Dáil Éireann Debate, Thursday - 18 December 2025
100. Deputy Pa Daly asked the Minister for Climate, Energy and the Environment the measures he is taking to enhance the power of the regulator to increase transparency in relation to the retail price of energy here; the steps he is taking to investigate and prevent price gouging, as the Taoiseach alleged is taking place (details supplied); and if he will make a statement on the matter. [72871/25]
View answer101. Deputy Jennifer Whitmore asked the Minister for Climate, Energy and the Environment if he will direct the CRU to launch an investigation into price gouging by energy retailers; and if he will make a statement on the matter. [71566/25]
View answerBefore we start, it is no disrespect to the Ministers of State but is the senior Minister ever going to turn up? I presume there is a good reason for his absence.
My understanding is that he has been away all week in Strasbourg. He has been involved in issues relating to the Irish Presidency.
Tá sé tuirseach traochta.
He feels he is well covered by the presence of two Ministers of State to represent him. I hope the Deputy will understand and appreciate this. We will bring back the Deputy's good wishes and concern for him.
There seems to be a pattern but anyway.
Irish households are being ripped off in their energy bills. Even the Taoiseach has acknowledged it. Last week at the joint committee, we were told that price gouging cannot be ruled out.
The ESRI called for a fresh inquiry into our sky-high energy prices. We introduced legislation a few years ago to stop this, but we were ignored, and since then there are record numbers in arrears, price hikes across the board and vital supports such as energy credits withdrawn and ripped away. If even the Government is admitting that price gouging is taking place, why not do something about it, and stop the profiteering before taking away all the energy credits?
I propose to take Questions Nos. 100 and 101 together.
I know Deputy Daly is interested in this matter. He has raised it in the House on a few occasions, so he has a good track record on it. As he is aware, the electricity and gas retail markets in Ireland operate within an EU regulatory regime wherein these markets are commercial and liberalised. The Commission for Regulation of Utilities, CRU, ended its regulation of retail prices in the electricity market in 2011, and in the gas market in 2014. Price setting by electricity suppliers is, therefore, a commercial matter for the companies concerned. Obviously the CRU remains vigilant and observant of how the market works. Retail prices are influenced by several factors, including wholesale energy prices, system operation costs and supplier hedging. The latest data from Eurostat show that, in nominal terms, Ireland ranked fifth for electricity prices and eighth for household gas prices among European countries in the first half of 2025. When adjusting for purchasing power parity, Ireland is mid-table in terms of energy affordability, with the 12th highest electricity and gas prices among European countries.
Regarding hedging, suppliers in Ireland were shown to have taken a prudent approach to hedging, which had the benefit of protecting final customers from the worst effects of the wholesale price crisis. Conversely, hedging limits the ability of suppliers to reduce prices immediately in line with wholesale price shifts. We saw at the time of the Putin invasion of Ukraine that the gas markets had very significant spikes in wholesale prices, yet our energy users here did not see those spikes in cost because of hedging. Of course, when prices on the markets come down, we do not see the consequential reduction as quickly. The International Energy Agency, IEA, has observed that Irish retail prices have not adjusted at a comparable pace to the decline in wholesale prices, with the energy component of retail prices remaining up to three times that of the wholesale price. Again, that can be factored, to some extent, by the hedging position of the companies concerned.
While the CRU has found no evidence of market failure or windfall profits in the retail sector in its market monitoring role, the IEA findings underline the importance of progressing the programme for Government commitment to "commission an independent review into the speed and level of passthrough from wholesale prices to retail prices". The Minister, Deputy O'Brien, is on public record about this but, if not, we will put it on the record now. He has written to the CRU to request that it commences this independent review, building on the work of previous CRU investigations by reviewing the competitiveness of Irish retail energy markets, examining supplier costs, including hedging and pricing practices, and providing comparative price analysis with other EU member states. That body of work was identified as part of the programme for Government and the CRU has now been tasked by the Minister to carry out the work. From an Irish perspective, that will give some level of insight into whether there are practices that could be defined as the Deputy mentioned. It will also assess whether measures are warranted to enhance market responsiveness to wholesale price changes, and make recommendations to ensure that the benefits of lower wholesale prices are felt by consumers. This report will inform the work of the national energy affordability task force.
In addition, the Department is transposing the new electricity market design directive 2024. This directive requires regulators to ensure that suppliers implement appropriate hedging strategies to reduce the risk of supply failure.
