I move "That this Bill be read a Second Time." This Bill makes provision for an expenditure under two distinct heads: firstly, under Section 2 for an expenditure by the Minister in discharge of his functions under the Act of 1925—that is, for an expenditure of £335,000; secondly, by the Electricity Supply Board for additional provision for the generating capacity of an expenditure of £365,000. The provision made for expenditure by the Minister will, it is expected, be final as far as he is concerned, and it covers four broad heads: (1) the settlement of the contractors' claim; (2) the settlement of claims for compensation; (3) certain minor works; and (4) costs of administration.
Sub-section (5) of Section 11 of the Shannon Electricity Act of 1925 imposed a limit of £5,210,000 on the amount of the advances which can be made from the Central Fund for the Shannon scheme. That amount was increased by the Electricity Finance Act of 1929 to £5,835,000. The further increase contemplated by this Bill brings the total up to £6,170,600.
These advances will be made to the Shannon Fund, which is under the direct control of the Minister for Industry and Commerce, subject, of course, to the sanction of the Minister for Finance. The payments made from these advances will be made by the Minister for Industry and Commerce. The position in respect of this Fund is as follows: The total borrowing powers authorised under the Act are £5,835,000. The total payments made up to 30th June this year were £5,780,200, leaving a small balance of £54,800. The expenditure for which provision is now required is: (1) Compensation. The total required in respect of compensation is £203,250. The main item is in respect of compensation which will arise for lands flooded or required in or around Lough Derg. The amount which we are asking for in respect of compensation may be on the generous side. It is hoped that a number of claims may be settled for somewhat less than we have estimated, but it is obviously desirable that we should be on the safe side to avoid any possibility of having to come to the Dáil again with a further Bill, and also to enable the various compensation claims to be disposed of as rapidly as possible. There is a sum of £23,197 required for certain minor civil works. There are a number of such works required of various kinds, none of them very large. In addition, there is a sum of £6,000 required to meet administrative expenses up to the completion of claims in respect of lands flooded and acquired. We are also making provision for £5,000 for contingencies. The total under these heads amounts to £237,447. Deducting from that the balance given already of £54,800, we get a net amount of £182,647, which is the sum required in respect of these items. We have to add to that a sum of £150,000 payable to the contractors. These two together make a total of £332,647, or roughly, the £335,000 that we are asking for now in the Bill.
The position in regard to the payment which has to be made to the contractors is as follows: In August, 1930, the contractors rendered their final account in respect of the works carried out by them under the constructional contract dated August, 1925. The full amount of the claims came in round figures to £1,055,000. At the time of the rendering of the account the contractors notified the Minister then in office and the engineers that on certain legal grounds they contended that the engineer was no longer qualified to issue a certificate based on that final account, which would be binding on the contractors under contract.
The engineer proceeded with the examination of the accounts with a view to the issue of a certificate for such items as he considered admissible. The Minister's representative attended before the engineer, but the contractors did not. On the 21st October the engineer issued a certificate indicating which items of the account he considered admissible and which items were inadmissible. The items regarded as admissible amounted, in round figures, to £24,500. The complaints made by the contractors against the engineer fell into three classes. They complained that the engineer did not give decision at the stage when it was alleged he should have done so; that is, in the case of extensions of time. They complained that the engineer did not give the decisions which the contractors desired in matters relating to wages, and they complained that the engineer would not act without the Minister's authority in the giving of written orders for extra work.
The contractors applied to the Attorney-General for a fiat to institute proceedings in the courts with a view to establishing their contention that the engineer was no longer qualified to make binding conditions under the contract, and thus reopen all the decisions in the certificate of 21st October, 1930. The late Attorney-General did not grant the fiat, but he appears to have intimated to the contractors' solicitor that he would consider any further representations they were in a position to make on the matter. Before the matter was proceeded with, the facts of the case were reported to Professor Meyer-Peter. He was one of the experts concerned with the initiation of the civil construction side of the Shannon works. He was asked for an independent opinion as to what sum, if any, over and above the amount paid to the contractors on foot of the engineer's certificate of the 21st October, the contractors could reasonably expect to establish as due to them on the final review contemplated in the contract of the items of their account regarded as inadmissible. Professor Meyer-Peter, having considered the matter, mentioned a sum in the region of £150,000. The Executive Council of the late Administration approved of an offer of this amount. An offer was accordingly made to the contractors' solicitor; it was accepted by his clients, and a formal agreement made between my predecessor and the contractors was subsequently executed. It is on foot of that that this payment of £150,000 is now being made.
