We are always happy to welcome our Scottish colleagues to Ireland.

I wish to ask the Taoiseach a number of questions on the ESB regulatory pricing regime. The Taoiseach will be aware that on 1 October, the price of gas increased by 34% and approximately a 20% increase has been granted to the ESB. It is an increase of 19.4% for residential electricity, 19.6% for small enterprises and 21% for large industrial units. These increases come at a time when the price of oil globally is falling. When the increases were granted, oil was $65 per barrel, $5 higher than it is today.

These increases mean that a number of categories of people are severely affected. Irish families will have noticed the dramatic increase in gas and ESB bills in the past 12 months. The ESB was granted a 25% increase last year. The gas increase will result in an increase of about €25 per household bill each month. That means families, faced with rising mortgage interest rates, are now faced with rising energy rates which will affect them very severely. Questions will have to be asked about whether radiators are kept on during the day or at night, for example. Hundreds of thousands of elderly people, many of them living alone and who need heat, will have to decide whether to heat or eat in some cases — it will be that serious.

Energy costs are crippling for businesses. I advise the Taoiseach that this is a very serious matter. I wish to bring to the Taoiseach's attention a letter I received from an employer of 1,000 people. The point was made that the pricing model for electricity is out of kilter with reality and that since 2001, the energy regulator has granted cumulative price increases of 100% in electricity and 170% in gas. The question is asked how the electricity pricing regime can be correct when the company in question has signed a 12-month oil contract at 22% below the price of oil six weeks ago.

The global price of oil is dropping, and in this country ESB and gas charges are rising through the roof. The point is made by this employer that the only way of dealing with this is to move out of the country. That is a very serious matter. What will the Taoiseach and his Government, who set policy in this area, do about it?

The prices that came into force on 1 October this year, including the 33.8% increase, will be fixed for one year until 30 September 2007. The Commission for Energy Regulation will review prices again during the summer of next year for the gas year starting on 1 October 2007. Under the Gas (Interim) (Regulations) Act 2002 responsibility for the regulation of tariffs is delegated to the CER, which has responsibility for ensuring market stability, encouraging new market entrants and ensuring tariffs are cost-effective and do not discriminate unfairly between licensed operators in the State sector, such as ESB or Bord Gáis, and those in the private sector. There is no need to rehearse all the issues dealt with in its decision.

Following a long price freeze from the mid-1980s onwards Bord Gáis has been able to sustain relatively low prices, in part due to favourable long-term hedging contracts, resulting in a very low average cost of gas relative to the price. The effect of the proposed increases of 33.8% on the CPI figures is 0.164%. I do not think increases in gas prices of that order will drive anyone out of the country.

The proposed increases in gas tariffs and electricity prices are practically the same. Some of the largest suppliers in the UK have also faced significant price increases. Npower has experienced rises of 30.8%, Scottish Power has averaged 34.6%, as our friends in the Gallery will know, and Powergen has experienced an increase of 24.4%. The CER has published its draft decision on the average price increase of 19.7% for ESB customers, to come into effect on 1 January 2007, one of the contributors to which is the cost of gas. While the price fluctuates the regulator takes the price over the full period and not just a few weeks.

That does not deal with this situation. Gas was available free of charge in the UK two weeks ago but industrial electricity costs in this country are 30% higher than in Great Britain. Industry, as the Taoiseach knows, is not included in the CPI figures. He said the price rises were unlikely to drive anybody out of the country. The company of which I speak will suffer an increase in electricity costs for next year of €800,000. I have evidence from a food processing firm in Cork whose gas bill has doubled from €3.4 million to a staggering €6.8 million per annum in the past four years. We are pricing ourselves out of the competitive market.

I have been informed by the company in question, as has the Minister, that for companies trading internationally these increases cannot be passed on and will ultimately be addressed by moving operations out of Ireland unless the situation is resolved effectively. That is a clear warning to the Taoiseach as head of Government.

Will the Taoiseach send a direction to the regulator to defer these price increases until such time as a full-scale assessment of the pricing regime is carried out? While the Taoiseach cannot direct the CER it should take cognisance of what the Taoiseach says.

Will the Taoiseach review the electricity pricing model, which will seriously affect thousands of jobs in this country? This is a very serious issue. Will he agree to do so on the basis that these increases are savage? At a time when world oil prices are falling they are going through the roof in this country. He is now warned, in advance, of what he needs to do. Will he defer the price increases and carry out a real assessment of the electricity pricing regime so as to allow some comfort to businesses, families and the elderly?

The system in this country allows for increases once a year, as agreed in legislation passed by this House. The position is examined over a year and the regulator makes a decision that applies from operable dates. This provides consistency of policy for industry and is designed as a model that gives certainty. We have experienced one increase but in the UK this year there have been 13 increases.

There have been five.

Throughout Europe and internationally prices are going up dramatically. We, like most countries, import most of our gas from the one location in Russia. We do not have a North Sea gas resource to protect us from price rises. The same applies to industry in every country. We cannot have a regulator who keeps the situation neutral when times are good and ask him or her to stand down an increase when there is a difficulty and a real price increase. Under the legislation the responsibilities of the CER include market stability, encouraging new market entrants, ensuring tariffs are cost-effective, guarding against discrimination and exercising its functions in a way that protects the interests of the final customers of gas and electricity. A large part of the increase in electricity is because of the gas price. Gas and oil are internationally traded commodities and every business understands that.

They are coming down internationally.

Our prices are 50% more expensive than the UK.

We have no control over them because they are internationally traded and our model is set in legislation. We have kept prices down for years, during which there has been no increase whatever. The regulator has made its judgment and recently provided figures based on its calculations over the year.

Deputy Kenny asked what we proposed to do. We took immediate action. Some 70% of generation costs are outside domestic control and the Government and the regulator will work with industry to reduce the remaining 30% of costs and improve efficiency and competition in the sector. Several weeks ago we announced a substantial increase from 1,800 to 2,400 free units for old people which, based on the calculation of the regulator, will fully protect the hundreds of thousands of people in the State who would otherwise have difficulties. It will give certainty to individuals that they can continue to be protected from the increases.