I thank the Minister of State for the reply. I agree to some extent with him that it is a commercial issue. Obviously all the energy companies have a responsibility to their shareholders not only to have the same amount of profit but to have an increased amount the following year and the year after that.
I agree with the Minister of State that hedging is an issue. The Government can see that prices do not come down as quickly as they go up. He said that energy costs in Ireland are the 12th highest in Europe, but when other factors are stripped away we have some of the highest prices in Europe. As the Minister of State knows, household bills have doubled over the last five years. Nearly €2,000 extra is now paid by households compared to five years ago. These prices are not inevitable. They are not normal. Ireland is an outlier in this. The latest report from the International Energy Agency highlighted the gap between Ireland's wholesale prices and retail prices as being the largest in the world. We are paying a price for energy that is three times what it costs to produce. What is the Minister of State going to do to address it?
As we said, it is of very serious concern to the Government that the energy component of retail prices in Ireland is significantly above the wholesale cost. The IEA renewables report notes that the gap is widening across the countries studied since the start of the energy crisis. Of course that is concerning. The gap is particularly large in Ireland with the energy component of retail prices up to three times that of the wholesale cost. The CRU has carried out extensive monitoring of the Irish retail energy market in recent years and has found no evidence of market failure. Market failure is one thing, yet there is obviously something that is distorting that. That is why the Minister has asked the CRU to carry out that investigation which was identified and factored into the programme for Government. I am hopeful that when that piece of work is done it will shine a light on the issue. It may not be a case of market failure but perhaps there is a lack of competition; I do not know. It is worrying that the gap is widening and it clearly requires a thorough analysis of the facts to establish what exactly is happening. Then it is a matter of an appropriate Government response within the confines of the free market that exists and how the Government might be able to act to ensure domestic and business consumers are able to purchase energy at rates that are comparable. At the end of the day, it puts pressure on every aspect of society if the energy market is not functioning to the extent that we want. It hits us from a competitiveness point of view. If the Deputy has had an opportunity to read the Draghi report, he will know it is about competitiveness in terms of where we are at both a European and a domestic level.
It certainly is not market failure for the energy companies because they are making huge profits. We have called since 2023 for a dedicated hedging monitoring unit so that the regulator can oversee and regulate hedging because the energy companies need to be held to account and to justify the increase in prices. The regulator must also treat energy as a public good. In the coming months, we are going to see an extra €1 tacked onto bills to invest in the grid. Price review 6 also has worrying price increases coming down the tracks. There will be more price increases for the renewable heat obligation, as well as the carbon tax, which the Minister of State's colleagues and supporters in government, the Healy-Rae brothers, opposed vehemently while in opposition, and now are flag bearers for the carbon tax since the last budget. What is the Minister of State going to do to protect households from the rising costs and to address the unfairness in how the costs are structured and levied?
The old adage of all politics being local is alive and well for the Christmas season in Kerry. The Government understands the importance of a functioning energy market. It is the role of the CRU to manage that. The Minister has sought that piece of work to be done and it will inform any decisions that have to be taken thereafter.
It is easy to say - although I am not accusing Deputy Daly alone of this - that we are heaping on additional charges for no reason. The carbon tax or carbon charge, from the time it was introduced, was a very clear indication by Government of the direction of travel for fossil fuels. It was about encouraging societies to move away the harmful impacts of fossil fuels. It gave certainty to the market place that if energy users continued to use fossil fuels as they were, the charges would increase over time. What I was clear on, from the perspective of the Opposition at the time, was that the Government would put in place a methodology to ensure that the taxes or charges collected would be ringfenced and used for what was referred to as a hypothecation fund. The funds would be used to assist those in greatest need and those who were challenged by the tax.
That is not what happened.
I know some Deputies will have a different view but that is very much what has happened with that funding. It was not about raising a tax or an additional charge for the sake of it. It was about attempting to change behaviour and then utilising the moneys collected to assist those facing challenges in moving away from fossil fuels. That is working, of that there is no doubt.
No, it is not.
Deputy Daly talked about the additional charge under PR6 that will go into upgrading the grid. That is really important. That work has to be done. We have significant constraints on our electricity grid at the moment that need to be addressed. Unfortunately, that has to be paid for and that is why the CRU monitors all of these charges. Companies do not have a free-for-all in terms of what they charge. It is monitored by the CRU and is provided for in PR6.