The second heading under which expenditure is provided for in this Bill is in connection with the decision, by the Board, to increase the generating capacity. That is under Section 4. Before dealing with that I would like to explain the necessity for Sections 3, 5 and 6 of the Bill. Section 3 has relation to so much of Section 15 of the Principal Act, as amended by Section 7 of the Act of 1930, as limits the time within which variations may be made. Sub-section (2) of Section 15 of the 1927 Act provides, in effect, that when any portion of the Shannon works is handed over by the Minister to the Electricity Supply Board, the Board becomes liable for a proportionate part of the advances made to the Minister from the Central Fund for the construction of the works and also for any outstanding interest on such advances. In practice it was found that it was impossible in some cases to determine accurately the liability to be transferred to the Board until a considerable time had clapsed from the actual transfer of the works.
Sub-section (10) of Section 15 of the Principal Act, which was inserted as an amendment by the Electricity Supply (Amendment) Bill, 1930, provides for the subsequent variation of a liability fixed under sub-section (2), but it was stipulated that such variation could not be made after the commencement of the half-yearly payments to be made by the Board by way of repayment to the Exchequer of the advances originally made to the Minister for Industry and Commerce for the construction of works—payment of compensation, etc. It is now considered that the limitation upon the time within which the variation may be made in the liabilities transferred from the Board should be removed.
Under Section 5 (4) of the Shannon Electricity Act of 1925, claims for compensation for permanent interference with fishery rights may be made at any time within ten years after the completion of the works which caused the interference. The repayment of the advances to the Minister for paying such compensation will be imposed as a liability on the Electricity Supply Board by making some portion of the Shannon works that has been handed over to the Board liable for such proportionate part of the advance as is fixed. It is clear that claims for compensation for permanent interference with fisheries may be made long after the portions of the Shannon works have been handed over to the Board, thus necessitating the variation of the proportionate parts of the advances already fixed and necessitating such variations later than the date fixed by sub-section (10) of Section 15. It is possible that a similar variation may be also required by reason of expense incurred by the Minister under certain other heads.
Section 5 is necessary to give the Electricity Supply Board power to construct, maintain and operate the generating station at Ardnacrusha. When the Act of 1927 was being drafted it was intended the Board should not embark on extension works at Ardnacrusha without the prior consent of the Oireachtas. The view is that sub-section (3) of Section 20 of the 1927 Act empowers the Board to construct, maintain and operate electrical generating stations anywhere throughout the Saorstát except at Ardnacrusha. Therefore, apart from the provision of the necessary money, the Board must get legal power to extend the generating station at Ardnacrusha and that power is conferred by sub-section (1) of this section. The effect of sub-section (2) is to make any additional works constructed under Section 5 part and parcel of the Shannon Hydro-Electric Scheme for all purposes. The Act of 1927 defined in general terms the functions of the Board in relation to the system and contained other provisions such as that which enables the Board to exercise certain functions and duties through its duly authorised officers and servants. Sub-section (2) of this section places the extensions, for which Section 5 provides, on the same footing as the remainder of the Board's works.
As regards Section 6, the position is that the Minister for Industry and Commerce acquired under the Act of 1925 certain lands, chiefly flooded lands, as a result of the construction of the works. The Minister as the result of the acquisition becomes liable in lieu of the tenant to pay annuity and other payments to the Land Commission under the Land Purchase Acts. Certain agreements have also been made with the Great Southern Railways Company for the construction of railway sidings in connection with the transformer station. Under these agreements certain small payments are due in perpetuity by the Minister to the Company and vice versa. There are also certain other mutual benefits and obligations under these agreements. Under existing powers the Minister must pay these annuities and transfer to the Board the liability for repayment to the Minister for Finance of the advances which must be made from the Central Fund to enable the Minister for Industry and Commerce to make the payments. This is a somewhat cumbersome procedure, particularly as the amounts involved are comparatively small, and when the Minister has completed operations under the Shannon Act it would be a waste of time and labour, involving book-keeping transactions over a long period, if the present arrangement were continued. This section accordingly provides for the transfer to the Board of the liability to make such periodical payments in future. The transfer will be made by order in the same way as the liability in the past has been transferred to the Board for repayment of advances to the Shannon Fund. It is estimated that the total annual payment for which liability will be transferred to the Board under the section will not exceed £3,000, which is a comparatively small sum in relation to the Board's annual revenue. It will be made out of the Board's revenue, and it will not be possible for the Board to obtain advances for the purpose of meeting recurring liabilities of that kind.
