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Dáil Éireann debate -
Tuesday, 28 May 1963

Vol. 203 No. 2

Committee on Finance. - Electricity (Supply) (Amendment) Bill, 1963—Second Stage.

I move that the Bill be now read a Second Time. The purpose of the Bill is to authorise the increase to £160 million of the existing statutory limit of £135 million on the capital expenditure which the Electricity Supply Board may incur for general purposes, that is to say, exclusive of capital expenditure on the electrification of rural areas.

At 31st March, 1963, the actual capital expenditure of the Electricity Supply Board for general purposes was about £97 million. In addition, the Board had entered into commitments for the same purposes amounting to approximately £37 million. The total of £134 million covers expenditure already incurred and expenditure likely to be incurred on foot of present commitments up to 1968/69. It includes provision for 470 megawatts of generating plant yet to be commissioned. It is expected that all this additioinal plant will have been commissioned by 1969 and the Board's generating capacity will then be 1289.5 megawatts, of which 219 megawatts will be hydro, 407.5 megawatts peat-fired, 15 megawatts fired by native coal and the remainder of 648 megawatts fired by imported coal or oil.

The Board must plan system extensions well in advance, especially generating plant extensions. The Board must, in fact, be in a position to enter into commitments in the immediate future in respect of additional plant and equipment which will be required after 1969. As the total of the Board's expenditure and commitments is now approaching the limit of £135 million set by the Electricity (Supply) (Amendment) Act, 1962 which was passed in July, 1962, the authority of the Oireachtas to the raising of this limit to £160 million is now being sought.

Deputies will recall that I said when moving the Second Reading of the 1962 Bill that the limit of £135 million was expected to cover the commitments likely to be entered into for the next two years or so. At that time the ESB were assuming an 8 per cent per annum rate of growth in the demand for electricity. The Board are still working on an annual growth figure of 8 per cent long term but they have found that they must be equipped to deal in the short term with annual growth rates exceeding 10 per cent. For example, in the year to November, 1962, i.e. before the onset of the very bad weather, the growth rate was 10 per cent. To meet the load situation which would develop with an accelerated growth rate of that order the Board have decided that three instead of two extra 60 megawatt generating sets must be installed at Ringsend thus bringing the capacity of that station in 1966/67 to 270 megawatts. Commitments in respect of the extra 60 megawatt set at that station, which must be entered into immediately, practically exhaust the Board's authority to incur capital expenditure for general purposes and this explains why it is necessary to seek the approval of the Oireachtas to increase the limit at least a year earlier than had been expected.

On the basis of their forecast of a long-term rate of growth in the demand for electricity of 8 per cent per annum, the Board expect that further capital investment amounting to about £27 million will arise for approval in the next three years. The construction of about 200 megawatt of additional generating capacity and large extensions of the transmission and distribution system are envisaged.

It is expected that all bogs suitable for economic development by present methods for power station fuel will be in production by about 1970. Power stations have already been sited on all the rivers capable of being developed economically for hydro-electricity generation, and, while the collection of data on other water power resources is continuing, no significant additions to generating capacity can be expected from them. The possibility of using the indicated reserves of high ash coal known as crow coal in the Arigna area as fuel for an extension of the Arigna generating station is still under investigation but, in any event, the amount of additional generating capacity which could be based on the Arigna coalfield is insignificant in relation to future generating plant requirements. Unless, therefore, we should have the good fortune that adequate and economically workable reserves of oil or natural gas are discovered in the country, we must rely on imported conventional fuel or nuclear energy when that becomes economic to supply energy for new generating stations commissioned after 1970.

The ESB continue to watch developments in the application of nuclear power for electricity production, but so far conventional methods of generation are cheaper.

The unprecedentedly heavy demand for electricity experienced during the prolonged spell of severe weather last winter taxed the Board's generating system to the limit. It was only by calling on every available generating unit, including the stand-by plant at the Pigeon House which had to be worked well beyond its rated output, that the Board was able to maintain supply throughout this period. Early in February the peak load reached a record high level of 632 m.w. The difficulty of maintaining supply was accentuated by the widespread damage to transmission and distribution lines caused by blizzards during this period. The extent to which the Board succeeded in maintaining the supply of electricity during this period was really an outstanding achievement and I am sure that Deputies will agree that the Board's staff concerned are deserving of heartiest congratulations for the excellent services rendered by them.

Hear, hear.

Although it does not arise directly on this Bill, I should like to say a few words about the progress of rural electrification. The 1962 Act authorised an increase in the capital subsidy for the connection of rural houses to the electricity supply to 75 per cent of the capital cost subject to a maximum of £75 for any one house, and authorised the Board to spend an extra £5 million on the scheme, bringing the total permitted expenditure on it to £37 million. A special grant of £90,000 was provided for "backbone" distribution lines in certain rural areas which it would otherwise be quite uneconomic to connect. The Board is now pressing forward with the completion of the initial scheme and expect that the development of all areas will be completed by June, 1964. At the same time the Board is putting into operation a further programme under which all, or nearly all, houses still without supply will be re-canvassed over the next few years and local post-development schemes to bring supply to all those now requiring it will be drawn up. It is a feature of the rural programme in its final phase that some houses now prepared to take supply, may have to wait a while until the post-development scheme for their locality comes to be carried through, but this is inescapable if orderly progress, rather than haphazard individual connections, is to prevail and thus ensure the minimum capital expenditure on the work and, consequently, lower special service charges for those who have to pay them. It is expected that comparatively few people will have to be asked to pay special service charges of more than half their normal fixed charge.

