to address the cost of energy for our people. Businesses and citizens need to be confident that we are dealing with this key challenge for the economy.

Energy costs are a key ingredient of our competitiveness. Since last September, I have spent quite some time meeting with business interests in my constituency — from the multinationals in Leixlip to small and medium enterprises in the wider area. A common theme of concern to the business community is the high cost of energy here compared to other European countries. Our energy costs are estimated to be 8% higher than the EU average. However, we must never underestimate the country’s many positive attributes, such as a flexible educated workforce, a pro-enterprise approach and a low corporation tax policy. We must now focus on energy costs and this debate gives us a chance to take stock of the progress we are making in this respect. In this context, I welcome some recent initiatives which will assist in driving down energy costs. Last week, the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, announced that the EU has decided to award €100 million to our electricity interconnector project. This will enhance the country’s competitiveness and give confidence to our business community that the Government is committed to reducing energy costs.

The east-west interconnector is a vital piece of infrastructure for our country and will bring many benefits. It will improve energy security, promote greater competition in the electricity sector of the all-island single energy market and offer opportunities for the export of wind-generated electricity, thus providing a further boost to our growing renewable energy sector.

The second initiative is the introduction of new suppliers to the energy market. Endesa, a large, international and experienced energy supplier, has decided to enter the Irish market. It will invest more than €800 million in the economy and will provide competition in the energy market. Endesa’s new Irish operation will have a 14% market share when fully operational [528] and will be in a position to expand, given that it has purchased generation-ready sites at Lanesboro and Shannonbridge.

The introduction of competition is the key to reducing energy costs. It is important to have a policy mix that generates an energy market which has the ability to attract competition into the energy sector and also sustain those who enter the market. The introduction of major new international competitors will give confidence to businesses that we now have a market structure where different energy companies will compete for business. This is a significant development and will bring prices down.

Reliance on imported fossil fuels is another barrier to a competitive energy supply source. The percentage of imported fossil fuels, particularly gas, on which we rely for electricity generation is much higher than in other countries. This reliance left us exposed when oil prices rose significantly last year. A recent report from the energy regulator indicated that if 40% of our power was generated from renewables, it would have a further significant dampening effect on prices. The Government has demonstrated its commitment to this policy with significant investment in the renewable sector.

At a time when public confidence in regulators is shaken, the energy regulator can use its good offices to ensure that there is transparency in the energy prices offered to consumers and businesses. Oil prices have been reduced significantly in recent months and while gas has not been reduced as much, a clear and quick response from the regulator to falling energy prices will help to restore confidence in regulation generally. In this context, I welcome the Minister’s initiative to have the regulator, in conjunction with the energy companies, examine ways to fast track some of these downward trends for the benefit of businesses and consumers.

Encouraging a competitive, least-cost energy supply is a key policy objective for the Government. Rising energy costs are a major concern for all sectors of the economy and for consumers not only here, but in the EU generally. The Government has the necessary policies to bring about more competitive and secure energy supplies.

I commend the Government amendment to the House.

  Deputy Charlie O’Connor: I welcome the opportunity to make a brief contribution to this important debate. It is good to see a Minister of State present with an appropriate surname for this particular debate — the Minister of State, Deputy Seán Power. I commend Deputy Coveney for tabling the motion. It is interesting, however, that the Opposition is not quite united on all the issues concerned.

  Deputy Denis Naughten: The Government is not quite united.

  Deputy Simon Coveney: The Opposition is united, as the Deputy would know if he had listened to my contribution last night.

  Deputy Charlie O’Connor: Are you going to protect me, a Leas-Cheann Comhairle, or will I protect myself?

  An Leas-Cheann Comhairle: I think the Deputy is quite able to protect himself, but I will do my best.

  Deputy Denis Naughten: Deputy O’Connor does not need much help.

  Deputy Charlie O’Connor: I welcome the opportunity to be involved in this debate, because it gets me out of my office. I have been in the office all day and have been taking many calls on this issue.

[529]   Deputy Denis Naughten: The Deputy has been using too much energy.

  An Leas-Cheann Comhairle: Allow the Deputy to continue without interruption.

  Deputy Charlie O’Connor: I often say that I bring my life experiences to my politics. I have plenty of gloomy days in my life. I lost my job three different times. The Opposition will say that will happen again.

  Deputy Denis Naughten: Pretty soon.

  Deputy Charlie O’Connor: It has happened to me and I know what it is like. I will keep working as long as I am here, and it is important I do that.

When one turns on the television, there is more gloomy news. As a distraction, I turned on Sky News, to ensure the rest of the world is falling apart also, and there was more gloom.

  Deputy Simon Coveney: Reducing energy prices would relieve that.

  Deputy Charlie O’Connor: Deputy Beverley Flynn made a very interesting point and I hope people will pick up what she said. In her excellent contribution, she made the point that a gloom and doom response is fair enough, but people looking at us hope that our leaders and every politician will, at least, show some confidence and a way forward.

I do not agree with everything that has been said and done. I believe strongly that it is important we inspire confidence in the public. The public has responded in a very bleak manner today. I took calls today from all over my constituency. I was talking to people in South Dublin County Council, where I have a long record and am well regarded. They were not a bit happy. That is the kind of political day we have had. It is important to drive through the issues and continue to represent in a confident manner the way forward.

My town of Tallaght has been affected just as much as other areas. I am on the Government benches and hold up my hands in that regard. There were some 6,516 people on the live register in Tallaght in December and I am sure, with all the bad news we got today, the situation is still as bad. It is important to put this into context, particularly with regard to the issue of energy prices.

Last week, I heard Deputy Finian McGrath make the point that public servants and the public service were getting much criticism and were easy targets. To some extent, they fought back today and have been facilitated by the media in that regard. They have a point of view to express. My jury is a little out on this.

  Deputy Simon Coveney: The Deputy should speak on the motion.

