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Energy Prices

Presentation to

Joint Committee on Transport and Communications

25th February 2015

Electricity Prices – Summary of Issues

1. What Drives Electricity Prices• Wholesale Commodity Prices – Gas is the main driver, not oil• Infrastructure Costs – networks & generation capacity

• Island system – unique in Europe• Dispersed rural population – very long over-head line networks• low level of interconnection• smaller scale generators

• Government Policy – support for renewables, security of supply, energy efficiency• Market – competitive supplier costs/margins

2. Irish Prices v Europe• Most Irish businesses paying below Eurozone average• Irish residential broadly comparable to rest of Eurozone:

• Largest category of residential customers (representing average Irish consumption) paying 2% below Eurozone average

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Electricity Prices – Summary of Issues

3. Impact of Falling Wholesale Energy Costs• Wholesale Gas prices have significant impact

• Forward gas prices (in euro) fell by c. 18% in 2014 • Have risen by c. 8% since start of 2015

• Energy represents about 30% of total electricity price for domestic customers• Suppliers buy in advance – this spreads and delays the impact of fuel price changes on

end user prices and helps price stability

4. Electric Ireland Approach• Implemented a 2% electricity price reduction before the winter• Will pass through further price benefits to customers if wholesale price trends allow• Margins are modest – low compared to GB • Very aware of and proactively managing energy affordability issues:

• Disconnections down 20% in 2014. We do not disconnect a customer who engages with us.• “Pay as you Go” Meter Installations up 25%.• Number of customers needing instalment plan payment arrangements is reducing• Additional protections for vulnerable and elderly customers.

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