The total number of consumers connected under the rural electrification scheme at a recent date was 271,763 which together with 14,370 consumers who had been connected before the rural areas were developed gives a total of 286,133 or approximately 72 per cent of all rural dwellings. The total capital cost of rural electrification to date is about £32 million. On the basis of the present subsidy arrangements the Board can offer supply on reasonable terms to some 100,000 rural dwellings still unconnected. The Board expects that about 64,000 of these will accept supply during the next four years and that in due course some 96,000 will be connected bringing the total rural connections to about 96 per cent of all rural dwellings. This achievement compares very favourably with what has been achieved in many better off European countries. The total estimated capital cost of connecting the 96,000 houses is £7 million or on average, about £75 per house.

There are, however, some 12,000 houses or about 3 per cent of all rural dwellings which because of their isolated locations would be hopelessly uneconomic to connect. The total estimated capital cost of connecting these houses is £2½ million or an average of over £200 per house. While a subsidy of £75 per house is available in these cases, very heavy special service charges cannot be avoided because of the inordinately high capital cost of connection. Deputies will appreciate that the cost of connecting these houses would be altogether out of proportion to any benefits to be conferred. The vast majority of these houses would be connected mainly, if not wholly, for lighting and cooking. These needs could in these cases be met in a reasonable way by alternative fuels and the initial cost would be insignificant compared with what it would cost to connect with the electricity supply. With this end in view, the Government has made available a grant of £10 per house towards the installation of bottled gas for these houses.

Deputies will, no doubt, have been struck by the magnitude of the capital investment in the electricity industry which will be required in the future, and by the rate at which it has increased. The maximum expenditure of the ESB for general purposes, i.e. excluding expenditure on the electrification of rural areas was set at £100 million by the Electricity (Supply) (Amendment) Act, 1954. In 1961 the figure was raised to £120 million, in 1962 to £135 million and it is expected that in three years' time the limit of £160 million now proposed will have to be raised again.

The foregoing figures are exclusive of expenditure on the electrification of rural areas, which has to date cost between £32 million and £33 million. Increasing capital investment in the electricity industry is common to all countries and, indeed, the consumption of electricity in any country is a good measure of the degree to which that country has been economically developed. Of course, as I have already indicated, the Board's cash requirements lag considerably behind their commitments.

Re-investment of their depreciation funds at present provides about half the Board's annual capital requirements. For a number of years past, apart from rural subsidy totalling £5 million and minor receipts from other sources, the Board have obtained the remainder of their capital requirements direct from the public by the issue of stock, guaranteed as to principal and interest by the Minister for Finance. Stock to a total of £27 million has been issued to date, including the successful issue of £7 million in March last. The eagerness with which the Board's capital issues have been taken up by the public is a measure of the public confidence in the organisation, a confidence which I feel sure is shared by Deputies.

I recommend the Bill to the House.

We on this side of the House echo and, in fact, stress the remarks made by the Minister in reference to the provision of electric current during the first few months of this year. Anyone who lived on the edge of the areas that were badly affected, as I do, realised the devotion to duty—no lesser phrase would be adequate—displayed by the officials of the ESB. The manner in which, in West Wicklow and the borders of Kildare, they managed to keep current supplies going or were able to reconnect so soon after the blizzard deserves commendation from every side of the House. Let us hope we will be luckier in relation to the weather in the future and that they will not be called on again to make the same efforts which, I might add, were eager and wholehearted in exactly inverse ratio to the efforts made by the Government for the people who suffered in those badly-stricken areas. However, the tribute was due and I am glad to have this opportunity of paying it.

I must confess that, listening to the Minister speaking, I thought back and decided how interesting and how amusing it was to hear Deputy Childers, as Minister for Transport and Power, coming in to give the baby elephant more fuel and food. The Tánaiste has frequently made foolish statements—he specialises in them and there is no person who has to apologise more often—but none so foolish as the description of the Shannon scheme as a white elephant. The rate of progress of hydro-electric supplies from the late 20s to the present time is surely something of which Deputy McGilligan can be justly proud.

Before I go on to other more general matters, I must say I considered it rather much for the Minister to give such a late explanation as to why he has had to come again to the House so soon after last August. It does seem there was something wrong in the forecast last August. Any change in the supply situation since surely would not make it necessary to call for a £25 million increase in the permissive amount of capital structure within 12 months. Perhaps it is as well that is so, because we can well remember the mistake the Taoiseach made in directing the ESB some ten years or so ago in providing for a rate of increase for current consumption that was contrary to all the technical advice given at that time in Economic Development. It is perhaps better there should be the caution there was apparently last August.

It would be grossly unwise to utilise capital for unnecessary pre-development as was done by the Taoiseach at that time and the Government were then properly taken to task for it by committees examining this project at the time and not merely from the financial angle. The Minister made reference to rural electrification. I want in that respect to get one thing clear. There are two views in relation to the method of payment for rural electrification. One is that it is better the general taxpayer should pay and the other, that the electricity system is one that very nearly equates to the general taxpayer system. By and large, there is not very much difference between the two.

In fact, there is quite a case to be made that when it is the rural areas that are being considered for this development, their more fortunate brethren in relation to electric current should be the people who should meet the general cost rather than the general taxpayer. There are two quite legitimate views to be held on either side. The Minister may hold one and I may hold the other, but it should be examined from the point of view of the two rather than from the angle of any extraneous circumstances. There never was any suggestion that the ESB, when the method of subsidy was changed, should reduce their supplies of current to new rural areas. It was merely a question of method of payment.

Debate adjourned.
The Dáil adjourned at 10.30 p.m. to 3 p.m. on Wednesday, 29th May, 1963.