  Deputy Charlie O’Connor: I am speaking about the motion. By the way, I am not as experienced as some of the Opposition. I base the way I contribute on what I hear over on that side from people talking about everything.

  An Leas-Cheann Comhairle: Both Deputies should address their remarks through the Chair.

  Deputy Charlie O’Connor: I suspect that if I was out of order, the Chair would have picked up on that by now.

  An Leas-Cheann Comhairle: I am sure I would.

[530]   Deputy Charlie O’Connor: My jury is out on the issue with regard to ESB employees. ESB employees have been on to me to make their case. I do not know whether they rang Fine Gael spokespersons, but they make a strong case for themselves. It is important we hear their case.

As vice-chairman of the Joint Oireachtas Committee on Social and Family Affairs, which is chaired by Deputy Jackie Healy-Rae, I have chaired a number of sittings at which groups presented strong cases I would support with regard to social inclusion. I always say that when all boats are struggling, we must remember the little boats. People in disadvantaged communities, people who are unemployed, the vulnerable and the aged would say they have even greater difficulties with regard to energy costs than others.

The Minister made the point about co-operation with the authorities in Northern Ireland. As a member of the British-Irish Assembly, I support that. It is important we work with partners right across the island. I hope we do that. I look forward to engaging my friends from Fine Gael on another occasion and thank the Chair for its courtesy.

  Deputy Dara Calleary: I welcome the opportunity to speak about the Government’s energy policies and welcome the Minister’s intentions, stated last night, with regard to a reduction in electricity prices.

The Joint Oireachtas Committee on Enterprise, Trade and Employment has spent the past two days having hearings into the retail market. One of the key issues arising as a differential in cost is the price of energy. One of the retail operators with the committee today, which operates in the South and in England, pointed to a 50% difference between its energy bills here and in England. All the retailers with operations on both sides of the Border pointed to a smaller, but still significant difference in energy prices. Therefore, the announcement made by the Minister last night is welcome.

The key issue Ireland faces as an island is energy supply. We are an island at the edge of Europe, but we are an island at the end of a gas pipe that comes from a country that is, at the best of times, unstable, and, as we have seen in the past number of weeks, a country not afraid to use its supply as a political weapon. For that reason, we must address our supply issues.

Deputy Áine Brady spoke earlier about the efforts being made by the Minister, Deputy Eamon Ryan, in the area of renewables. There is much work to be done in that regard, but much as been achieved, not just by Government, but by many interest groups outside the House. I compliment Deputy Coveney who has been to the fore in educating many of us in the House on the issue.

However, there is still not enough happening. We still have very restrictive planning laws with regard to renewable energy and infrastructure. It may be that the Government will have to take action to overcome local planning difficulties in this regard.

The biggest issue for us is supply. In this regard, both I and Deputy O’Mahony are very familiar with the issues relating to the Corrib gas field. I have never made any secret of my support for this project. This island needs that supply now more than ever. I commend the Minister, Deputy Eamon Ryan, and the Minister for Community, Rural and Gaeltacht Affairs, Deputy Éamon Ó Cuív, on the work they are doing with the north-west forum in trying to bring as many people on board with the project as they can. The loss to Ireland as an island as a result of delays in bringing the gas ashore is increasing daily.

We have got lucky in that oil prices have collapsed again, but they are beginning to rise. Everybody who knows anything about energy or oil, suggests oil is more likely to end up at the price it was last summer than the current price. For that reason, we need certainty over our alternative gas supply here. I appeal to all sides on this issue to use the forum, its non-[531] political nature and the experience of Joe Brosnan as its chairman, to address their concerns and the issues. Everybody is agreed about bringing the gas ashore, but the difficulty concerns how it is brought ashore. We need to get it ashore as quickly as possible.

One of the benefits of having gas on the west coast is the Gas West project. This has opened an alternative energy supply to businesses and domestic customers in the area. Many parts of the country have had a gas and electricity supply alongside each other for many years. It was only in the past few days that my home town was connected to gas. This happened because of the potential to get Corrib gas on shore. It does not make sense that the west takes gas that comes from a pipeline that begins in Russia, when we have enormous supplies of gas a couple of miles off our coast.

Supply is related to prices. Difficulties with regard to supply drive prices. The difficulties with oil prices have been driving the cost of electricity and gas. However, we have in our power and within our grasp as a country the ability to manage the problem and ease the pressure. We should grasp the ball with both hands an run with it. I appeal to all sides to use the north-west forum to address the issues. We must get the gas ashore and open up whatever else is out there. There is a significant reserve of energy, be it oil or gas, off the west coast. We must get it ashore and use it for the benefit of the people.

  Deputy Denis Naughten: I wish to share time with Deputies O’Mahony, D’Arcy, Perry, Clune and Burke.

  An Leas-Cheann Comhairle: Is that agreed? Agreed.

  Deputy Denis Naughten: I welcome the opportunity to speak on this debate. Irish households and businesses are being burdened with the highest energy prices in Europe. This is having a dramatic impact on the financial management and day-to-day lives of households and families throughout the country and on businesses and small businesses, particularly small businesses struggling to cope and manage the massive energy bills they receive.

My colleague, Deputy Enright, has spoken on numerous occasions on the issue of fuel poverty. Many families fear the arrival of an ESB bill, wondering how they will manage to pay it and ensure the electricity is not turned off. Not only is this a fear for families but small businesses trying to keep their heads above water are also concerned.

It is extremely frustrating that energy prices, and electricity prices in particular, are artificially high in this country. They were set artificially high by the regulator to encourage competition. This has been the situation for the past six or seven years. It has not brought competition into the marketplace and people are struggling with it. This country has a big problem in that the ESB has been far too efficient in producing electricity. As a result of this, the ESB is investing in Europe and further afield but is debarred from investing in this country. This artificially high price needs to be addressed especially with regard to the impact it is having on the economy and competitiveness.