Section 4 provides a sum of £365,000 for the provision of additional generating capacity. Shortly after the change of Government took place, it was intimated to me by the Electricity Supply Board that new generating capacity would be required to meet the peak load in 1933, and the summer load in 1934. Certain discussions took place as a result of which the Board examined the various methods by which the additional generating capacity might be provided. The Board examined the cost and the advisability of providing the additional generating capacity by new hydro-electric units only, by new steam units only, and by a combination of one hydro-electric unit and one steam unit. The figures presented by the Board supported their recommendation, which was in favour of getting the additional generating capacity by the installation of one new hydro-electric unit at Ardnacrusha and an additional steam unit at the Pigeon House. The Board estimated that in the year 1933-4 the number of units to be developed would be roughly 200,000,000; that the peak load in that year would be 78,000 kilowatts; that it was necessary to have a plant capacity of 98,000 kilowatts. The capacity of the existing plant being only 90,000 kilowatts it was necessary that provision should be made for the additional 8,000 kilowatts required for the peak load. The existing plant, they estimated, would be deficient by 20,000 kilowatts in the following year, by 32,000 in 1935-36, and by 44,000 in 1936-37. They estimated that the annual cost of production in respect of new plant to produce 40,000 kilowatts would, if new hydro-electric units only were determined upon, be £41,000; if new steam units only were determined upon, £39,500; and with a combination of one hydro-electric unit and one new steam unit, £33,500. That would be in the year 1935-36—and the plant capacity would have to be increased by that amount.
The reason for these figures, and the reason for the Board's recommendation was that if they decided to go ahead with new hydro-electric units only, certain additional storage would have to be provided, but by the installation of an additional steam unit at the Pigeon House it was possible for them to make much more advantageous use of their present storage. They have what they call an iron ration of water storage. That iron ration represents a certain water storage which must be held during the various years until such a late period in the summer that it generally cannot be utilised at all. If sufficient steam generating capacity to carry the day load in the event of an extended dry spell in the autumn were provided, that iron ration of water storage could be released. Consequently it appears from the Board's report that the provision of additional steam capacity as the result of reducing the number of units to be generated by steam would enable the water power to be more fully utilised. It is intended that when this additional plant has been installed, and when generation has reached 250,000,000 units per year, there will be only about 15,000,000 units steam power required, while the rest, that is 94 per cent., will be water power. During the dry years, of course, the conditions can be such that the steam energy will be about 50,000,000 units at that stage of the load. The costs of the various installations recommended by the Board are:—
(1) the installation of a 25,000 k.v.a. generator, combined with a Kaplan turbine of 30,000 horse power, at Ardnacrusha, together with the necessary transformer and switch gear, £220,000;
(2) the installation of a 20,000 kilowatt steam turbine with provision of boiler capacity of approximately 10,000 kilowatt at the Pigeon House station, £100,000, and
(3) an increase in the boiler capacity from 10,000 kilowatt to 20,000 kilowatt at the Pigeon House station, £45,000.
It will be noted that a 20,000 kilowatt steam turbine is to be installed at the Pigeon House, but that increase in boiler capacity will be only to the extent of 10,000 kilowatt. That is all that is considered necessary at the present time. It has been intimated that certain developments in boiler construction are going on, and that, although these developments have now been nearly completed, they have not yet reached the stage where we would be safe in investing in a boiler of the new design. It is not necessary, however, that we should do so at this stage. This second boiler will not be required for some time, and, by that period, it is thought that these new developments will have been perfected, and that, consequently, by delaying the installation of the second boiler until it is absolutely necessary, the advantages of the new development can be secured.
