asked the Minister for Transport and Power whether he sanctioned an increase in ESB charges; and, if so, on what grounds.
Ceisteanna — Questions. Oral Answers. - ESB Charges.
37.
Mr. O'Donnell
The ESB are required by statute so to fix their charges that, taking one year with another, revenue balances outgoings. The board informed me that their accounts for the year ended 31st March, 1971, will show a deficit of over £2½ million and that at existing rates of charge and without taking into account expected increases in oil and other costs in 1972, a further similar deficit would arise in the year ending 31st March, 1972, and that to correct this position the board proposed to increase charges so as to bring in £3.7 million additional revenue in the current financial year.
After consultation with the Government, I informed the board that in order to minimise as far as possible the immediate impact on prices, the increases to be introduced should be designed to reduce the additional revenue intake in the current financial year to about £2½ million.
Mr. O'Donnell
Did the Minister answer Questions Nos. 37 and 38 together?
No.
Mr. O'Donnell
No. 38 is coming up?
Yes.
When did the Minister sanction this increase?
Last Monday.
On Wednesday last the Minister for Health told me that an increase was under consideration.
There was a Government meeting.
There was a Government meeting on Tuesday.
We meet on Fridays too.
Tuesday is the day they meet, when nobody reads the newspapers. They catch up with them on Fridays.
Can the Minister say whether the Government will receive increased revenue of £22,500 as a result of this increase being imposed by the ESB — £22,500 in the form of turnover tax?
Yes. That is another matter.
38.
Mr. O'Donnell
asked the Minister for Transport and Power whether, in view of the fact that the ESB have felt it necessary to increase electricity charges twice within a space of 12 months, he will have a full inquiry carried out into the whole operation of the ESB.
The ESB are by statute obliged to operate on a non-profitmaking basis and consequently the only measure which they can adopt to contain cost increases which are outside their control is to maintain as high a level as possible of general efficiency. I would agree, therefore, with the purport of the Deputy's question that the efficiency with which the board operates is relevant to the level of charges which they must impose.
I am in continuous touch with the affairs of the ESB and one of my primary concerns is to be satisfied that the board operate efficiently. The affairs of the ESB were investigated in great detail by a special prices advisory body set up by the Minister for Industry and Commerce in 1966 and that body found no grounds on which to criticise the efficiency of the board.
The board's efficiency may be examined under a number of heads. One head is plant margin because generating plant makes heavy demands on capital moneys. An indication of the board's progress in this respect is that the generating plant margin has been brought down from a level of 25 per cent in the mid-1960's to a current level of 16 per cent. This means a saving of about 60 megawatts in plant which is equivalent to a saving of £4 million in installed capacity. The ESB margin of 16 per cent compares with a planned margin of 17 per cent in Britain.
Another head to be considered is generating plant operating efficiency because fuel costs account for roughly 25 per cent of the board's revenue expenditure. The board's efforts in this respect have resulted in the operating efficiency of all stations being raised from 88 per cent to 96 per cent over the past 15 years. These two indices of efficiency which I have just mentioned have, moreover, been the subject of an examination by the World Bank teams which investigated the board's operations. These teams composed of economists and engineers made a detailed study of the board's utilisation of capital and of their operating efficiency. In their reports they expressed themselves satisfied with the ESB's conduct of its affairs and as a result of their reports the World Bank has to-date undertaken to finance the board's programme to an extent of 34 million dollars.
Other indices of efficiency are growth rate and load factor and in these respects I am satisfied by reference to comparable performance in other countries and to the information published by OECD on electricity prices in the OECD Member States that the board's performance is satisfactory.
On the evidence before me which extends beyond the examples I have quoted, I am satisfied that the ESB operate at a high level of efficiency. Nevertheless, I consider it desirable that it should be demonstrated to the public that the board are operating efficiently and for this reason I propose to initiate an independent investigation into the efficiency of the board's operations.