The red tape and bureaucracy involved in regulating the energy sector in this country, as is the case in many other sectors, is unnecessary and is putting pressure on families, individuals and small businesses. Sadly, when I raised this specific issue with the Taoiseach in the House yesterday, he stated that in a number of years time we hope to be able to cut out some of the red tape and bureaucracy. Families and small businesses do not have years. Jobs are haemorrhaging on a day to day basis. We have seen 36,500 jobs lost this year alone.

In his contribution, Deputy Coveney spoke about the windfall tax which is unnecessary at this point in time. It generates an extra €300 million per year through charges to electricity customers which could provide an automatic 10% reduction in the cost of electricity if it were [532] handed back to the customer tomorrow morning. Why is this not being done? The energy companies received this windfall through no mechanism of their own. It was introduced by the Government to deal with the issue of carbon allowances. It should be handed back, particularly in the current economic climate.

While the regulator is quick to increase prices and slow to reduce them, another issue on which the office might begin to focus is estimated bills. The ESB states it is its objective to read the meter for every second bill. However, this does not happen. In my case, the meter was not read for 14 months. However, when the bill was issued I was charged at the higher rate rather that the rate at which much of the electricity was accumulated. Tenants in rented accommodation face a problem where they transfer between meter readings and end up being charged for electricity used by a previous tenant. This is a major problem and the regulator must set standards on estimated bills and ensure that public information is made available to people so they are not being overcharged for electricity they never used.

  Deputy John O’Mahony: I am glad to contribute to the debate on this motion and I commend Deputy Coveney on bringing it before the House and for continuing to highlight the burden of some of the highest energy prices in Europe being carried by the households and business sector of this country. I also congratulate Deputy Coveney for pressurising the Minister, Deputy Ryan, to come out, even at this late stage, to indicate a double digit reduction in electricity prices this year. The question which everybody is asking is why it has taken so long to recognise this. It should have happened months ago.

I will consider the problem of high energy prices in Ireland through the eyes of the taxpayer. Over recent days, we listened to the debate on the economic trouble in which the country is and the global recession and we heard that global conditions caused the problems we have here. People wonder why there is a disconnect between the Government or the people running the country and the ordinary people. We need look no further than our energy prices to see the slowness to react to changes on the world market. As the price of oil and gas rocketed last summer, the energy regulator sanctioned increases of 20% in gas prices and 17.5% in electricity prices with the add-on that there would be similar increases in January.

  Deputy Seán Power: No. That is not correct.

  Deputy John O’Mahony: Everybody knows what happened subsequently. Oil and gas prices dropped dramatically from almost $150 per barrel to between $35 and $40 which it is at present. It was reasonable to assume that hard-pressed consumers, businesses and households would get some respite at a time when a bit of good news is badly needed. It was a chance to restore some sense of competitiveness into industries and businesses which were on their knees because of the Government’s handling of the economy for the past 11 years.

  Deputy Seán Power: Give us the facts. Do not make it up.

  Deputy John O’Mahony: Incredibly, we were told the ESB——

  An Leas-Cheann Comhairle: Allow the Deputy to make his contribution.

  Deputy John O’Mahony: I stated I was——

  Deputy Simon Coveney: Like what the Minister of State said about smart meters last night.

  Deputy John O’Mahony: This is what is being said on the streets.

[533]   Deputy Seán Power: It is not.

  Deputy John O’Mahony: Incredibly, we were told that the ESB and Bord Gais had booked most of their fuel requirements at peak price for the coming six months and therefore were not in a position to pass on the reductions quickly. Why did this rule not apply when prices for the consumer rocketed within weeks of increases in world prices earlier in the summer? Last summer, people paid €1.40 per litre for petrol when the price of a barrel was €150. Today’s price is approximately €40 which means we should be paying €0.47 per litre if it were related to global prices as our economic problems have been related to global difficulties.

I listened to the Ministers for Finance and Enterprise, Trade and Employment earlier today and I have listened to Government Deputies up and down the country blaming our present economic woes and difficulties on the global economy. How can they ask the people of Ireland to believe this when they do not ensure the benefits of reductions in global oil prices are not passed on to the man and woman in the street and to the business community? This is an opportunity to give some good news and help restore competitiveness which is an essential requirement if we are to get the economy moving.

I have information on other figures but I do not have time to discuss them. With regard to energy prices, particularly the price of petrol and diesel at the pumps, last weekend in Mayo there was a variation of up to €0.13 per litre in the prices of petrol and diesel. I do not blame the petrol pump owners for the huge anomalies. Many small businesses and corner shops tell me they must pay more to their suppliers than it can be bought for at the Tescos of this country. Whatever needs to be done to get an even playing field needs to be done.

Deputy Calleary mentioned the corrib gas forum. I agree with him on this point. More than 1,000 people are employed in the Corrib Gas field at present. I could not imagine the wasteland this area would be if these jobs were not there. Many mistakes have been made and people’s views have been trampled on over the past number of years. This forum is an opportunity and I hope all opinions will be taken into account and that we find a way to bring the gas ashore for the benefit of the people of Ireland and the people of Erris and Mayo.

  Deputy Michael D’Arcy: I speak tonight as a householder and a business user. As a commercial dairy farmer, I have seen the cost of energy rise by more than 100%. This is causing significant difficulties for businesses. Good business this year is not to make profit but to continue trading. I appreciate that energy generation in this country is expensive due to the fact that 90% is sourced from fossil fuels. The majority of this is in the form of gas. We have no nuclear generation and the renewable sector is still in its infancy. Competition in this area has failed. The ESB and Bord Gáis Éireann are totally dominant in almost every sector, including the domestic and business sectors.

The Minister of State was not in office when a company called Va[yuml ]u Limited, on the deregulation of the market, began to compete with Bord Gáis Éireann and took over a significant chunk of the market. I saw that if one gives a lean, hungry company the opportunity on the deregulation of the market, others will come in and compete. If they do so, they will make energy available at a cheaper cost.

