1. CER Presentation to Joint Committee on Transport and Communications Electricity and Gas Price Drivers and Developments 18 th February 2015

2. Agenda Electricity Price Drivers and Developments Gas Price Drivers and Developments Recent Energy Retail Trends

3. Electricity & Gas Price Drivers Networks Regulated by CER –~30% of cost in electricity, ~40% in gas Wholesale Competitive wholesale SEM: ~50% of cost International gas price is a big cost driver –30% in electricity, 50% in gas Retail Competitive pricing: ~12% of cost CER oversees consumer protection Levies Government PSO Levy: ~8% of electricity cost Covers renewable, peat and certain gas plants

4. Oil prices do not impact on retail prices for electricity, gas costs are a key driver Circa 95% of gas consumed in Ireland comes from Great Britain, most liquid and competitive market in Europe This gas cost is out of Ireland’s control - we are a “price taker” Gas prices have declined 18% (Q1 2014 – Q1 2015) in Euro terms, less than decline oil prices (affected by decline in Euro vs Sterling) Great Britain price accounts for 50% or more of cost of gas in Ireland, most of rest is pipe network cost Suppliers buy ahead at fixed price contracts (hedge) to provide greater retail price stability. It can take over 6 months for changes in fixed priced contracts to feed through to retail prices 4 Wholesale price trends

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6. EU Electricity Prices, H1 2014 Domestic electricity prices in Irl are lower than the Euro area average Business electricity prices in Irl are the same as Euro area average Difference in price primarily explained by: –Ireland’s generation mix. –Dispersed & low nature of its population. Recent Energy Retail Trends Domestic Electricity Prices compared to Euro area average, Band DD, (48% of MWhs) inc all taxes Industrial Electricity Prices compared to Euro area average, Band IB, (32.5% of MWhs) ex VAT

7. EU Gas Prices, H1 2014 Domestic gas prices in Irl are 6% lower than the Euro area average Business gas prices in Irl are the same as the Euro area average Recent Energy Retail Trends Domestic Gas Prices compared to Euro area average, Band D2, (93% of MWhs) inc all taxes Business Gas Prices compared to Euro area average, Band I4 (31% of MWhs) ex VAT Difference in price primarily explained by: - Ireland’s location on the periphery is a factor

8. Recent Domestic Price Changes Reductions in standard tariffs are welcome, reductions are much higher for active customers. 8 CompanyElectricityGasDate Electric Ireland-2% average-17/11/14 Bord Gáis Energy-2.5% unit rate-3.5% unit rate16/03/15 SSE Airtricity-2% unit & standing charge-4% unit & standing charge 01/04/15 PrePayPower-4% bill (comprised of +4.8% on standing charge & -7% on unit rate) Na31/03/15 Pinergy-2% average-17/11/14 FlogasNa-- Energia---

9. Strong competition & price deregulation has helped deliver more choice, competitive prices and innovative products –Standard rates have declined Switching rates in Irish retail markets for gas and electricity are high –Switching supplier is simple, fast and free and has no impact on quality of supply –To get the best deal, shop around or contact current supplier to see if a lower tariff is available. CER actively oversees consumer protection through licencing of suppliers and monitoring of their activities Benefits of Retail Competition