I move: "That the Bill be now read a Second Time."
The purposes of this Bill are to increase the limit of authorised capital expenditure by the ESB for all purposes, including rural electrification, from the existing limit of £450 million to a new figure of £700 million and to delete detailed provisions dealing with the terms of pension schemes for wholetime members of the board of the ESB.
Under existing legislation the ESB are authorised to incur expenditure for capital purposes up to a limit of £450 million. By the end of June, 1973, the total capital expenditure approved by the board had risen to £420 million, which will cover generating plant and transmission and distribution equipment due for commissioning up to the end of the present decade. However, over the next few years the board will have to decide on details of future generating capacity which will require capital expenditure exceeding the present statutory limit.
The board are working on the basis of a long term forecast of a growth rate of 10 per cent per annum in the use of electricity. This is based on rate of growth for some years prior to the recent energy crisis. It might be argued that the present increased prices of electricity could lead to a reduced growth rate in future as prices are unlikely to return to anything like their former levels in the foreseeable future. At the present time electricity consumption is, in fact, running at the same level as in the corresponding period of last year. At this stage it is not possible to predict the future rate of growth.
The high price of electricity must necessarily mean greater economy and care in its use but on the other hand electricity is relatively no dearer than other forms of energy and consequently there is no likelihood of a significant shift to other forms of light, heat and power.
Electricity consumption has increased in the past at a greater rate than other forms of energy and it is expected in most countries that this tendency will continue in future. In all the circumstances I consider that for the present at any rate it is prudent for the board to base their plans on a growth rate of 10 per cent per annum over the medium term we are dealing with in the context of this Bill and that the statutory limit on capital expenditure should be fixed on this basis. Should it prove to be the case that growth does not take place at this rate, the board's plans are sufficiently flexible to allow postponement of some elements of the new capacity so as to keep capacity and requirements in reasonable balance. In such an event the statutory limit on capital expenditure would suffice for a longer period.
A sufficiency of electricity is of such importance to the country, both socially and economically, that we must not run any risk of finding ourselves without adequate capacity to meet our needs. The board's programme within the statutory limit on expenditure is required to be submitted in detail for my approval from time to time and in that way the position will be reviewed at regular intervals in the light of experience.
The present generating capacity of the ESB is 1,798 MW and additional generating stations approved for construction total 1,392 MW. These are due for commissioning between now and 1980 and comprise four 250 MW units—two at Tarbert and two at Poolbeg; a 60 MW plant at Marina; the pumped storage plants totalling 292 MW at Turlough Hill and a 40 MW extension to Shannonbridge milled peat plant.
To cater for the growth in demand additional generating capacity of some 1,100 MW will require to be brought into service in the period 1980-82. The board will soon have to enter into the earlier of the various contracts involved. The total capital expenditure to which the board expect to have to commit themselves in the next few years is estimated at £250 million at present day prices. The actual expenditure will be spread over a period extending somewhat beyond 1982. The addition of £250 million comprises expenditure of:
Generation |
£175 million |
Transmission/System Operation |
£20 ,, |
Distribution |
£45 ,, |
Premises and General |
£10 ,, |
As Deputies will be aware, this country at present depends on imported oil for almost 70 per cent of our primary energy requirements. The recent oil crisis has made two facts very clear; namely that the era of cheap oil is over and that countries can no longer plan their energy programmes with the assurance of uninterrupted supplies of oil. The recent unprecedented increase in electricity charges was a direct consequence of the rise in oil prices. The Government are fully conscious of the heavy impost which the increased charges represent for the householder and for all sectors of the economy. These charges are particularly felt because of the pervasive role which electricity plays in all our lives. As I say, however, the increased charges are a direct consequence of the rise in world oil prices and there was no practical alternative to the introduction of electricity charges commensurate with the new oil prices. I might add that, despite these very substantial increases, electricity charges in this country compare favourably with the rest of Europe.