We have seen the difficulties that arose when trying to bring fuel ashore from the Corrib gas field. Two Deputies from Mayo have just spoken about them. The planning process and the necessary legal framework are so onerous that it takes years to get through them. The building of massive infrastructural projects is the easy part, which certainly should not be the case.

Every proposed wind farm meets with considerable objections from locals who want clean energy but who do not want it to be produced in their area. It can take up to ten years before [534] construction starts on a wind farm. How can we be encouraging these developments but not changing legislation to facilitate good, carbon neutral projects?

The imposition of carbon taxes on consumers in these difficult financial times is criminal. In the four-year period ending in 2012, the amount expected to be charged is approximately €1.6 billion. These charges suggest consumers are paying too much.

With the 7% tax on public sector pensions introduced yesterday, the reduction of up to 10% in public sector pay and the 1% tax on earnings, nobody could possibly justify the charges imposed by companies such as Bord Gáis Éireann and the ESB. They are outrageous at this time.

The old way of doing business in the State used to be to add a margin to the cost of providing a service but this is certainly not the case in respect of energy costs in Ireland. The regulator has not covered himself in glory. I stated at a recent meeting of the Joint Committee on Communications, Energy and Natural Resources that, all too often, the ESB and Bord Gáis Éireann seek an increase of a certain percentage. While they may not be allowed to charge the full percentage, they charge most of it. The perception is that the ESB and Bord Gáis Éireann are setting the prices rather than the regulator.

Fossil fuel prices have dropped significantly in the past seven months. Prices increase at a multiple of the speed at which they decrease. The country should be connected to the international grid as soon as possible. We must facilitate private enterprises’ drive to construct interconnectors. One interconnector is due to be linked to my county, County Wexford, which will be welcome. These interconnectors will allow for the correct development of the national grid. Without them, we will not be able to capitalise on providing energy to the areas in which it will be needed most whenever the upturn in our economy arrives, as it will at some stage.

If the next Celtic tiger era is to benefit, the next period of construction in the State will not involve the construction of houses or factories but the construction of infrastructure. I hope this will be sooner rather than later.

  Deputy John Perry: I congratulate the Fine Gael energy spokesperson, Deputy Coveney, on tabling this important motion. It focuses on the cost of energy to the consumer, especially the cost of electricity. The motion acknowledges that Irish households and businesses are burdened with some of the highest gas and electricity prices in the European Union and that our national economic competitiveness is suffering as a result of high electricity costs.

These complaints are not new. Any historical review will show that complaints about the high cost of electricity are a long-standing problem dating back decades. The last few reports from the National Competitiveness Council, particularly the 2008 report, comprise a damning account of the Government’s failure to address spiralling business costs and the decline in economic competitiveness. This shows that the Government has made little progress in addressing the crisis arising from rising electricity costs and that Irish industrial electricity costs are the second highest in the Union.

The past decade has seen the introduction of major changes in the electricity sector, including a serial restructuring of the ESB and the establishment of the Commission for Energy Regulation. These changes were intended to bring more transparency to electricity pricing, more competition in electricity generation and lower electricity costs for consumers. Regrettably, none of these seems to have occurred in practice.

The first major impact of the opening up of the market was that electricity prices increased, resulting in the creation of a profit margin for new generation companies. That particular round [535] of price increases cannot be blamed on ESB management as it was the direct responsibility of the Government.

The hope that full transparency regarding electricity pricing would follow the establishment of the Commission for Energy Regulation was dashed some years ago during the fiasco in which the regulator granted the ESB a major price increase only to be followed a few months later by a reduction in that increase. There are credible anecdotal accounts that this price reduction followed, in large part, the discovery of a significant error in the data underlying the case for the price increase. This does not inspire confidence in the cost control activities of the ESB’s executive management and the regulator.

A key characteristic of the electricity sector is the perception that electricity costs are largely outside Government and executive management control. The costs of the primary energy inputs of fuel oil, coal and natural gas are determined by world markets. Electricity generation and supply comprise a capital-intensive business and there is little flexibility in the scale of the annual financial charges passed on to the electricity customer.

These two factors lead to the perception that labour, operation and maintenance costs comprise a small proportion of total electricity costs and do not matter very much overall. This is more or less what the secretary general of the Irish Congress of Trade Unions said on the RTE news within the past week. In actual fact, domestic factors that are under the direct control of ESB executive management account for a significant proportion of the cost of electricity, and the bulk of these costs are labour costs. In absolute terms, ESB payroll costs amounted to more than €500 million last year. The scale of labour costs constitutes a powerful reason to ensure cost factors within our control are minimised and the sector operates as cost efficiently as possible. This is not the case at present.

Making the electricity sector cost effective for the Irish consumer can be characterised as a long-running power struggle between the Government, ESB management and ESB trade unions. The minimisation of the costs within their direct control is the fundamental challenge for the ESB’s executive management. The way the price of electricity has undergone a sustained escalation over the years would seem to show that the Government and, therefore, the Irish electricity consumer have been on the losing side of that power struggle.

A consultant study from 2004 showed that domestic controllable costs are estimated to account for 30% of the difference between Irish and average EU electricity prices. As an absolute minimum, the regulator must focus on lowering this differential in controllable costs to bring us into line with our competitors. The problem really concerns controllable costs but the Government has abandoned its responsibility in this area.

We now need a fundamental review of the regulatory system, including by way of asking ourselves whether the break-up of the ESB and the introduction of the regulator, in its present form, were actually mistakes. The small and relatively self-contained electricity system in Ireland does not really lend itself to the dogma of competition as applied in large electricity markets. Our circumstances are unique and we should recognise this in how we approach Government control of the sector. High costs comprise one of the key causes of our job losses.

  Deputy Deirdre Clune: I am delighted to speak to this motion, which is very important at a time when many are experiencing difficulty operating businesses. Consumers are finding it extremely difficult to make ends meet. I am especially conscious of the high rate of unemployment, which is continuing to rise.

