Table 4 Share of taxes in electricity prices for domestic consumers (2nd semester 2007)

Ireland has the highest electricity prices in Europe for businesses and domestic consumers, due to a dependence on electricity generated from fossil fuels and high taxes, according to a new report.

Electricity costs the Irish domestic consumer 20% above the EU average, according tothe report by State agency Sustainable Energy Ireland (SEI), and some industrial customers are paying up to 52% above the EU average.

Gas prices in Ireland are 17% above average for domestic users. Most industrial and commercial customers pay 9-13% more than average, except for one category of medium-use customers who pay 6% less.

Adjusting for cost of living differences between countries, electricity and gas prices in Ireland are 9% and 2% respectively below the EU average.

SEI says dependence on generation from fossil fuels is an important factor with some 88% of Irish electricity generated from fossil fuels and 60% from oil and gas alone.

This is the highest in Europe, according to the SEI.

The SEI says electricity prices to industrial and commercial customers in Ireland for the second half of 2007 were above average in all consumption bands for which data is available, ranging from 3% to 52% above the EU average electricity prices.

For the electricity consumption bands that represent most of Ireland’s industrial customers, electricity prices in Ireland were between 23% and 29% above the EU average and between 21% and 27% above the Eurozone average.

The higher electricity prices in Ireland are due in part to the high proportion of electricity generated by gas and oil (60% compared with 24% on average for OECD Europe). Gas prices in Europe increased on average by 35% between 2005 and 2006 and a further 12% in 2007. Oil prices doubled between July 2007 and July 2008.

Gas prices for industrial and commercial customers in Ireland for the second half of 2007 were 9% to 13% above the average for EU countries for lower consumption bands and 6% below the EU average for large gas customers.

Within the Eurozone, gas prices in Ireland were 4% to 8% above the average for lower gas users and 10% below the average for higher users.

Highlights – Residential

• The SEI says valid comparison of residential gas and electricity prices between countries can best be made when currency exchange and living standards are corrected for. Purchasing Power Parities (PPPs) are currency conversion rates that both convert to a common currency and equalise the purchasing power of different currencies.

• Residential electricity prices in Ireland were between 9% and 15% (depending on the level of consumption) below the EU average for most residential customers in the period July – December 2007, when comparing using purchasing power parities.

• Electricity costs for the average residential electricity consumer in Ireland were 9% less than the EU average based on purchasing power parities and 3% below the Eurozone average on the same basis.

• Natural gas cost for the average consumer were 2% below the EU average using purchasing power parities and 12% below the Eurozone average on the same basis.

• The most significant factor affecting energy prices in Ireland is recent increases in global oil prices due to Ireland’s high dependence on oil. In addition there is the knock on impact oil prices have on other energy prices, in particular natural gas and as a consequence electricity prices.

• According to Ireland’s 2007 energy balance oil accounts for 66% of Total Final Consumption (TFC) in Ireland (almost 100% in transport TFC, 40% of residential TFC, 39% of industry TFC and 35% of services TFC) and 56% of Ireland’s primary energy supply. According to EU statistics, Ireland’s oil dependence (as a proportion of primary energy supply) is higher than any other EU-15 Member State except Luxembourg (63% primary energy in 2006).