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Joint Oireachtas Committee Communications, Marine and Natural Resources IBEC Large Energy Users Delegation Wednesday, 2nd November 2005 Since 2000………………. Rapid increase in international commodity prices Lack of Infrastructural Investment – 25 year underinvestment legacy – €3.5 billion currently being spent on electricity networks Ad-hoc development of energy market – Absence of a national energy policy Market Liberalisation Ireland V’s EU 2005 Electricity Prices 2005 0.1 0.09 0.08 € per KWh 0.07 0.06 0.05 0.04 0.03 0.02 0.01 Latvia Bulgaria Sweden Estonia Lithuania Poland Finland Norway France Croatia United Kingdom Czech Republic Slovenia Austria Greece Denmark Malta EU (25 countries) EU (15 countries) Spain Belgium Hungary Slovakia Romania Portugal Luxembourg Germany Cyprus Netherlands Italy Ireland 0 Eurostat This indicator presents electricity prices charged to final industrial consumers, which are defined as follows: annual consumption of 2 000 MWh, maximum demand of 500 kW and annual load of 4 000 hours. Prices are given in Euro (without taxes) per kWh corresponding to prices applicable on 1 January each year. Ireland v’s EU 15 Average Electricity Cost: Ireland v's EU 15 Average 0.1 0.09 31% 0.08 € per KWh 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0 1994 1995 1996 1997 1998 1999 2000 EU (15 countries) 2001 Ireland 2002 2003 2004 2005 Eurostat Gas Price – cost drivers International Commodity Prices Network Infrastructure Investment Regulated Tariff Structures – complex structure, cost base, regulated tariff formula 25% increase 2005/6 Gas Price Trends Industrial Gas Prices, Jan 2005 (€ per GJ– 4186 GJ per annum with taxes and VAT) Eurostat Business Impact - IBEC/Amarach Summary IBEC/Amarach Energy Survey – 75% feel they are at a competitive disadvantage because of energy costs – Only 3% of respondents passed on increased costs to their consumers *value of product leaving factory now 5% less than 3 years ago (CSO) – 97% absorbed all or part of costs – 24% of respondents are considering re-locating business 30,000 manufacturing jobs lost in the past 3 year, 500 currently being lost a month Short-Term Solutions Continued deferral of ESB Revenue (€89 million) until commodity prices ease Investment of dividend paid to Government (€ 184 million, 2002-2005) Greater flexibility in tariffs Medium/Long Term National Developmet Fund 2000-2006 € billions Energy, 0.14 2007-2013 NDP funding for Energy Infrastructure Education, 2.1 Social Housing, 7.8 Health, 2.5 Public Transport, 2.8 Publication of a National Energy Policy Environment Services, 3.8 National Roads, 5.9 Local Infrastructure, 4.3 Medium/Long-Term All-Ireland Energy Market – Bring scale to the market Stricter scrutiny of regulated market Liberalisation model?? Maximise efficiency of market players Security of Supply Improved Incentives – Supporting initiatives e.g. SEI Summary Rapid changes with significant negative business impacts Industry has responded – increased efficiency, decoupling of intensity and GDP Need a regime that will balance competitive needs of all energy stakeholders National Electricity Price Trends – CER Averages 9+3.5 16 14 12 10 % Increase 8 6 4 2 0 14.1 12.5 8 6 4.2 2001 Price 2002 Price 2003 Price Increase Increase Increase 2004/5 Price Increase 2006 Increase Actual Price Increases Business sector 2005 2006 CER Average 12.5% 8% Mining 21.4% 19.5% Plastics 13.15% 12.59% Chemical 20.3% 15.9% Building Materials 18.4% 15.4 Retail 15.9% 12% Appendix Slides Energy Intensity Industry Energy Intensity % Change toe/M€95 1990-2000 % change 10 0 -10 -20 -30 Ire la Ne nd th er la nd s De nm ar k Au st Lu ria xe m bo ur g Be lg iu m G re ec e Po rtu ga l -40 Improvement in energy-efficiency expressed as % change in toe/ M€95 in the period 1990-2000. Eco-Efficiency in the Industry Sector EPA, 2005