asked the Minister for Trade, Commerce and Tourism in view of the £6.3 million profit made by the Electricity Supply Board this year, if he will now withdraw the 80 per cent increase in the fuel variation charge which the Government sanctioned with effect from 1 September last.
Ceisteanna—Questions. Oral Answers. - ESB Fuel Variation Charge.
7.
The fuel cost variation surcharge operated by the ESB is the mechanism which reflects increases or decreases in fuel costs to the board. It is intended to help balance revenue with fuel costs and it does not generate any profit or loss.
The rates of surcharge, which are subject to review every four months, are examined in detail by the National Prices Commission and any increase in rates must have Government approval. The latest review, undertaken by the National Prices Commission in October 1981, revealed that no reduction in the present rates of surcharge is warranted.
With regard to the increase in the rates of surcharge implemented from the August-September 1981 billing period, I should point out that a factor which contributed significantly to the level of that increase was the necessity to recoup increased fuel costs incurred by the board in the period from February 1981 when a decision on revised rates of surcharge was postponed.
Is the Minister aware that the 80 per cent increase will mean an increase of £100 million in revenue to the ESB and is he saying that this additional revenue is entirely necessary? Further, is the Minister aware that this increase has meant practically a £3 increase per week for the average consumer and that consumers who are heavily dependent on electricity will pay even more? Does he consider this a reasonable charge to apply now or is it part of the general decimation of the middle income group?
The Deputy may have misunderstood the content of the reply. The reason for the size of the fuel cost variation surcharge agreed upon last summer was that the increase which the ESB had sought from the National Prices Commission in February last in relation to allowable cost increases, and which had been approved by them, was not approved by the previous Government. Because of the serious situation in which that placed the ESB by the summer of this year it became necessary not only to adjust the EEC rate of surcharge which had been recommended by the NPC in early February 1981, but to adjust it in such a way as to raise the surcharge on electricity charges for one year in order to recoup the shortfall because of the failure of the previous Government to provide sufficiently for the ESB's fuel surcharge cost.
Would the Minister agree that after that decision was taken by the Minister for Finance the ESB declared a profit of £6.3 million? Is the Minister suggesting then that, had the ESB been given the increase that they sought earlier in the year, that profit would have been £15 million? How can the Minister come to the House and tell us at this stage that it was necessary at that time? This is a factual situation. The ESB subsequently declared £6.3 million profit. If they had had the increase that the Minister says was necessary for them to recoup themselves at this stage they would have £15 million profit. I refer the Minister to their figures. I ask him to look once again at that 80 per cent surcharge which is causing extreme hardship and difficulty outside. The ESB revenue is just over £400 million and this is an extra £100 million on £400 million which in any terms is enormous. From that extra £100 million which the ESB will take in as a result of this increase, would the Minister consider giving some money to improve supplementary welfare and to assist the Society of Saint Vincent de Paul who at present are in extreme difficulty? The Minister must be aware of this now. I recognise that the Minister's mid-July budget put increased taxes on the fuel cost to the ESB and of that £100 million perhaps £60 million is being recovered by the Minister.
There is some confusion between accounting periods in the question posed by the Deputy. The ESB accounts for the year ended 31 March 1981, which were not published until September 1981 show that the board had achieved a surplus of £6.3 million, as the Deputy said, on electricity sales in excess of £400 million. However, that surplus merely enabled the board to reduce their accumulated deficit from £21.3 million to £15 million. The Government had decided in late 1979 to allow the ESB to reactivate their surcharge in respect of fuel cost variations because it was felt at that time that the reintroduction of a surcharge would allow the ESB to recover the escalating fuel cost increases quickly. The NPC recommended at that time and the Government of the day accepted that the surcharge be reviewed on a four-monthly basis. Those periods fell in February, June and October of each year when the actual and likely cost of fuel to the ESB is taken into account. Consequently, the surcharge is a mechanism which enables the board to match revenue against fuel costs. Any over-or-under recovery in the operation of the surcharge in any period is taken into account in the next review. Consequently, the surcharge mechanism does not generate either profit or loss for the board. In accordance with the arrangements which the previous Government had entered into, the ESB submitted in late December 1980 the review of their fuel surcharge to take effect from February-March of the 1981 billing period. That was based on unrecovered costs amounting to £61.99 million. The NPC accepted that, because of the projected increased cost in fuel for the financial year April 1981-March 1982 together with under-recovered costs for the previous financial year and some other once-off costs, that additional £61.99 million in respect of fuel cost variation surcharge ought to be allowed. The Minister at the time accepted the NPC recommendation and conveyed his decision to the then Department of Energy whose responsibility it was to obtain Government approval for the increase. However, the Government of the day decided not to authorise the increase, consequently in summer of this year the ESB's accumulated deficit was considerably larger than it would have been had the increase recommended by the NPC and the Minister been accepted by the Government that time.
Would the Minister agree——
This is a final supplementary.
I have been informed by the ESB that this extra £100 million is necessary because the Government have added £60 million to their costs and consequently they need the £100 million in those circumstances. From the extra revenue being taken by the Minister for Finance, would the Minister not make further moneys available to sustain supplementary welfare which is under great pressure at the moment and the Society of Saint Vincent de Paul who are paying an increasing number of ESB bills? The Minister should recognise also that if this increase had been given at the time, then the ESB's profit instead of being £6.3 million would have been £15 million.
We cannot have a debate on this.
The Deputy is confusing accounting periods. The ESB showed a surplus of £6.3 million in respect of the financial year which ended in March last. The Deputy is now referring to charges which are imposed in relation to fuel cost variation surcharges in respect of the current financial year of the board. Consequently it would be quite erroneous to suggest that any variation would have affected last year's outturn.
Ceist 8.
By way of explanation——
I am sorry Deputy, your last question was a repeat of the one supplementary you asked previously.
By way of explanation, the Minister——
We could never make progress in this way. This is a matter for debate but it cannot arise on questions.
The Minister has made a very important point. He has referred to the two months during which Fianna Fáil should have increased the price which was in the old accounting period of February and March. If it had been increased in February and March in effect their profit would have been £15 million. That is the point I am making. I am not confusing accounting periods. It is purely a matter of information.