Gas Regulation Bill, 1957—Second Stage.

Minister for Industry and Commerce (Mr. S. Lemass)

I move that the Bill be now read a Second Time. This is the last of the Bills I have to produce to enable the Supplies and Services Act to lapse finally on 31st December, so that it represents the end of a process which most Deputies will be glad to see terminated.

This Bill has been framed on the same principles as the Prices Bill which the Dáil recently passed. Deputies may ask therefore why it was not incorporated with that Prices Bill. The explanation is that there is in existence a highly complex code of legislation relating to gas charges and the question of gas charges is a rather specialised one. It was considered desirable therefore that policy relating to gas charges should be made effective by means of a separate Bill which will form part of that code of legislation to which I have referred.

The principal statute relating to the control of gas charges is the Gas Regulation Act, 1920, and the powers contained in that Act were used to control charges for gas until the outbreak of the war in 1939. Gas charges were controlled by means of Orders made by the Minister for Industry and Commerce. A number of these Orders fixed maximum prices for certain companies; others fixed standard charges which were tied to dividends by a sliding scale. If the charge for gas exceeded the standard charge, then the dividends had to be reduced and if the charge was less than the standard charge, then the dividends had to be increased.

There were ten gas companies controlled by means of Maximum Prices Orders and six companies were subject to the other kind of Order which related dividends to standard charges. There were six other companies, mostly very small concerns, which were not subject to any form of control at all.

All that system of controlling charges for gas broke down when war-time conditions developed. The difficulty of maintaining supplies, the deficiency in coal availability and the low quality of coal which was procurable all operated to affect production costs. All these measures for controlling the charges for gas in normal times had to be dispensed with and from then until now gas charges have been controlled under emergency legislation including the Supply and Services Act to which I have referred.

If the Supply and Services Act were allowed to lapse on the 31st December without new legislation, then these pre-war Acts would come into operation. I am sure Deputies will recognise that the restoration of gas charges to the levels which they were in 1939 would be out of the question because production costs are much higher now than they were before the war. Apart from that consideration, it is desirable that there should be a new approach to the question of controlling gas charges and that the system in use before the war should be abandoned as unsuitable and unnecessary in the circumstances of to-day.

Gas companies do not now enjoy the monopolistic position which they held in pre-war years. They are subject to vigorous competition from both electricity and oil. That competition ensures that their charges will not be excessive. Therefore, I think we can dispense with the existing statutory control machinery or the pre-war limitations on gas charges and dividends, subject to the enactment of this legislation which will permit of control being reintroduced if circumstances should make that course necessary.

The circumstances which I envisage are those which are provided for in the Prices Bill. That is to say, when the advisory committee has reported that the charges of a particular gas company are too high or alternatively that because of temporary circumstances gas is in short supply. I explained to the Dáil during the Second Reading of the Prices Bill the reasons which led to the decision that the procedure for price control which was set out in that Bill was the most suitable in the circumstances in which we now find ourselves. The argument in favour of applying the procedure to the commodities and services covered by the Prices Bill applies with equal force in the case of gas charges.

I mentioned that some of our gas companies have never been subject to control in relation to charges and I do not propose that they should be brought within the scope of the present measure. Most of them are only maintaining themselves with difficulty at the present time. Therefore it is only the larger and more important gas companies which will come within the scope of this Bill. These are the gas companies operating in Dublin, Cork, Waterford, Wexford, Dundalk, Kilkenny, Galway and Cobh.

A number of other gas undertakings are in municipal ownership and, since they are being operated in the interests of the ratepayers, I do not think there is any need to bring them within the scope of this Bill——

Mr. Everett

Is the Minister aware that some of the companies included in the Bill are the owners of gasworks in provincial towns and that the ratepayers have nothing to do with them?

Mr. S. Lemass

There are a number of quite small undertakings.

Mr. Everett

They are not very small.

Mr. S. Lemass

I shall look into that. Most are small undertakings.

Mr. Everett

One company owns three or four.

Mr. S. Lemass

Each undertaking is a separate undertaking. I am not dealing with the question of ownership except that I am eliminating companies in municipal ownership. The undertaking by itself is either in the category of a large or small undertaking——

Mr. Everett

The people in the provincial areas need protection just the same as those in the cities.

Mr. S. Lemass

I do not think that that protection can be given by way of control, judging from my information of the finances of these undertakings. Most of them are in difficult financial conditions. Any attempt to deal with their charges by way of control would, I think, result in a decision to cease business, which would be generally regarded as undesirable. A number of smaller companies have in fact ceased business because of their inability to cover rising costs with rising revenue.

The position will be that there will be power under this Bill to reimpose control where circumstances require it, either because of evidence of excessive charges due to circumstances outside the control of the operators or because temporary conditions produce temporary scarcities. These are the same principles embodied in the Prices Bill and we are applying them to this Bill. The only reason for a separate Bill is the existence of this code of legislation and the practice of dealing with gas charges as a separate matter for legislation.

General MacEoin

This is a Bill I do not like at all. In it the Minister has used a significant phrase. If somebody does something there will always be power to reimpose controls. In other words: "If you do not do what we say, then you are going to get it; we are going to give it to you in a way you will feel most."

I think the Minister made the case against the Bill when he said that gas is now in competition with the E.S.B. and everybody like that. The authority the E.S.B. has to increase charges is that they want to earn sufficient to maintain their undertaking and to pay their charges and expenses. I do not think any gas company is able to do more than that this minute. Bearing in mind the increased cost of coal and everything else the time has come when, in my opinion, undertakings like these should be allowed to manage their own business.

Mr. S. Lemass

That is what I am proposing to do in the Bill.

General MacEoin

When the Minister is going that far he should go the whole way. The Minister is saying that he is keeping the power to reimpose controls. In other words, if the company does not do what the Minister for Industry and Commerce for the time being wants it to do, then you can come down on it with a big stick. You are keeping that power and you have that threat. That is the kind of legislation that I dislike intensely. There is always someone in the background to hit.

I have no brief for the gas people but I think that these gas concerns are some of the concerns that ought to be entitled now, if it is not now too late, to manage their own business in their own way so that the law of supply and demand will operate as to what they will charge and as to what the price will be for their products. The less interference we have with these concerns the better for everybody. There is now no restrictive power in the Minister or the Government to control what charges may be made by concerns such as the E.S.B. because they have to charge sufficient to meet their capital commitments. But when one of these gas companies proceeds to make some money you are ready to hit them. They also find it necessary to defray their capital charges and running expenses. I suppose there is nothing we can do about it but this is a type of legislation that I do not like.

Mr. S. Lemass

I am in such complete agreement with the views expressed by Deputy MacEoin that my only need now is to show that this Bill is doing exactly what he desires it to do. At the present time the price of gas is controlled under Orders made under the Supplies and Services Act and after the 31st December next the price will not be subject to any official control. However, we are taking power to reimpose controls if there is an inquiry by an advisory committee which finds that the prices charged for gas are excessive due to causes within the control of the management or, alternatively, where some temporary crisis arises, perhaps because of some trade dispute in Britain which would make it difficult to obtain supplies of coal, in which case it would be necessary to keep the situation in hand until the temporary crisis had passed.

I contemplate that, apart from any such temporary crisis that I have mentioned, controls will not, in fact, be exercised. In the case of the smaller gas companies, many of which are having difficulty in continuing to carry on, there is no question of control.

Question put and agreed to.

Dáil Éireann debate -
Wednesday, 4 Dec 1957