This is an important motion. I am pleased the Minister, albeit belatedly, has instructed the regulator to examine energy prices to see what can be done to reduce prices. Deputy Coveney has been calling for changes in this area for a long time. The motion we have before the House [536] is broad but it makes specific points in different areas about how practical and realistic measures can be taken to reduce the cost of energy. Energy costs are an important factor for the economy because our competitiveness has dropped from fourth place to 20th place in the global competitiveness league. The cost of energy is a major element of the cost of doing business in this country.

8 o’clock

I attended a meeting of the Joint Committee on Enterprise, Trade and Employment which was examining the cost of retail goods to consumers in this jurisdiction. Many media reports focused on the issue recently. It was interesting to hear a representative from Aldi indicate that the energy cost of operating a facility in Ireland is 100% higher than a similar facility in the UK. That flies in the face of a report produced by Forfás in December 2008, which estimated the cost of doing business in this country as approximately 20% dearer. However, the man from Aldi can stand over his figures. That is an alarming statistic which underlines the difficulty so many people have doing business in this country where energy costs are one of the major factors.

The cost of energy to consumers is a major factor also. Many speakers expressed their bewilderment at the increase in energy prices in August 2008, which was justified at the time by the fact that the price of oil was high, yet when the price of oil dropped to approximately $40 a barrel it was not reflected in a decrease in energy prices. That drives people insane. They cannot understand it and are most frustrated by it.

A widow contacted me last week whose husband died relatively recently. She set about putting her own name on the ESB bill, which had been in her husband’s name. Although she was in the same house and it was the same service she was asked for a payment of €300. We appealed the imposition of that charge and the appeal was granted on compassionate grounds. However, that fee of €300 is still in place. One only has to consider the amount of rented accommodation that changes hands around the country. That fee is outrageous and it does not make any sense. There is no cost involved other than the time it takes to change the name on the billing address.

The same can be said about the increase in wages to ESB workers. In this day and age when people are losing their jobs it is hard to justify an increase in wages in the ESB. In the past 24 hours we have seen a levy on pension payments imposed on public sector employees. I accept the payment in ESB was agreed but there was no justification for it. People cannot understand it. I heard Padraig McManus justify it on the basis that labour is a small factor in overall costs. Those figures have been disputed by Deputy Perry who spoke previously in the debate. The cost may be small but it is significant and it sends out a completely wrong message.

The Minister of State, Deputy Seán Power, is willing to give up his job. That would have been a small contribution but it would be an important message to send out, that we are serious about excesses and keeping costs down, especially costs to consumers and business. I hope the ESB will reverse that decision.

  Deputy Ulick Burke: I thank my colleagues for sharing time. I commend Deputy Coveney for bringing this timely motion before the House. Day after day, throughout the country we hear reports of job losses. One of the main reasons given for job losses is lack of competitiveness. Within the competitiveness area the criterion that ranks highest of all is the cost of energy.

That was brought home clearly to me last week when a company in Loughrea, which was established 20 years ago, announced it was closing down. Word came from the US that because [537] it was no longer competitive to continue in Loughrea the company would close on a staggered basis commencing in March and finishing in June.

An important point is that we have long heard we are losing our competitiveness as a manufacturing base but this case was different in that we are losing a service industry that involved high-quality jobs. It is sad to note that only today the Minister for Finance made a statement in the House dealing with the other motion before the House. He outlined that the maintenance of jobs is paramount and restoring competitiveness is central to that goal, yet for the past ten years this Fianna Fáil-led Government has paid lip-service to the production of energy in this country, especially renewable energy.

A major wind farm, which was of great importance to the west of Ireland in particular, was delayed for four years because two Government agencies stifled the planning process. In addition, the banks that were going to finance the project for private developers pulled out. That is what is happening now, the banks are not providing the resources and backup for private developers to develop alternative sources of energy. Government has sat idly by for so long without doing anything to address the issue.

Gama erected a gas power station at the old disused mine at Tynagh in Loughrea two years ago. It is a state-of-the-art electricity producing station. An unusual situation developed in terms of cost effectiveness that was overseen by the Commission for Energy Regulation. The producers of electricity got a contract whereby they were paid for the total potential capacity output of that station when the output was never more than 50% or 60%. In terms of competitiveness, how is it that the regulator has not sorted out that issue? Why has there been such a rip-off in that particular instance?

There is a need for a review but when that takes place surely the person charged with the responsibility must have adequate teeth and power to provide proper regulation. If we are to maintain jobs it is important that somebody must intervene. If energy prices increased so rapidly six months ago, why has there not been a corresponding reduction in them recently given the monthly decrease in the price of oil and other carbon fuels? It is important that the Government would take action at this stage because of the totally inadequate efforts or powers of the Commission for Energy Regulation. It has failed. It is a flop and it is time it was changed.

  Deputy Trevor Sargent: De bharr gur labhair an tAire Ó Riain agus an tAire Stáit, Seán de Paor aréir, ní féidir leo an freagra a thabhairt don díospóireacht anocht agus is onóir mhóir domsa mar sin freagairt ar son an Aire agus an Aire Stáit.

I again thank Fine Gael for tabling the motion. We have had a useful and productive debate and I hope it has led to a better understanding of the mechanisms that determine how electricity prices are set and the various factors driving them. I am also gratified that the motion has seen Fine Gael come around to the Government’s way of thinking on the transfer of transmission system assets to the ESB——

  Deputy Simon Coveney: To EirGrid.

  Deputy Trevor Sargent: ——to EirGrid, and I hope there are further potential fields of agreement between the Government and the Opposition in the energy sphere.