The energy crisis has served to reinforce our present policy in two areas— the resolve to maximise the contribution of native resources and to move away from our present over-dependence on imported oil. Prior to the onset of the energy crisis, it has been accepted that Ireland's native sources of primary energy, hydro, turf and a small amount of coal, were being fully developed. The position has been revised in the light of the changed energy situation particularly the increased price level of all forms of energy. Bord na Móna carried out a re-examination of bog areas which had previously been considered unsuitable for economic development in the face of low cost imported fuels. Bord na Móna and the ESB are now drawing up plans for a new turf development programme under which greatly increased quantities of peat would be produced for electricity generation. It is envisaged that additional turf fuelled generation plant of about 160 MW capacity will be provided capable of producing 700,000 units of electricity annually. The ESB are also reviewing the possibility of using a low-grade home-produced coal which had hitherto been regarded as too costly.
Marathon Petroleum Ireland, Limited have confirmed the presence of a significant deposit of natural gas at a point 29 miles to the south east of the Old Head of Kinsale. The find is described as relatively small in comparison with offshore finds currently scheduled for development in the North Sea and is not sufficiently large to justify a grid distribution system for use of the gas as a fuel throughout Ireland.
The present intention is that the gas should be piped ashore in the neighbourhood of Cork city and that priority should be given to the use of the gas for the generation of electricity and the production of ammonia for the nitrogenous fertiliser industry.
It is calculated that the deposit when fully developed should be capable of supporting a daily flow rate of 125 million cubic feet of natural gas for about 20 years. The ESB propose as a first step that a 75 MW gas-fired plant should be provided at Marina in 1977. In subsequent years up to 1982 a number of gas-fired gas turbines will be provided at Whitegate with the subsequent addition of steam turbines using the waste heat to give a total capacity of approximately 500 MW at the Whitegate plant.
It is recognised that the use of the natural gas for the generation of electricity is open to objection on the grounds that this is not the most efficient use of a high grade fuel. The combination of gas-fired gas turbines with the subsequent addition of steam turbines using the waste heat will, however, give the highest possible efficiency for the use of natural gas in power stations.
Having regard to our heavy dependence on imported oil and the necessity to ensure the greatest possible security of sources of energy in the event of another emergency similar to the one we had last winter, I think that the gas of a large proportion of the gas for the generation of electricity can be fully justified.
It is understood that the gas is of excellent quality and is suitable as a raw material for the manufacture of ammonia. It is proposed accordingly that approximately 52 million cubic feet a day should be used for an ammonia plant which Nítrigin Éireann Teoranta are setting up at Cork. This would meet the potential demand for ammonia, for the following decade, of the nitrogenous fertiliser industry for the whole Irish market. Gas used for the production of ammonia will replace oil which normally would have to be imported for this purpose.
Nuclear energy has now emerged as the best large scale alternative to oil for electricity generation. Since the Government approval in principle of the ESB proposal to construct a nuclear power station, the board have been proceeding with their plans. Their aim is to issue an inquiry towards the end of 1974, for a reactor in the 600 MW range with a commissioning date of 1982. The estimated cost of the reactor is £130/150 million. The selection of a site for a nuclear station is primarily a matter for the ESB. They have recently indicated a preference for Carnsore, County Wexford. A final decision on the sitting of the station will not, however be taken until further detailed investigation by the ESB is completed; a recommendation has been received from the Nuclear Energy Board and formal approval is given by the Government.
The Nuclear Energy Board have wide powers to ensure that adequate control is exercised over nuclear material and the operation of the nuclear station, and will oversee all stages of the design and installation of the plant. It is also a function of the board to prepare safety codes and regulations taking into account the experience of nuclear power in other countries and the standards recommended by international bodies dealing with nuclear energy. There are about 150 nuclear reactors in commission elsewhere and the ESB are satisfied that techniques are now sufficciently developed to make nuclear power safe. In addition, the board are converting some of their plant to dual firing which will allow the use of coal or oil depending on availability.
