Ryan Welcomes Improvement in Ireland’s International Competitiveness

Ryan Welcomes Improvement in Ireland’s International Competitiveness

“Eurostat data shows falling electricity and gas prices bringing Irish energy costs closer in line and, in some cases below, European averages”

Dublin, 24^th January 2010

Energy Minister Eamon Ryan T.D., today welcomed the significant improvement in competitiveness of Ireland’s international energy costs, highlighted in Sustainable Energy Ireland’s publication – Understanding Electricity & Gas Prices in Ireland.

Ireland experienced the third largest price drop in electricity prices to industry across the entire EU over the 12 month period ending on 30^th June 2009. At the same time, 22 of 27 EU countries experienced price increases. Gas prices also continued to fall with a result that gas prices are now 7% to 10% below the EU average in the two main consumption bands for business.

Commenting on the publication of the statistics Minister Eamon Ryan said; “The results published today by SEI are extremely welcome. These results clearly indicate that policy to encourage competition in electricity generation and supply is paying dividends for consumers. Ireland has close to the highest overall dependency on fossil fuels for electricity generation across the EU and we are particularly dependent upon imported gas. Following two decades of under-investment in our networks, Ireland faces the combined challenge of funding a very significant investment in energy infrastructure and the structural challenges imposed by geographic isolation, a small and widely dispersed population and the lack of power generation economies of scale. To achieve anything close to cost parity with our European neighbours is a great achievement. Clearly, the long term solution to our energy cost challenge must be to reduce our dependence upon imported fossil fuels by continuing to focus on the development of renewable electricity and to continue to foster competition. I will ensure that we do not lose sight of these goals.”

Electricity

Ireland experienced a 15% decrease in electricity prices to medium sized business customers in the six months to 30^th June 2009. In Europe as a whole, this category of consumer experienced a 2.2% increase and the Euro Area a 4.3% increase. While Irish prices still remain above the European average, the gap has closed considerably in all consumption bands. Of particular note is that for large electricity users (those in consumption band IE & IF), the statistics show that Irish electricity prices are actually below those available in the UK.

Irish domestic electricity prices in the main consumption band remain comparatively high. However, when adjusted for purchasing power parity to remove currency and other effects, domestic electricity prices were just 4% above the EU average in the first six months of 2009, and were actually below the EU average for higher volume consumers.

Gas

Gas prices to Irish business with medium consumption levels (band I3) have been falling since early 2008 and fell by a further 15.8% in the year to 30^th June 2009. The rate of decline for the EU as a whole was 8.7% and 8.1% in the Euro area. Business gas prices in Ireland for the first half of 2009 were below the average for Euro Area States in mid-range consumption levels (bands I2 to I4 – 15%, 12% and 3% below respectively). Only in the smallest consumption (band I1) was Ireland above the average in the Euro area.

Based on purchasing power parities, gas costs to domestic consumers ranged from 8% below to 28% below the average for the Euro Area countries by the end of June 2009. Since then gas prices to domestic consumers have further fallen by almost 18%.

Impact on Consumers

In addition to these cost savings already delivered, more than 370,000 domestic consumers have to date availed of considerably lower electricity bills by switching their electricity supplier. Typical savings range between 10-14% of energy costs.

The Government has also provided more than €90 million in funds under the Home Energy Saving scheme, which provides grant support for a range of energy efficiency measures. Already 43,500 householders have availed of this scheme since its launch in March 2009. For consumers in receipt of the fuel allowance, the Warmer Homes Scheme also provides energy efficiency retrofit measures at a nominal or zero cost to householders.

“These results clearly indicate that policy to encourage competition in electricity generation and supply is paying dividends for consumers. Regulation of energy tariffs will only continue until competition has taken firm hold in the market. The CER has recently published a paper for consultation on the final removal of price control from ESB Customer Supply and I believe that a clear roadmap that will lead us to full retail electricity deregulation will emerge from this process. This will put further downward pressure on prices,” concluded Minister Ryan.

Note for Editors

The SEI publication “Understanding Electricity & Gas Prices in Ireland” analyses statistical data published by Eurostat, collected under the EU Gas and Electricity Price Transparency Directive and compares electricity and gas costs to business and domestic consumers across the entire EU. The current SEI report analyses data up to the end of June 2009. A copy of the full report is available at: www.sei.ie

Regulated Electricity Price Changes 2009 (ESB)

Regulated Gas Price Changes 2009 (BGE)