I move: "That the Bill be now read a Second Time".
The purposes of the Bill are firstly to increase the limit of authorised capital expenditure by the ESB for general purposes and, secondly, to provide for certain amendments in the superannuation code of ESB employees.
Under existing legislation the board are entitled to incur capital expenditure for general purposes, that is to say, for all purposes other than the electrification of rural areas, up to a limit of £225 million. While actual expenditure up to 31st March, 1970, amounted to about £187 million the board, of course, must enter into commitments for substantial expenditure some years ahead. Deputies will appreciate that, in general, it takes five years from planning stage to commissioning stage for generating stations. Therefore, at any given time, the board are committed to expenditure on generating plant up to five years ahead. Capital for transmission and other expenditure does not have to be planned quite so far ahead. I propose in this Bill to increase the limit to £290 million.
The board's total installed generating capacity at present amounts to about 1,410 megawatts. They expect to commission 706 megawatts of additional capacity, half of which will be oil fired, to meet the demand up to 1974-75. This additional capacity includes a 40 megawatt extension to the milled peat fired station at Shannon-bridge, County Offaly. This will absorb the production of the last major bog suitable for harvesting by Bord na Móna's advanced methods.
The additional capacity also includes the 280 megawatt pumped storage scheme at Turlough Hill, County Wicklow. A pumped storage project depends on the utilisation of relatively cheap electrical energy available from thermal generating stations to pump water during the night from a low level reservoir to a high level reservoir. This water is utilised the following day to produce peak load energy and in this way the station acts as a storage centre for electricity.
Although the scheme has received a certain amount of publicity, Deputies may not be fully aware of the magnitude of the work being carried out. The scheme, which qualified for a loan of about £6 million from the World Bank, and which will cost over £12 million, was largely designed by the board's own engineers and is regarded as being unique in civil engineering projects in Ireland. Turlough Hill will be the sixth station of its kind in Europe and only two others in the world are technically more complex, in terms of the height and quantity of water used.
I think the board have, perhaps, tended to be unduly modest with regard to the Turlough Hill project. They have every reason to be very proud of this development. Deputies should take the opportunity to see the scheme for themselves, as I did, and I have no doubt that the board would be delighted to show them around.
When the Turlough Hill area was first proposed as a location for the project, there was considerable disquiet about the dangers to the amenities of this beautiful part of the country. It is, therefore, necessary to point out that the board have so designed the scheme that virtually nothing will be visible from the road. On their own initiative, the ESB engaged a most eminent landscape architect to advise on the problems associated with the project and, despite a number of public statements to the contrary, they have closely followed the recommendations made and have every intention of doing so in the future, if at all practicable.
Controversy at present surrounds the proposed routes of the transmission lines from the scheme. I do not propose to add fuel to this controversy except to point out that the decisions in this case will be for the appropriate planning authorities, from whom the ESB have sought planning permission, and that interested parties can lodge any objections they may have with the appropriate planning authority.
Also included in the additional capacity being provided in the next few years—and another innovation as far as the ESB are concerned—are two 13 megawatt gas turbine units at Pigeon House. These small sets can be started independently of outside electricity supply and would reduce the time required to restore supply to the Dublin area in the event of the main Dublin stations being temporarily out of action. They can also be utilised for peak load, thus avoiding the necessity for installing large uneconomic units—"peak lopping" as it is called.
The question of erecting nuclear stations has been posed from time to time both in the press and here in the House and I take this opportunity to explain the position. The competition posed by nuclear power generation for conventional thermal stations has led to rapid and substantial improvement in the technology of thermal generation in new, larger, higher-temperature units, giving greater efficiency and hence lower cost. In our circumstances, it is necessary to bear in mind the size of station suitable to Irish conditions.
The more competitive nuclear stations erected abroad have so far all been of very large capacity, approaching our total installed capacity. There is a problem in accommodating large generating units on the ESB system because of the base load running which they require, and the risk involved in overdependence on single units. However, the continuing growth in demand for electricity in Ireland is making it possible to use larger and larger units so that the time when nuclear generation may become viable is moving closer. In addition, producers of nuclear generators are now tending to give more consideration to the production of competitive medium and smaller sized units.
Apart from pure economics, we are becoming to a greater extent each year dependent on oil, and generation from native sources of energy, already practically fully developed, now represents an ever decreasing percentage of output. Diversion into nuclear generation would be a safeguard on security grounds. It is thus in the national interest to lessen our dependence on any one energy source. The ESB have already arranged for the training of some of their engineers in nuclear technology and are continuing to study the overall situation. Ireland may well have its first nuclear power station before the end of the seventies.
The demand for electricity continues to grow at a remarkable rate. The rate of increase over the past four years was as follows:—
|
1966-67 |
8.6 per cent |
|
1967-68 |
10.3 per cent |
|
1968-69 |
11.8 per cent |
|
1969-70 |
10.5 per cent |
By way of comparison, the increase in demand in European member countries of OECD has averaged between 5 per cent and 6 per cent in recent years; further comparisons show that, in the five-year period ended March, 1968, the average annual increase in electricity consumption per inhabitant was 11 per cent in Ireland, 5.1 per cent in the UK, 6.1 per cent in France, and 7.6 per cent in Italy. The growth in demand here is, of course, a sign of economic strength and an indicator of the improving living standards of our people. Our economic growth is conversely to a great extent dependent on our continuing to invest increasing amounts of public capital in the provision of electricity to meet the increased demands.
