Electricity prices will fall by some 10 per cent and gas prices will be reduced by 12 per cent from the end of April, it was announced today.
Minster for Energy Eamon Ryan said the Commission for Energy Regulation (CER) had carried out a review of energy prices over the past month after he asked them to speed the process of reducing prices. He said the CER had now presented him with a range of options which allow the reduction of prices.
All electricity customers will see their bills reduced by an average of 10 per cent from the end of April, said the Minister. He said the 12 per cent reduction in gas prices will apply to domestic customers as well as to small and medium enterprises.
The changes will apply to ESB, Bord Gáis and all customers serviced by independent suppliers.
“It is a positive news story for the country at a time when money is tight. It will help our competitiveness, help jobs in this country, help householders who are on a tight budget,” he said.
He commended the work of the CER. On the ESB, he said that the utility company had already paid out €400 million from its profits to keep energy prices down even before this reduction was announced.
He dismissed the contention that the CER and the ESB were dragging their heels by not passing on the huge drop in oil and gas prices since last year. He also said that the current set-up was sufficiently flexible and was not over-regulated.
He pointed to the moves made by both the ESB and CER last year to ensure that prices remained low.
“Last year they sat down and agreed €400 million in reductions. They stood up to the plate when fossil fuel prices were high. It was not much recognised but it was real. That process continues to be flexible,” he said.
He said the CER had identified 10 per cent savings in network charge reductions. For Bord Gáis the profits have been higher because Ireland experienced a cold winter this year.
The chairman of the CER Michael Tutty also dismissed the suggestion that the commission was keeping prices artificially high.
Speaking on RTE today, he said that the CER sets prices at a level to allow the ESB cover its costs. In addition, newer operators in the electricity market Bord Gáis and Airtricity areallowed to sell below cost to allow them gain share in the domestic market where the ESB currently has 99 per cent dominance.
“We are going to sit on them [ESB] for the moment,” he said in relation to the regulation of the ESB’s prices. He would not be drawn on how long that situation would continue or the percentage of the market that would have to be gained by its competitors before the CER withdrew from price regulation.
Fine Gael spokesman on energy Simon Coveney said the charges were welcome but had come very late in the day, given that fuel prices have been at very low levels for the past few months.
“Customers are still paying too much. Last time we had an energy review was just before Christmas. They got it wrong. Energy prices in Ireland are still far too high," he said.
That view was shared by the Labour Party spokeswoman on energy Liz McManus, who also said the market was over-regulated.
“There’s no need for the over-regulation that we have that’s very slow and sluggish in responding to needs and prices. In the meantime householders pay too much. What we want is a ceiling price for the ESB rather than a fixed price. The system has to be reformed. I do not know if this Minister is up to the job,” she said.
Seán Murphy, director of policy at Chambers Ireland said the reductions would have "a significant impact on both residential and business costs" and would "contribute to enhancing spending power, underpinning consumer confidence, and improving Ireland’s international competitiveness.”
He called on the CER to act with "greater urgency" on pricing which would allow "even greater flexibility of response in terms of energy production and purchasing decisions”.
