There is enormous potential in the mid-west region in terms of renewable energy resources – BREEN

February 12th, 2009 - Pat Breen

Speaking during the Fine Gael Private Members Motion on the high energy costs, Deputy Breen said I commend Deputy Coveney on tabling this genuine, timely and positive motion.  Small businesses are sinking on a daily basis, while others are barely remaining afloat.  Many business interests are being crippled as a result of high costs.  The high price of energy is a major factor in this regard.  As Deputy Coveney stated, Ireland dropped from fourth to 22nd on the global competitiveness league table in recent years.  However, businesses are not the only ones affected by what is happening.  Ordinary people have also been affected.

  Last July, the price of oil reached an all-time high of $150 a barrel.  In the interim, it has decreased to somewhere in the region of $40 a barrel.  Unfortunately, this decrease has not been reflected in householders’ ESB or gas bills.  Motorists are complaining that the reduction in fuel prices has not been passed on at the pumps.  When the price of crude oil decreased in the autumn of last year, there was a gradual drop in the price of petrol and diesel.  However, the price soon rose again.  There was a high of €1.43 per litre of petrol in July of last year.  The price now is just under €1.  In light of widespread dissatisfaction with what has happened and claims that motorists are not receiving the benefit of reductions in the price of crude oil, the National Consumer Agency undertook an investigation into petrol and diesel prices which indicated that there is little evidence to suggest unwarranted delays in the passing on of wholesale price reductions to consumers.

  Tight profit margins in this country have already forced many petrol retailers in rural areas out of business.  A large number of petrol stations throughout the country have closed.  Many of these were small businesses which had shops on the forecourt at which bottled gas and other things were sold.  The majority of those who operated these concerns will inform one that there was very little margin to be gained in respect of selling diesel and that the could no longer remain in business.

  There is a concern that the bigger players entering the market will close further stations in rural areas.  The retention of competition in respect of prices is vital.  The national consumer survey found that Ireland compares quite favourably in the context of the density of petrol stations.  Ireland has one outlet per 2,020 people, whereas in Northern Ireland it is one per 3,100 .  In Britain, the figure is one station per 10,000 people.  Competition is the key towards ensuring that there is some level of variation in prices.

  Petrol and diesel prices in this country are high.  I trawled the Internet earlier this evening in order to try to discover the price of diesel in Poland.  Many manufacturing jobs are moving from this country to Poland at present.  Last month, some 1,900 jobs at the Dell plant in Limerick were lost to Lodz.  The price of diesel in Poland is 82 cent per litre.  This compares to a price of approximately €1 in Ireland. That speaks volumes about the price of diesel and petrol here and the fact that it is affecting many of our manufacturing businesses.

  There is enormous potential in the mid-west region in terms of renewable energy resources, particularly in the area of wave and wind energy.  If the wave and wind energy in the Shannon Estuary was captured it could make a major contribution to regional and national electricity demand.  We are fortunate that the University of Limerick is located in the area and we should examine the importance of the University of Limerick, which could become a centre of excellence in this area.  A programme of investment is already under way in Moneypoint, which I hope continues.

  I commend Deputy Coveney.  He pointed out what must be done to address these issues and I appeal to the Minister to take on board his proposals.

 

Deputy Simon Coveney: I move:

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;

— 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 of 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 €300m 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

— immediately introduce the promised legislation to transfer electricity transmission assets from ESB to EirGrid.