The Irish Exporters Association today (Monday 16^th Feb ) stated that the industrial electricity and gas prices were now seen as a major cost base competive issue for Irish exporters of manufactured goods. Irish firms targeting export markets are facing intense pressure from currency fluctuations, as well as having to contend with energy prices 18.7% above the EU average, (the second highest in the EU). Inability to take action on the currency front to lower the competitive pressure forces a higher focus by exporters on reducing the home cost base. Energy prices are now seen as a key target for reduction. This issue has been flagged as far back as November 2007 in the Forfas Electricity Benchmark report, then again in March 2008 when the High level Review Group on Manufacturing identified electricity and gas prices as a key concern of industry.

However, since then the Energy Regulator has sanctioned a 17.5% increase in the benchmark price for electricity and has steadfastly stated he will only look at the pricing structure again on the 30^th Sept 2009. The IEA believe this will be too late with many exporters unable to meet their immediate current costs of production, and in urgent need of cost reductions to stay in business. The IEA have been calling on the Minister Eamon Ryan, responsible for the energy sector, to intervene and direct the regulator to act within the month.

John Whelan, CEO of the Irish Exporters Association (IEA), stated on releasing the Association's commentary:

"Irish Electricity prices were the lowest in the EU 15 prior to the establishment of the Regulator. Since the establishment of the CER, prices have rapidly risen to the second highest in the EU, with devasting consequences for the competitiveness of Irish manufacturing exporters.

Clearly there is a need for the Government to review the terms of reference of the Regulator, or perhaps more appropriately, dispense with the Regulator's office entirely."

John Whelan went on to say:

"We have now 7 suppliers of industrial electricity in the Irish market. Under normal circumstances this will ensure a competitive market. The Regulator, by fixing the Benchmark rate for the ESB as a supplier, is in fact taking the normal competitive forces out of the market, as all the suppliers link up to this rate with slight adjusts for volume below the benchmark."

He went on to outline the track record of the Energy Regulator as follows:

• Irish Industrial electricity prices (excluding VAT) increased by almost 70% in the period 2001 to 2007. This was twice the increase in the EU 15 countries (average increase 36.4%)
• In August 2008, the regulator gave the electricity suppliers (7 new suppliers in total)a further17.5% increase.
• Since then heavy fuel prices are back to January 2007 levels, coal prices are back to January2007 levels but more critically gas prices which are traded internationally in Sterling havefallen when translated into euros, below the 2007 levels.
• Mr Whelan concluded by saying

"The IEA believe that Minister for Communications, Energy and NaturalResources, Eamon Ryan T.D., must either give a direction to the Regulator to immediately reduce electricity and gas prices by 17.5% or dispense with the post of Energy Regulator entirely and let the market drive down prices.

Right now getting energy cost reductions passed onto industry is one of the key steps to improvingourexport competitiveness and saving jobs in the country."

END

For more information, please contact:

John Whelan 01 661 2182