The board had been estimating future demand for electricity on a 9 per cent compound growth basis but they are now raising this estimate to 10 per cent. Estimating increases in demand for electricity up to five years ahead is a hazardous and onerous job. There is the danger, on the one hand, of over-estimation in which case the unused generating capacity would bring serious losses and, on the other hand, the danger of under-estimation. resulting in load shedding because of inability to maintain supplies. Future demand is affected by the course of general economic progress in the country in the period concerned. The ESB, I might say, employ the most modern techniques of forecasting and they are aware of the latest developments internationally in the determination of more precise statistical standards for the peak load security level.
To meet the expected growth in the years after 1974-75, the board expect, during the next two years, to approve the construction of up to 500 megawatts of further generating capacity estimated to cost £25 million. A further £5 million expenditure in respect of generating capacity being provided up to 1974-75 will also arise during the next two years. Finally, improvements to the transmission and distribution networks and other works costing about £35 million are expected to arise for approval by mid-1972. These sums total £65 million which is the amount of increased capital expenditure being authorised by the Bill. Further amending legislation will then be required, giving the House another opportunity to debate, in a general way, the affairs of the board.
The enormous new investments now necessary to keep pace with the sustained and continuing growth in demand involve a serious financial problem. During the next seven or eight years the board will have to provide as much capacity again as has been provided up to now. Their capital expenditure is now running at over £20 million a year. Having regard to the amount of capital left available after meeting the other competing demands for capital in the Irish market, the board can no longer attract their full requirements by the traditional long-term loans, as in the past.
The board have, therefore, to resort to foreign borrowing and credit financing which involves high interest rates and repayment in a shorter term. This involves higher revenue charges and greater reliance on internal financing. As indicated in last year's ESB report, this is one factor leading to increased prices. As long as the present general financial position persists, I cannot rule out the likelihood that further price increases may be unavoidable.
I might say that the board's charges, taking into account the increase which came into effect in January, still compare favourably with most West European tariffs for domestic consumers. In regard to industrial consumers, there is, admittedly, cheaper power for big industrial users in Norway, Sweden and Switzerland where there are adequate supplies of cheap hydro-power. French, British and Dutch tariffs for big industries give about the same order of costs to the user as those of the ESB. I am sure the House will agree that it is a major challenge to the ESB to maintain electricity prices here at attractive levels.
I have pleasure in recommending the increase in the board's limit on capital expenditure to the House. It is a warranty, a clear evidence of progress being made and of confidence in our prospects for the future.
The second part of the Bill deals with certain improvements in the pension schemes for ESB employees. The first manual workers' pension scheme which came into operation in 1943 provided a maximum fixed pension of £3 a week and a retirement benefit of £200. Over the years the pension rates have been increased from time to time but it became obvious that a scheme based on fixed amounts was no longer appropriate. Substantial improvements in the pension entitlements of manual workers have recently been negotiated between the board, the workers, and the unions.
The principal improvement is that a worker with full service can now get a pension of half his retiring pay, together with a retirement benefit equal to one year's wages. Payment of pension is guaranteed for five years following retirement and a worker may, before he retires, exercise an option to provide his wife or other dependant with a pension for life should she survive him. Death benefits payable under the scheme have also been improved. The worker's contribution rate under the new scheme is 5 per cent and there is an equal contribution by the ESB.
Many ESB workers serve in a temporary capacity for some years before they are appointed to permanent and pensionable posts with the board and admitted to membership of the pension scheme. The new scheme will enable workers to reckon for pension purposes one half of such service, excluding the first two years which are regarded as a probation period. One of the objects of the Bill is to amend the existing statutory provisions to enable this credit to be given.
The new benefits represent a considerable advance on those which applied formerly and the new scheme which was initiated by the board, is, in my opinion, a practical demonstration of their concern for their staff. I am confident that the new scheme will provide a valuable contribution towards the growing improvement in staff relations which the board are so anxious to foster.
The pension scheme for general employees of the ESB also came into operation in 1943. Persons who were more than 40 years of age on the date the Electricity Supply Board (Superannuation) Act, 1942, was passed could get a supplementary allowance of up to 10 free added years for pension purposes. Persons who were less than 40 years of age when the 1942 Act was passed and who were entitled to reckon only half their prior service for pension purposes have in recent years been pressing strongly for the grant to them of a similar concession. Representations have been made on a number of occasions by members of the Oireachtas. The Government have reviewed the position in the light of the decision to reckon unestablished service in the Civil Service in full for pension purposes and have decided to amend the 1942 Act, to enable the under-40 group to claim credit for the whole of their prior service.
The amendments proposed in the Bill are in line with improvements in pension benefits elsewhere in the public service and I am, therefore, recommending the amendments to the House.
