Speech by Denis Naughten TD, Minister for Communications, Climate Action and Environment,
The Energy Regulatory Seminar
The Gandon Suite North,
The O'Callaghan Davenport Hotel,
8/10 Merrion Street Lower, Dublin 2, D02 DX57.
Thursday, 1st December 2016
Why is there a Department of Communications, Climate Action and Environment? Governments and government departments change priority over time. My Department exists to address the connected challenges of a country, and provincial parts of the country especially, that are significantly behind where they need to be, in terms of modern communications infrastructure.
We are also a country playing catch-up on our obligations in relation to Climate Change. This obligation is as much an opportunity as an obligation. In any event it is our children's future and a vital national interest.
The challenges are clear and they are many. What is less clearly developed is the economic opportunity in terms of jobs and investment for a country that is better connected in an information age – where the scarce and valuable commodity of energy is conserved.
The failure to realise this comes at an economic cost, a social cost and an economic opportunity-cost.
We are the first generation where we are more likely to see our children and grandchildren with fewer opportunities than we have had, unless we change fundamentally the way we use resources. It is easy to preach to people that our way of life is unsustainable. It is harder to convince them that it is possible to continue to live well but within the limits of our environment.
Climate Change is the defining challenge of our time and it is during our time that the obligation exits for us to take action. We need to act now and we need to think long term.
To achieve this, climate policy must be developed through consultation. We need our citizens, including all of you here today, to participate and contribute to Ireland's climate policy.
The second point is about regulation. Some of us here are regulatory experts and might even enjoy the dark depths of regulatory legislation – of which more anon by the way. But I – and this audience especially – need to question ourselves continually, and critically, about what regulation is for and whether and how it serves our consumers and citizens. The White and Green Papers stated that high quality regulation ultimately enables successful delivery of our energy policy objectives, including sustainability and climate action. A stable certain regulatory environment helps create a climate for investment and ensure that the cost of capital for investors is kept as low as possible. In the Green Paper, we stated, very tenuously and under certain assumptions, how each percentage fall in the borrowing rate for network companies could be linked with an electricity retail price reduction of about 1.9%.
I will now turn to updating you on four regulatory issues drawn from the Energy White Paper, specifically:
- The OECD regulatory review,
- The complexity of the legislation,
- Some White Paper actions on costs
- the Regulatory Legislative Overview.
1. OECD Review
I am particularly pleased to welcome Dr Rolf Alter, Director of the Public Governance and Territorial Development Directorate at the OECD and his colleague Anna Pietikainen.
I very much welcome that the OECD, at the request of the Commission for Energy Regulation, will carry out a peer review of the CER. I commend CER for initiating this important work.
Our OECD speakers and Commissioner Blaney will tell you much more later. I am particularly pleased that an organisation of the international calibre of the OECD is carrying out this work.
Building on the OECD's most recent advancements in the development of best practice standards in regulatory governance, I am confident that the process will enable the CER to continue to be at the leading edge of regulatory practice in the regulation of electricity and gas markets.
This review will feed into, and inform, the overall review of the framework for the regulation of electricity and natural gas markets, referred to in the White Paper. I emphasise that stakeholder engagement and involvement will be an important part of this review to ensure its success, so I encourage you all to participate in the process.
In passing I note that Oireachtas members will be involved in the review, given that under our legislation, CER is solely accountable to the Oireachtas Committee for the performance of its functions, and not to me as Minister.
2. Consolidation of the Electricity Regulation Act
Mention of my Oireachtas colleagues just now reminds me of the valuable and constructive contributions, and amendments, of various Deputies and Senators during the passage of the Energy Act earlier this year. It was very clear to me that they were strongly committed to and knowledgeable about fulfilling their legislative scrutiny and drafting roles, but that navigating the byzantine legislation in order to do so, was nearly impossible.
The body of legislation has grown over the years, reflecting the journey over the last decade and a half through market changes and EU compliance. It is important that legislation is as accessible as possible.
In response to Oireachtas members plea for consilidation, I am delighted to announce today that work has started on consolidating the Electricity Regulation Act 1999 and its amending legislation. This is led by the Law Reform Commission. Departmental Officials are closely involved and a restatement of the 1999 Act is expected over the coming months.
3. White Paper Actions on costs
Turning to the cost actions in the White Paper, recognising the undeniable challenge posed by climate change, our goal must be to ensure that the overall transition is achieved with optimum benefits, at least cost, and that robust quantitative and qualitative measures are available to support analysis and decision making.
My Department, the Department of Jobs, Enterprise and Innovation, and the Statistical Unit of the Sustainable Energy Agency of Ireland, working together in a cooperative manner, developed during the year a set of robust and internationally comparable measures of energy cost competitiveness. I commend their work. It culminated in new material in the SEAI price report published earlier this summer. So we can report progress on this White Paper commitment too.
CER is working on a number of White Paper actions that address its role as consumer advocate. I welcome the various consumer focussed actions, including the recent revision of the Supplier Handbook, and look forward to the forthcoming assessment of the retail market.
4. Regulatory Legislative Overview
Another regulatory commitment in the White Paper is the periodic publication of an overview of the legislative work programme for the regulation of the electricity and gas markets, to be known as the Regulatory Legislative Overview or RLO. The first RLO is included in your information packs this morning.
The RLO is an expression of the commitment, to offer stakeholders the opportunity to contribute to energy policy development and implementation. With your feedback, future RLO editions will seek to keep stakeholders up to date on regulatory policy development, including on the review, and enable them plan their activities accordingly.
I do hope that collectively we can make the RLO process useful.
5. Next Steps & Conclusion
In conclusion, I would again like to thank Dr Rolf Alter and his colleague for coming here today and for their considerable expertise being committed to the review.
Finally, I would like to thank you all for joining us in what promises to be an informative and constructive seminar, perhaps one of many. I wish you well in your deliberations on what is a full and ambitious agenda.