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Presentation to the Joint Committee on Communications, Marine, and Natural Resources.
IntroductionThe unprecedented levels of increase in Gas and Electricity prices, as recommended by our Regulator, are matched in uncannily equal proportion by the level of disinterest in how such increases could be afforded by consumers not to mention how such staggering levels of increase will have a knock-on on the cost of everyday goods, services and labour. The majority of Irish consumers find themselves in quite an unpleasant situation when it comes to energy awareness. Some will argue that they should take account of and interest in their surroundings and their environment. A not unfair reply would be that they have done that. They have paid all of their environmental taxes, cut down, cut back and cut out where they could and elected and supported their representatives to be especially informed and active on their behalf. But the unpleasant situation can become all the more unpleasant when as consumers they are uninformed, or worse, ill-informed and as a result, are bewildered as to how to act effectively or support the introduction of true efficiencies that will go beyond the short term. What – one has to wonder – is the legitimate expectation from advising a consumer that there is sufficient coal to last for about 300 years – but that the world’s gas and oil supplies will run out somewhere around the middle of the 21st century? If it is to elicit the reaction that something had better be done - then success is guaranteed. But taking it further – again – it is just not enough to tell that consumer that new sources of energy, preferably renewable ones, and energy conservation are needed immediately without telling them how to do it, showing them how to do it and providing them with REALISTIC incentives – both real and monetary – to actually do it. Being RealisticThe starting point for future progress must be from the understanding that there is too much complex data, an overabundance of confusing and argumentative debate yet all too little real advice or action that consumers readily understand. Crucially, affordability remains the key. What can the consumer do and what do they know of the entire area? For the most part the consumers’ understanding is limited to:
The information that they receive on efficiency is limited to basic advisory cautions such as:
ElectricityWhat consumers are not told is how to understand the system that locks them into provision of supply by dominant providers. Their dominant electricity provider:
All this despite returning profits in 2005 of €241 million which was 31% more than the profit returned in 2004. These are results which cause consumers to react negatively and take a stance of immobility. But worse was to come – an ‘average’ increase of 3.1% effective from January 2006 proved to be anything but that for the Irish consumers of electricity in a market without choice or competition. What had not been highlighted or brought to the attention of those already overburdened consumers was that the cost of Standard Domestic unit charges would increase by 4.4% including VAT and that Night Storage Heating was to increase by a massive 13.6%. Moreover – the Standing Charge for Urban services increased by 18.7% whilst the rural 24 hour rate increased by ‘only’ 9.3%. Now, if you take this in the context of the many consumers in Ireland who consider themselves to be living and having purchased new homes in Rural areas but who find themselves paying Urban rates – you begin to see why they are so frustrated at the lack of consideration and control for them. This comes across as nothing more than an accountancy exercise to guarantee profit from an already overburdened customer base. GasThousands of consumers installed or re-installed a gas supply into their homes. They were sold the product with the message of value for money and a price frozen that was impossible to beat. It was - until 2005 when users took on an increase of just over 25% and a promise of more to come. That promise has now been fulfilled with the 34% increase applied this week. Where was the advice to them that:
The point here is exactly that which we have made at the beginning – consumers cannot envisage increases of this nature nor can they accommodate them comfortably within a budget that simply cannot keep pace. This leaves them in urgent need of assistance, guidance and realistic alternatives provided by their Government in what is a real time of crisis. FinallyIn recent years we have been advised that the source of our problems were global market conditions - an oil crisis - that forced providers to up their prices. The Minister told us this, the CEO of the ESB told us this, Bord Gais have told us this and the Energy Regulator has backed each of them up. We were also advised that, when matters improved, we would see reductions passed back to the overburdened consumers. In October 2006 we have:
In October 2006 we need:
On behalf of the Consumers’ Association of Ireland I thank the Members of the Joint Committee on Communications, Marine and Natural Resources for their time and for the invitation and opportunity to contribute on behalf of the Irish domestic consumers. CONTACT:
Dermott Jewell at Consumers’ Association of Ireland : 01 – 497 8600 |
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