In connection with these new works it is necessary that I should explain to the Dáil a certain decision that was made by the Executive Council. The information conveyed to me was that the additional generating capacity would be required in the winter of 1933, and that there was no time to be lost, as the installation of the additional generating capacity would take a very considerable time. A period of 18 months was mentioned in connection with the new hydro-electric units, as representing the very minimum which could be considered, whereas 20 to 24 months was much more likely to be the time required. A period of 15 months was mentioned in connection with the new steam units. It is understood that the total capacity of the existing plant is adequate to supply the peak load next winter, but certain insurance against breakdowns must always be effected, and if one unit went out of production, the generating capacity of the remainder would be inadequate to meet the load. Consequently, it is essential that some additional generating capacity should be provided before the winter of next year. The circumstances required a prompt decision and yet it was not possible, on the information available, to make that decision. A certain period elapsed while the Board was examining tenders received, and various expert reports submitted and preparing its report for me. In the meantime, they recommended that, in so far as the new hydro-electric unit might form a part of any programme determined on, work could be proceeding on the erection of the coffer-dam at Ardnacrusha.
I felt that I was bound by an undertaking given to the Dáil by my predecessor, and given at my own request, that no part of the money provided for the Electricity Supply Board, the £2,000,000 provided last year, would be expended on new generation. When this proposal in respect of a coffer-dam, however, was submitted, in view of the apparent need for urgency, the Executive Council decided to authorise the Board to proceed with the construction of this coffer-dam and to charge the amount against that £2,000,000. The amount was £30,000. That amount is, however, being provided out of this sum now asked for, so that the position in respect of the two million pounds will remain unchanged. It is necessary, however, that we should inform the Dáil that that step was taken. The coffer-dam will be more or less a permanent structure. It will be permanent to this extent, that it will be left there after the new turbine has been installed, with whatever alterations are necessary, and will, consequently, reduce the cost of the installation of an additional turbine which may be installed at Ardnacrusha. The erection of another coffer-dam on another occasion will not be necessary.
No doubt Deputies will be querying the position in respect of the publication of the Board's accounts. The Board's accounts for the year 1930-31 have not yet been published and, as Deputies are aware, they are long over-due. It was originally intended that these accounts should be available at the beginning of this year, but the audit of them has not yet been completed. I am now informed that it is expected that the audit will be completed by the end of August and that the accounts for the year 1931-32 will be ready for audit by the end of July, and that the audit should be completed by the end of September. It is necessary, however, that Deputies should be given some information concerning the financial position of the Board. We had a long discussion on this matter last year, and it was revealed that the financial position of the Board was by no means satisfactory. I do not think it can be said to be satisfactory yet, but, as the public know that that is the position, the question we have to ask ourselves is, by what date, and with what speed, the unsatisfactory nature of the financial position of the Board can be remedied. It is estimated that the accounts for the year 1930-31 will show a deficiency of £198,318. Deputies may compare that sum with the very much smaller deficiency shown in the accounts for the previous year which have been published, but, in order to get a proper comparison, they must bear in mind that included in the items of expenditure in the year 1930-31, there were for the first time the full interest charges to the Department of Finance in respect of Shannon works transferred to the Board. The greater part of the works were transferred in that year and an interest payment of í359,419 fell due. There were also certain abnormal allocations in respect of depreciation of stocks and bad debts, but the position at the end of the year was, as I have said, that the revenue of the Board from the sale of electricity, or from any other source, was inadequate to meet all the charges against that revenue by a sum of £198,318.
That figure which I have given is of course an estimated figure. The audited accounts have not been published but it will serve to give Deputies a general idea of the position. For the year 1931-1932 it is estimated that the deficiency will be £33,169. That estimated deficiency is substantially less than the deficiency of the previous year but there is nevertheless a deficiency there. In that year the interest payment was £455,000, but the same provision in respect of depreciation of stock and bad debts had not to be made. For the future the position is that the Board estimate that for the year ending 31st March next they will produce a surplus roughly in or about £90,000. In the following year, however, that is the year 1933-4, sinking fund payments will arise for the first time. The surplus for the year 1932-3 plus the surplus for the year 1933-4 will be adequate to meet the sinking fund payments arising in the year 1933-4, leaving a sum of £33,000 for allocation to reserve.