I would like to address a number of the claims made by Opposition Members in their contributions. Specifically, I would like to respond to the accusation that our electricity prices are maintained at an artificially high level. I assure the House that nothing could be further from the truth. Our electricity tariffs are set at a level that is fully reflective of the costs borne by generators in producing the electricity. While it may be true that the State energy companies [538] could produce electricity for lower than the current public electricity supply tariff price, at least for a while, they could only engage in this practice by cross-subsidising their electricity generation from other areas of the company. If we allowed them to engage in this behaviour, it could cause incalculable damage to our electricity market. Vital infrastructural development in distribution and transmission networks could suffer and it would impact upon the ability of these companies to deliver on the commitments contained in their corporate strategies. As stressed yesterday, any such move would also lead to a loss of investor confidence in the transparency of the regulation of the market and even potentially drive independent power producers out the market. I hope the Opposition can agree this would be a retrograde step.

Instead, we can lower the cost of electricity to consumers in a non-distortionary fashion, through an expedited review of tariffs. The Minister for Communications, Energy and Natural Resources is tasking the energy regulator to undertake an immediate review of options to bring forward a reduction in electricity prices to achieve this. This review will be conducted within the existing regulatory framework and if current trends in energy prices, particularly gas continue, I expect a double digit cut in electricity and gas prices to become a reality later this year.

With regard to the concerns that a number of Deputies expressed on oil prices at the pump, I reiterate that the Government does not control prices at the petrol pump. The National Consumer Agency recently undertook an investigation into diesel and petrol price movements in Ireland. This report concluded that there is little evidence to suggest unwarranted delays in the passing on of wholesale price changes to the consumer at the pump. The Department of Communications, Energy and Natural Resources is however, reviewing the methodology for collecting oil price statistics in Ireland with a view to ensuring this information is fully reflective of current market conditions, taking into account significant changes in the structure of the oil market in recent years. The only viable solution to the energy challenges we face is to make our energy supplies more sustainable in the longer term. This will reduce our dependence on imported fossil fuels, which account for a large percentage of the price we pay for electricity and which will, in turn, drive competitiveness in the electricity sector.

The importance of renewables in this equation cannot be understated. The Minister outlined to the House last night the analysis recently published by the CER, which delivers the heartening promise that the achievement of Ireland’s renewable targets by 2020 will reduce our energy costs by 15%, compared to what they would have been without our development of renewable energy. The ESRI is researching the economic costs and benefits of renewables, which will provide further documentary evidence of the benefits of renewables. The upgrades required for our electricity networks are linked to this renewable development. These investments cannot be postponed and, as my colleague, the Minister of State at the Department of Communications, Energy and Natural Resources, Deputy Seán Power, put it so eloquently, we cannot put off until tomorrow the bills that we should pay today. The billions of euro due to be invested in modernising and upgrading these networks will serve as a potent fiscal stimulus for the economy.

Throughout this process, we will not forget the needs of the most vulnerable on our society. We have announced expanded services such as the warmer homes scheme and the home insulation grant programme. These services, coupled with the increases in social welfare fuel allowance payments, will ensure the less well off are protected from high energy costs. The Government has implemented measures that will deliver lower electricity costs to consumers in a transparent and credible manner, which will maintain confidence in our electricity sector and regulatory regime.

  Deputy James Reilly: I wish to share time with Deputies Ring and Coveney.

[539] The Minister of State said the transmission system assets would be transferred to the ESB but I hope he means EirGrid.

  Deputy Trevor Sargent: The Deputy is correct.

  Deputy James Reilly: He also referred to meeting Ireland’s renewable targets by 2020 but that is a joke. People are hanging on by their fingernails in business and they cannot wait until 2020 for a 15% reduction in energy costs.

I commend Deputy Coveney’s timely motion on energy prices. Domestic households and businesses are burdened with some of the highest prices in the EU for electricity and gas. Energy costs are a key component of economic competitiveness and Ireland’s ability to develop and attract new business is hampered by high energy costs. Energy is a key factor in the horticulture industry in north County Dublin where our indigenous tomato growing industry has been decimated by high energy costs.

However, I compliment Country Crest Foods, a progressive food company based near Lusk in north County Dublin, which is installing wind turbines at its food processing facility. Ireland needs to encourage and foster such a progressive independent food company ethos into the future. This company is always looking forward for new markets and opportunities, while embracing up to date cost saving measures like wind energy. However, the company’s zeal is unmatched by this lethargic Government and its regulators who are not reacting quickly enough to the downward changes in oil prices.

The motion is important because it seeks to achieve immediate reductions for business and householders of 20% from the ESB but also because it is imperative that the Minister transfers the transmission assets to EirGrid from the ESB as soon as possible. This is critical to allow independent energy producers access to the grid. The current ridiculous position is akin to us owning through EirGrid the main sewer pipes while the ESB continues to own the ransom strip between the sewer pipe and the house, which is a farce. This is totally unsustainable and untenable.

We need to think like our European neighbours where the production of even small amounts of electricity are encouraged and meters installed in order that they can feed back into the grid. This would encourage people to invest in photovoltaic systems and small wind turbines in order that we could have a network throughout the country boosting our energy supplies.

  Deputy Trevor Sargent: We are doing that.

  Deputy Simon Coveney: Not quickly enough.

  Deputy James Reilly: It would also encourage small companies to become involved in green energy production, including tidal and wave energy. The possibility of Ireland being a net exporter of energy, as these technologies improve, cannot be ruled out. The Minister of State said the Government is encouraging this but it is not doing so quickly enough. People are being penalised and they cannot access the grid.

In Germany those who net feed into the grid get paid almost three times the amount they are charged in recognition of their carbon free energy source.

  Deputy Trevor Sargent: The Green Party has been in power longer there.

  Deputy Simon Coveney: The Government should get on with it.

  Deputy Trevor Sargent: The Opposition is talking about it but we are doing it.

[540]   Deputy James Reilly: The Minister of State is the Green Party representative for my constituency. How he can preside over a reduction in the number of buses and in public transport generally in the constituency when it is totally contrary to his party’s policy is beyond me. Meanwhile, we pay millions of euro to maintain bus lanes with no buses to run on them.

