ValueIreland.com

Regular readers are probably aware that I’m not a big fan of the actions of the National Consumer Agency. And though it might have been expected, you haven’t seem me dancing in the streets with the news that the NCA would be no more following the 2009 budget announcement that the NCA would be merged with the Competition Authority.

Apart from a comment about the proposal on my original budget post, I haven’t really approached this subject.

There’s not a whole lot for me to say really, having thought about it since the original announcement. I absolutely believe that we need an organisation such as the National Consumer Agency to protect the interests of Irish consumers, but not operated in the way this organisation is.

The NCA has at least 60 different pieces of consumer legislation at their disposal under which they can protect consumers, yet during 2007 when they received at least 2,250 complaints regarding suspected legislation breaches, there were only the following prosecutions:

• Failure to display price of grocery product - 3
• Failure to display prices in a public house - 3
• Failure to display price of petrol - 6
• Other fines imposed - 4
• Prohibition Orders - 3
• Oh, and don’t forget the classic “undertakings” - there was 1 of those.

That’s less than a 1% prosecution rate - hardly “putting the consumer first”.

And what does it take to achieve this 1% prosecution rate - according to the NCA 2007 Annual Report:

The Agency employed 59 staff, of which 55 were civil servants on secondment from the Department of Enterprise, Trade & Employment, 3 were on secondment from Forfás and 1 is a member of staff of the Agency.

And at a cost to the tax payer of:

State funding was provided through the Office of the Minister for Enterprise, Trade and Employment, and amounted to €5,369,331 for the period ended 31December 2007.

We do need a National Consumer Agency - and possibly we need it to be independent and for it to not be merged with the Competition Authority - but for an organisation that claims to be “putting consumers first” it needs to do a whole lot more and to be a whole lot more effective before we can feel in any way protected.

Today, the Competition Authority have announced that they are to investigate Ireland’s soaring electricity and gas prices. Specifically with regards to electricity prices, ESB prices are set to go up in January 2007 by 20%.

Here’s a tip for the Competition Authority. According to Value Ireland research, there is no competition for Irish consumers in the electricity market. You can buy from the ESB, and that’s it. Read the research article here.

Irish domestic consumers now pay 51% more for their electricity than the EU average. From January, Irish consumers will pay about 17.5% per cent more for electricity than their British counterparts. Ireland could have the third highest electricity prices in the EU by January with this most recent price increase.

We’re told that this is because of increasing costs of the raw material used to create electricity - oil and gas. Yet we’ve seen the wholesale prices of these materials fall recently. And if that was really the case, why have we seen electricity prices increasing about four times as fast in Ireland as price rises in the 15 countries of the pre May 2004 EU, according to figures published by Eurostat earlier this year.

But wait a minute. We’re told in a Deloitte report that Irish consumers are forking out an extra €100m on their electricity bills due to poor management at the ESB. The debacle at the Rhodes powerstation is a great example of this poor management. We’ve also been told in the press that wages for some individuals working at the ESB Poolbeg generating station in Dublin running to €140,000 including overtime!

These huge costs within the ESB are on top of the €77m dividend that the ESB paid to the Government in 2005, which brought dividend payments from the ESB over the previous three years to €175m.

So we’re paying higher costs because of the inefficiency of the ESB. Yet the ESB expected in 2005 to make a profit of around €300m.

The numbers here are staggering. Is there nothing that can be done to address the numerous issues here in order for us to have lower electricity costs?

The Government will claim that there’s little they can do in the short term. But there is! The Government currently charges 13.5% VAT on electricity compared to 6% in the UK. This provides a further €360m annually to the Government finances. Even reducing this VAT rate to the same as the UK would save Irish consumers nearly €100 per year.

Finally, there is a tiny flicker of light at the end of the tunnel, as expensive as that may cost us. It is expected that the Public Service Obligation (PSO) will be removed from all electricity bills in 2007. This saving is a result of the steadily improving competitive position of wind power, which has resulted in a reduction in the annual PSO levy imposed on domestic consumers. This levy will be set at zero in 2007 and will result in annual domestic electricity bills falling by whopping €11.