In the present world energy situation diversification in the forms of energy used for electricity generation is of paramount importance. The recent crisis has clearly demonstrated this. We in this country have been particularly vulnerable because of our very high and growing dependence on imported oil. Our present plans will do much to remedy this situation. Considerable diversification and security will be achieved by our plans for the greater use of peat, use of natural gas from our own shores and finally nuclear power. All this will bring about a much greater spread in our electricity sources.
Having outlined the ESB's future supply plans, I should now like to bring Deputies up to date on progress of one of the board's current programmes—rural electrification. As Deputies will be aware, the four-year crash programme designed to achieve the completion of the rural electrification scheme is in its final year. It is expected that supply will have been offered in all the 792 rural areas by 31st March, 1975, although the work may not be completed perhaps for several months afterwards. At the beginning of 1974, applications for supply had been invited, either by canvass or by advertisement, from residents in 552 of the 792 rural areas. The ESB expect that they will have made 60,000 new connections by the end of the crash programme, compared with the original estimate of 36,000.
The character of the rural electrification scheme has changed significantly since the original programme was devised in 1946. Then it was simply a matter of connecting houses already built to the supply. Now it is also necessary to cater for new houses industrial developments and the increasing demands of the agricultural community. In the year ended 31st March, 1974, capital expenditure on rural electrification was approximately £4 million, bringing the total invested in the rural electrification scheme at that date to over £59.5 million, of which £21 million was by way of Government subsidy.
The present capital expenditure figures for the ESB and the magnitude of future expenditure give some indication of the growth of the electricity industry and the important role the ESB plays in the life of the community. The operation and running of the ESB have been the subject of two major inquiries in the last few years— the Fogarty Report which specialised in the board's industrial relations and the Fletcher Report which was a general investigation into the affairs of the board. In both these cases the recommendations of the investigating committees have been fully implemented in so far as lies within the board's competence. The findings of the Fletcher Committee were quite complimentary to the ESB's performance and planning. Certain recommendations in the Fletcher Report which would require new legislation are under consideration.
These recommendations are of a long-term nature and mainly relate to the financial regime within which the board are required to operate. The existing framework was laid down in the Electricity (Supply) Act, 1927. That Act requires the board to operate on a break even basis after making provision for all charges properly chargeable to revenue. The board are statutorily precluded from making a profit. The mandate laid down in the 1927 Act has worked well down the years and has stood the test of time. However, it is being reviewed in the light of the Fletcher recommendations to see how far it should be modernised to conform with present day thinking on more sophisticated financial structures for State companies. Any change will require legislation and the House will then have an opportunity of considering the matter.
Fuel efficiency is now more than ever a matter of particular concern to the ESB in the design of stations, the control of their operation and in the allocation of loading to the more efficient plants. It is heartening to note that the board's new Poolbeg station has achieved 2 level of thermal efficiency which is a record for board plant and, indeed, is excellent by any standard in the world. I am satisfied that both in this matter and in the management of their other affairs, the ESB are in the forefront of electricity authorities throughout the world.
The purpose of the second section of this Bill is to delete sections 17 and 18 from the Electricity (Supply) (Amendment) Act, 1961. Section 16 of the 1961 Act, provides for the making of pension schemes to cover whole-time members of the board.
Section 17 and 18 and the Schedule of the Act outline the provisions required to be included in every pension scheme or amending scheme for whole-time members of the board. The detailed provisions outlined in sections 17 and 18 and the Schedule to the Act are not sufficiently broad to permit the pension scheme for whole-time members of the board to be brought into line with the superannuation rights which the board's employees enjoy. It is, therefore, necessary to delete these provisions from the Act. This will facilitate the amendment of the scheme from time to time to keep it in line with developments elsewhere in public service pensions. The deletion of the provisions of sections 17 and 18 and the Schedule would bring the statutory provisions in line with those governing the superannuation schemes for the whole-time members of other State bodies.
I might mention that the chairman of the board is the only whole-time member of the board.
I commend the Bill to the Dáil.