  Deputy Trevor Sargent: I hope the Deputy uses the bus. Why does he not become a customer of Dublin Bus?

  Deputy James Reilly: This position is all the more galling when the Germans are producing carbon free energy. This is a gross abuse of monopoly and it must stop.

When oil prices increase, energy companies are very efficient and responsive in putting prices up but it is a different story when prices are coming down. The consumer and business community are slow to receive the benefit of falling oil prices. This is unacceptable where price and value for money are the key to economic survival. Our businesses and communities must be provided with competitively priced energy. The price of oil has collapsed by more than 80% to approximately $40 a barrel, yet we are waiting for realistic adjustments. To add insult to injury, staff salaries in the ESB increased by 3.5% last week. This is not the real world. The days of State monopolies and local authorities automatically foisting additional charges onto the public and business must end. We are paying a premium of approximately 10% of every electricity bill because the regulator insists on the cost of carbon emissions being levied even though electricity companies do not need to pay for such costs. This is crazy stuff and is theory gone mad.

The opportunities provided for a green energy industry in a country like Ireland, surrounded as it is by wind and sea with long hours of sunlight, are enormous and hold forth the prospect in the future of our economy being independent of the vagaries of the global fossil fuel market. This very real possibility will not happen unless the Government wakes up to it and, instead of paying lip service to the concept, brings about real change to the current obsolete arrangements. These proposals are the first step in that regard. I commend the motion.

  Deputy Michael Ring: I compliment Deputy Coveney on tabling the motion. I was one of the few people who wrote to the regulator and asked him not to proceed with the second increase. I asked him to wait and have patience. I pointed out that it was not fair to the country. It was not fair to business or the poor. I sent him a second letter stating that I thought he did not do his job correctly. Then, when oil prices reduced, he was not permitted under the legislation to reverse the price increase. That is wrong and crazy. It shows how the country is and it is no wonder we are in the climate we are in at present.

The taxpayers helped to set up the ESB. Today, it puts two fingers up to the Government and the country. It is doing that every day to young couples and local authorities. Taxpayers’ money went into electricity poles. However, the ESB is asking for colossal amounts of money to get them removed from roads where they may be causing a safety hazard or from other areas where young couples are seeking to build homes. The Minister should talk to the ESB. There is a public obligation and a public service element. The ESB should remove these poles, particularly if they are causing a safety hazard, without charging €20,000 or €30,000. Local authorities as one State agency should not need to pay a semi-State agency for it.

I congratulate Deputy Coveney on the motion. I have much more to say on it. It is not right that oil prices have reduced and the ESB got a price increase which it cannot reverse. To me, the regulator should not be in place. In fact, we do not need regulators. It should be the Minister who has responsibility for increasing ESB charges instead of handing over this power to someone with no responsibility to the Dáil.

[541]   Deputy Simon Coveney: I thank my colleagues from all sides of the House who contributed to the debate. I thank the Labour Party and Sinn Féin in particular for agreeing to support the motion, despite tabling a specific amendment owing to a policy difference on the transfer of assets. However, they have given full support to the motion’s focus on energy prices and the need to change our regulatory system.

This debate has focused attention on the fact that businesses and households simply pay too much for energy. It has resulted in the Minister announcing an energy price review, which I welcome. Unfortunately, like so many announcements the Minister makes, we have not received a timescale so we do not know when it will happen. We do not want or need a review that goes on for months and results in a double-digit price reduction sometime at the end of the year. We will get that without any extraordinary price review. That will happen in the course of time anyway. We are asking for an immediate price review as an emergency response.

Part of the Government’s national recovery plan for the economy should be to try to improve competitiveness and try to give people hope that not everything that comes from this House is bad news for them. This should be a good news story this week. We should be announcing double-digit price reductions in electricity and certainly high single-digit price reductions in gas as a result of an urgent price review. Those benefits should be happening next month or the following month and not in six or eight months’ time.

That is what I mean when I talk about the need for this House to respond urgently to issues outside of budgetary issues, which the Government is attempting to resolve this week by inflicting pain across society. This is a good news story on which the Government could have come with us and supported us. It could have given a clear positive message to people that we will alleviate the pain of households by reducing the cost of electricity and improve the conditions for cost competitiveness for businesses, thereby alleviating their pain and the pressures they are experiencing to some small extent.

For months, business leaders and representatives have talked about the pressures they are experiencing that relate directly to the cost of energy. A Government spokesperson put his finger on it today when he spoke about a large business that is based in the UK and Ireland. It pays 50% more for electricity in Ireland than it pays in the UK. What kind of incentive is that to attract businesses into the country at a time when we need them more than ever?

Last night, the Minister correctly spoke about the three pillars of energy policy: competition, security and clean power generation. This party wholeheartedly supports what the Minister is trying to do in terms of trying to transform energy generation here to increase the use of sustainable renewable sources of power through wind and wave technologies. Many positives can come from that through generating new industries and new green jobs for highly skilled and some not so skilled people in constructing wind farms onshore and offshore, and in constructing and developing apparatus that can capture the power of waves and deliver that power onto the grid in a competitive pricing arrangement. We want to see that happen.

However, the Minister is wrong in claiming that competition in the energy market in Ireland is working. It is not working. We have paid for and continue to pay for the facilitation of competition in the Irish energy market to attract new entrants to compete in the market. However, we are not getting the price benefits of that competition. Competition is no good if it does not deliver benefits for domestic and business consumers. That is where we are at the moment. We are continuing to pay to facilitate competition and a weakening of the ESB in the Irish electricity market, but we are not getting price benefits for households or businesses. That is damaging Ireland at a time when we cannot afford to suffer that damage. That is why this motion is so important, particularly this week.

[542] I wish to make some suggestions to the Minister and the experts in his Department for the price review in which I hope his Department will be deeply involved rather than just leaving it to the regulator. The Minister should consider the six proposals we have made in a non-party political motion — Fianna Fáil and the Green Party are not even mentioned in it. These are proactive positive suggestions as to how we can re-regulate our energy market to reduce costs and prices.

