Competition Authority Says More Competition in Irish Energy Market Would Benefit Consumers

In her speech to IBEC’s Annual Energy Conference today (Thursday 10th May 2001),Ms Isolde Goggin, Director of the Regulated Markets Division at the Competition Authority, highlighted the lessons the Irish energy market can learn from California’s experience of introducing competition in electricity markets.

"California has been much in the news lately as parts of the state faced rolling blackouts and some of its largest utilities teetered on the brink of bankruptcy. The immediate reaction in some quarters was to blame "deregulation". A closer analysis of what happened in California suggests that too much regulation, rather than too little, was to blame", said Isolde Goggin.

"What happened in California resulted from a poorly designed regulatory system, coupled with other factors which pushed up prices and made it difficult to build new generating plants. Regulation needs to encourage efficient new generation to enter the market and pricing policy must stimulate responsible behaviour by generators, suppliers and consumers. In California, when the State imposed price caps, consumers facing a fixed price had no incentive to reduce their consumption of power while suppliers, unable to cover their costs, could not fulfil their contractual obligations.

"In addition, a proper balance must be struck between environmental protection and the need to build new generating capacity to meet increasing demand.

"The electricity industry is critical to the success of the Irish high-tech economy and essential to our indigenous industry and international competitiveness. Competition has a vital role to play in the energy industry of the future", she said.

Ms Goggin advised that while the Irish market shares some similarities with California there are also some major differences. She highlighted other US states where regulatory reform has proceeded without a hitch – for example, Pennsylvania. She emphasised that such experiences of regulatory reform elsewhere provide positive examples of what works, just as the California over-regulation is a useful example of what to avoid.

She concluded that the task for Irish legislators and policy-makers is to learn from the California experience and choose the right options to create true competition to the benefit of consumers.

Ms Isolde Goggin, Director - Regulated Markets, Competition Authority was speaking at IBEC’s Annual Energy Conference, Thursday 10th May 2001.For further information please contact: Isolde Goggin on 087 237 1474.