Deputies are aware that the Board is required by the terms of the Electricity Supply Act, 1927, to make certain provisions in respect of depreciation and other charges and that the interpretation of that section was one of the matters in dispute between the Department of Industry and Commerce and the Board. A strict interpretation of the section required the Board to make normally a provision in respect of depreciation which would provide a fund capable of renewing all the assets transferred to the Board when their renewal became due. If that full depreciation fund had been provided, taking it that the Board is required to make that full depreciation fund, there would be a deficiency in that fund of £407,000 on the 31st March last. That deficiency would have increased to £507,000 on the 31st March next and would continue to increase according to the Board's estimates up to the year 1937. In each year some payment against that deficiency might, they estimate, be made but as from next year, that is, the year 1933-4, the Board expect that the revenue will be adequate to pay all the cost of operation, repairs and maintenance, and the general management expenses, and the payment in respect of liabilities assumed from local authorities, interest and sinking fund charges, with a small surplus.
It is obvious from these figures that any proposal to reduce the charges for electricity would have to be very carefully considered. The financial position of the Board is, as I have said, unsatisfactory and it is necessary that we should be satisfied that any alterations in policy in respect of rates was not going to produce a diminution in revenue which would make that position still more unsatisfactory. The Board estimate, on the basis of annual consumption, an increase in consumption of 14 per cent. It might be contended that a decrease in rates might produce an annual increase in consumption to a greater amount. That may or may not be correct. I have not had an opportunity of going into that aspect of the matter with the very great care that would be necessary before I would be in a position to make up my mind as to what the possibilities were but in the light of the figures which I have given it is quite clear that any alteration in policy would have to be very carefully studied before being given effect to.
The present position is that the Board expect to meet all their interest charges in this matter, plus all their operation expenses, with a small surplus this year. They hope next year to be able to commence the payment of sinking fund charges as well as interest charges, and the operation expenses with a small surplus, but as I have pointed out, they have as yet made no provision for a reserve fund, as was contemplated under the Act, and they do not expect to be able to reduce in any way the deficiency in the Reserve Fund, which a strict interpretation of the relevant section would make it necessary to decide exists, until the year 1937. At the same time there is no reason to regard the financial position of the Board as unsound in any way. I think that whatever interpretation of that particular section of the 1927 Act is the correct one, it is an arguable case that the Board should not be required to make that full depreciation provision, while at the same time repaying capital advances. However, it is obvious that even if we decided that the Board should not be required to make that provision for depreciation at all, it would still not be possible to contemplate any diminution in revenue consequent upon a reduction in lighting or heating charges.
I have refrained up to the present from saying anything that might give rise to a general discussion upon the whole policy of electrical development in this country. The Government on coming into office had to deal with the situation that it found existing. It found the Shannon Scheme controlled by the Electricity Supply Board in the position which I have indicated, requiring additional generating capacity to meet an anticipated demand for current and requiring that additional generating capacity with considerable urgency. It has put before the Dáil the recommendation of the Electricity Supply Board as to the manner in which that increased generating capacity should be provided. We have examined, with all the care which the time available permitted, the various figures submitted by the Board. On these estimates and figures it appears that the Board's recommendations must be accepted as being the most economical and best suited to deal with the situation, particularly the situation in respect of time.
The new generating capacity which will be provided by this expenditure will provide for all the requirements of the Board to the year 1936. After that date, if the increase in consumption continues at the rate of 14 per cent. per annum, a still further generating capacity will have to be provided, but before then, I think, there should be an expert examination into the whole question of the future of electrical development here. There should be an examination into the various problems that are associated with the provision of additional generating capacity at Ardnacrusha, such as the suitability of providing it by additional steam plant or the possibility of providing it by some other method. However, that examination can proceed, and it is the intention to arrange for it, in due course. In the meantime, however, the position is that this increased generating capacity must be made available and no time can be lost in doing so. Things have already run rather close and we could not afford to take the risk of delaying matters any further as, otherwise, at the end of 1933, we might find ourselves in the position that we should be unable to supply the demand for electricity that might the arise. Consequently I recommend the Bill to the Dáil.