One of the areas in which I did not address a problem last night is in the industrial electricity market. In that area, the focus needs to be on reducing the cost of transmission and distribution of energy in Ireland. This is the non-competitive energy sector in Ireland. Last night, the Minister, Deputy Ryan, expressed concern at possible distortions of market conditions. The competitive market will not be distorted by reducing transmission and distribution costs. There is plenty of scope for cost reduction in that area.

There is an underlying concern that the Minister believes that green thinking means that having high energy prices is somehow a good thing and that by keeping energy prices high, we will force people to reduce their usage and conserve energy in a more responsible way. It is possible to reduce prices and also do the other two things. They are not separate, mutually exclusive issues. Ireland cannot afford to have the luxury of keeping energy prices high in an effort to change consumer behaviour. We must change the way we regulate energy in Ireland to prioritise for the next two years the provision of cheap electricity to consumers, to households and to business in order to try to get this country back on its feet. At the same time, we must move the green energy market agenda forward and it is possible to do both at the same time.

  An Leas-Cheann Comhairle: As it is now 8.30 p.m. I must put the question on the amendment in the name of the Minister for Communications, Energy and Natural Resources.

Amendment put.

The Dáil divided: Tá, 80; Níl, 68.

    Ahern, Dermot.

    Ahern, Michael.

    Ahern, Noel.

    Andrews, Barry.

    Andrews, Chris.

    Ardagh, Seán.

    Aylward, Bobby.

    Behan, Joe.

    Blaney, Niall.

    Brady, Áine.

    Brady, Cyprian.

    Brady, Johnny.

    Browne, John.

    Byrne, Thomas.

    Calleary, Dara.

    Carey, Pat.

    Collins, Niall.

    Conlon, Margaret.

    Connick, Seán.

    Coughlan, Mary.

    Cregan, John.

    Cuffe, Ciarán.

    Cullen, Martin.

    Curran, John.

    Dempsey, Noel.

    Dooley, Timmy.

    Fahey, Frank.

    Finneran, Michael.

    Fitzpatrick, Michael.

    Fleming, Seán.

    Flynn, Beverley.

    Gallagher, Pat The Cope.

    Gogarty, Paul.

    Gormley, John.

    Grealish, Noel.

    Haughey, Seán.

    Healy-Rae, Jackie.

    Hoctor, Máire.

    Kelleher, Billy.

    Kelly, Peter.

    Kenneally, Brendan.

    Kennedy, Michael.

    Killeen, Tony.

    Kirk, Seamus.

    Kitt, Michael P.

    Kitt, Tom.

    Lenihan, Brian.

    Lenihan, Conor.

    Lowry, Michael.

    McDaid, James.

    McEllistrim, Thomas.

    McGrath, Finian.

    McGrath, Mattie.

    McGrath, Michael.

    McGuinness, John.

    Mansergh, Martin.

    Moynihan, Michael.

    Mulcahy, Michael.

    Nolan, M.J.

    Ó Cuív, Éamon.

    Ó Fearghaíl, Seán.

    O’Brien, Darragh.

    O’Connor, Charlie.

    O’Dea, Willie.

    O’Flynn, Noel.

    O’Hanlon, Rory.

    O’Keeffe, Edward.

    O’Rourke, Mary.

    O’Sullivan, Christy.

    Power, Peter.

    Power, Seán.

    Roche, Dick.

    Ryan, Eamon.

    Sargent, Trevor.

    Scanlon, Eamon.

    Smith, Brendan.

    Treacy, Noel.

    Wallace, Mary.

    White, Mary Alexandra.

    Woods, Michael.


    Allen, Bernard.

    Bannon, James.

    Barrett, Seán.

    Breen, Pat.

    Broughan, Thomas P.

    Bruton, Richard.

    Burke, Ulick.

    Burton, Joan.

    Byrne, Catherine.

    Carey, Joe.

    Clune, Deirdre.

    Connaughton, Paul.

    Coonan, Noel J.

    Coveney, Simon.

    Crawford, Seymour.

    Creed, Michael.

    Creighton, Lucinda.

    D’Arcy, Michael.

    Deasy, John.

    Deenihan, Jimmy.

    Durkan, Bernard J.

    English, Damien.

    Enright, Olwyn.

    Feighan, Frank.

    Ferris, Martin.

    Flanagan, Charles.

    Flanagan, Terence.

    Gilmore, Eamon.

    Hayes, Brian.

    Hayes, Tom.

    Higgins, Michael D.

    Howlin, Brendan.

    Kehoe, Paul.

    Kenny, Enda.

    Lynch, Ciarán.

    Lynch, Kathleen.

    McCormack, Pádraic.

    McEntee, Shane.

    McGinley, Dinny.

    McHugh, Joe.

    McManus, Liz.

    Mitchell, Olivia.

    Naughten, Denis.

    Ó Caoláin, Caoimhghín.

    Ó Snodaigh, Aengus.

    O’Donnell, Kieran.

    O’Dowd, Fergus.

    O’Keeffe, Jim.

    O’Mahony, John.

    O’Shea, Brian.

    O’Sullivan, Jan.

    Penrose, Willie.

    Perry, John.

    Quinn, Ruairí.

    Rabbitte, Pat.

    Reilly, James.

    Ring, Michael.

    Shatter, Alan.

    Sheahan, Tom.

    Sheehan, P.J.

    Sherlock, Seán.

    Shortall, Róisín.

    Stagg, Emmet.

    Timmins, Billy.

    Tuffy, Joanna.

    Upton, Mary.

    Varadkar, Leo.

    Wall, Jack.

Tellers: Tá, Deputies Pat Carey and John Cregan; Níl, Deputies Paul Kehoe and Emmet Stagg.

Amendment declared carried.

[543] Motion, as amended, put and declared carried.