Retaining Energy Rebate for Large Users must be seen as only First Step along the road to
Competitive Energy costs for Export Industry

Today, (2nd Sept) the Irish Exporters Association (IEA) representing export industry across the island, welcomed the Commission for Energy Regulation (CER) announcement yesterday to extend the rebate on the large users electricity price tariff, and also the decision to cease regulation of the ESB tariff for smaller users.

John Whelan, CEO of the IEA stated;

‘’Although Irish energy prices are moderating somewhat as international fuel prices fall, the reductions during 2009/2010 in electricity and gas prices were necessary but are not sufficient to improve Ireland’s comparative position. Irish exporters are still paying over the EU average for their energy inputs, and loosing out in the rapid return to growth in global markets as a consequence."

He went on to say;
‘’The recent reductions in energy prices are mainly due to falling fossil fuel prices
Internationally, hence it is crucial that the structural measures to ensure a long term improvement in energy cost competitiveness is taken up as a matter of urgency. The IEA believes that there is further scope for the CER to drive efficiencies in the energy market and reduce the cost of electricity to end users.’’

The IEA have asked the CER and the Government to prioritize export cost competitiveness objectives in all regulatory decisions until such time as exports and job recovery have fully returned. While no analysis of the factors contributing to the significant difference between electricity prices in Ireland and elsewhere has been conducted since the introduction of the all island electricity market in November 2007.

The IEA have pointed out to the CER that Deloitte in the last major study of the sector, estimated that domestic controllable costs accounted for 30 percent of the difference between Irish and average EU electricity prices . They found that labour costs for generation were above the EU average and that electricity transmission and distribution charges were also higher than in benchmarked countries.

The IEA called on the CER to do an updated assessment of the factors that contribute to the differential between Irish and international energy prices would be welcome. Regulation needs to focus on bringing the differential in controllable costs in the Irish markets into line with international best practice.

Information Notes: In 2008, the CER announced a rebate of €315 million (funded by ESB from its carbon windfall gain) to mitigate the impact of the very high global fossil fuels prices at that time for all users. The rebate is to continue for the 2009/2010 tariff year for large users, funded by ESB, in an effort to reduce the effect of the higher electricity prices in Ireland on their competitiveness. It was intended that rebate for large users would be gradually phased out over the two years from October 2010.

END