The Government should consider selling portions of its State- owned energy firms and put in place new measures to boost competition in the domestic market.
It should also boost security of its energy supply by investing in liquefied natural gas storage facilities, according to the European energy commissioner, Andris Piebalgs.
"The Irish market is not too attractive for new investment coming in and I think that's where the Government should look," said Mr Piebalgs, who will arrive today on an official visit to the Republic.
"[ It should ask] should there be some divestiture of existing companies, should there be some additional conditions provided for newcomers in the Irish market to compete on the same level as the dominant companies?" he added.
Mr Piebalgs said the Government should look at how best to promote competition because that was what would bring down prices for consumers. However, he said there was nothing wrong with state-owned energy firms per se. He suggested that if no competitors were coming to the Irish market, it was perhaps more to do with market organisation.
The two biggest energy companies in the Republic are both state-owned, the ESB and Bord Gáis. However, the Government is undertaking a strategic review of the energy market that could lead to the sale of parts of both companies.
In an interview with The Irish Times, Mr Piebalgs said he had received informal complaints from competitors claiming they could not enter the Irish market easily due to the dominance of the ESB. One competitor had also complained it could not get access to the electricity grid. However, none of these contacts had developed into a formal complaint that had required the commission to take any sort of legal action.
Statistics published recently by the Commission show electricity prices in the Republic are the seventh most expensive for consumers among the 25 EU states. For industrial customers the Republic is ranked the sixth most expensive state in the EU.
Mr Piebalgs, who earlier this month presented a green paper on security and sustainability of energy supply, also stressed the need for EU states, including the Republic, to invest in gas storage to ensure security of gas supplies in the future.
Natural gas storage is definitely necessary and countries should be looking for it, particularly those with a high degree of dependency on gas imports, said Mr Piebalgs.
Later this week EU leaders will discuss the Commission's green paper on energy, which seeks to build a single energy market.
