I move: "That the Bill be now read a Second Time."
The provisions of this Bill can be divided into four general areas. The first and most substantive area is the ESB's power and duties in relation to financial matters, and, specifically, expenditure and borrowing for general or capital purposes. Under the legislation as it stands there is a limit on capital expenditure by the board which is extended, by amending Acts, from time to time. The present limit, which was set in the Act of 1981, stands at £1,400 million.
On the basis of expenditure on approved capital projects now in hands, it is clear that this limitation will be reached in the latter part of this year. An increase in the statutory limit is therefore necessary, but I am proposing in the Bill to change the nature of the limit from one based on expenditure to one based on borrowings. There are a number of reasons for doing this. The scale of expenditure for capital purposes, which the board must incur is now such that the greater part of it — currently about 80 per cent — must be financed by borrowings. A change to a borrowings limit will, therefore, not only more accurately reflect this commercial reality but also more realistically reflect the real control which the Oireachtas can exercise, which is over the amount the board can borrow. The change to a borrowings limit will also bring the ESB legislation into line with more recent legislation affecting other semi-State Bodies such as the Gas Act, 1976 which covers Bord Gáis Éireann.
The limit which is specified in the Bill is £1,600 million, in aggregate, of borrowings which have not been repaid by the board. At present the level of the board's unrepaid borrowings stands at £840 million. After taking account of money, which can be allocated from internal resources, it is estimated that the amount of new borrowings required to meet the capital programme up to 1985 will be £735 million which will bring the total to just under £1,600 million.
This limit set in the Bill will, therefore, be sufficient to cover the board's capital operations up to the early part of 1985. At that stage it will be necessary to review again the financial requirements of the board and, if necessary, to seek the approval of the Oireachtas for a further increase in the limitation on borrowings.
The Bill also updates the statutory requirements relating to guarantee of ESB borrowings by the Minister for Finance, again the objective being to bring them into line with more modern practice. A limitation of £1,600 million is proposed on the total amount of such guarantees to coincide with the limitation on the board's total borrowings.
Apart from the foregoing provisions on borrowing limits, I consider it is desirable to formalise the arrangements for Ministerial control over the capital expenditure programmes of the board. It has been the administrative practice that the board submit for Ministerial approval their proposals for the construction of new generating capacity and the estimated capital outlay thereon. There are also the arrangements, in the annual budgetary context, under which the annual capital programme of the ESB is included in the capital budget. The capital expenditure programmes of the ESB are very substantial indeed and they impact on the economy both in specific and general ways. I believe, therefore, that the principle of Ministerial review of such programmes should be formally covered in the statutes governing the board's operations.
Deputies may feel that the provision proposed in sub-section (1) of section 2 of the Bill is too all-embracing. However, the provision as it stands has the merit of simplicity. Deputies will know that the capital expenditure programmes of the board in relation to new generating plant cover a period of many years. It may in certain cases be necessary to give broad approval in principle with provision for review of the project in the light of changes in demand for electricity. A substantial element of flexibility would, therefore, be necessary in relation to the giving of Ministerial approvals. It will also be necessary to look at the Board's capital expenditure proposals on an annual basis, in the context of general economic policy. Furthermore, there may be relatively short-term proposals for capital expenditures by the board which would need to be considered on an ad hoc basis. Deputies will appreciate that if an attempt were made to draft legislation which would comprehend the variety of circumstances which I have mentioned the result would be unduly complex.
I have discussed the matter with the ESB and we have agreed that arrangements can be settled between us and the Minister for Finance, which will enable the provision in the Bill to be operated satisfactorily without inhibiting in any significant way the day-to-day activities of the board in regard to capital projects and expenditures.
These are the principal elements in the financial provisions of the Bill. A number of minor, technical financial amendments to existing legislation are also proposed to improve administrative efficiency, from the viewpoint of both the board and the Minister for Finance. For instance, the requirement on the board, under the Act of 1954, to create a "form of security" when borrowing is being removed. Differences of legal opinion over the interpretation of this obligation on the board have given rise to delays in the negotiation of loan agreements. It is proposed to remove the obligation on the board to create a form of security but the option of doing so will remain to the board if lenders insist on it.
The second area covered by the Bill relates to annual payments to be made by the board to the Minister for the Environment in lieu of rates on the board's generation and distribution plant. Under existing legislation, the board are exempt from the payment of rates on such plant. The previous Government, in their consideration last year of departmental Estimates for 1982, decided that the ESB should pay £10 million this year as a contribution in lieu of rates. Provision for the receipt of this sum was made in the Estimate for the Department of the Environment. This was to be regarded as a temporary arrangement for 1982, pending official valuation and rating of the board's exempted property.
The Government have, however, concluded that in the special circumstances of the ESB there are arguments in favour of the concept of a payment, fixed by the Government, to be made annually by the board in lieu of rates and the Bill provides accordingly.
The third area covered by the Bill relates to amendment of certain provisions in the Electricity Supply Board (Superannuation) Act, 1942, so as to remove any doubts which might exist about the powers of the trustees of the board's superannuation committee to invest in real or personal property, and also to remove the existing requirement on the board to consult with the Minister for Finance before investing funds in securities authorised by law. This brings the relevant ESB superannuation provisions into line with those applicable to other State bodies.
The final area dealt with in the Bill is the involvement of the board in fisheries activities. These activities stem directly from the generation of electricity from hydro-electric stations on rivers which are the habitat of migratory fish such as salmon and eels. Legislation in the past has given the board the authority and responsibility to acquire, manage and preserve fisheries affected by their hydro-electric schemes.
Initially work involved the construction of salmon hatcheries and the contribution of these hatcheries to the country's salmon stocks has been of vital importance in the face of nationally declining runs of salmon. In response to a Government request, the board have agreed to increase their overall salmon smolt production, and the fish thus produced will be released into salmon rivers in need of restocking on an annual basis. The board have assisted anglers in Wicklow and Cork by cultivating brown trout in cages in Poulaphouca and Inniscarra reservoirs, and, to judge by reports from angling clubs, this has been a great success. The board is also the principal eel exporter of the country, and has assisted the State and other eel fishery owners in marketing their catches with those of the Board.
This brief review underlines the success achieved in the board's fisheries activities to date. It is important for the good of the fishing industry in general that the board should be given expanded powers in this area. At present the board has statutory powers in relation to specific fisheries on rivers on which it has constructed power stations. In order to enable the board to engage in fish farming in the open sea, and in rivers on which it has no fishing rights, it is necessary to statutorily empower the board to engage in the range of activities comprehended by the term "aquaculture", as defined in the Fisheries Act, 1980. In the present text of the Bill, section 9 uses a definition which is contained in section 54 of the Fisheries Act, 1980. I am now advised that, since this section of the Fisheries Act is not yet in force, it is necessary to have a definition incorporated in the Bill itself and I am introducing an amendment for this purpose.
The ESB occupies a position of very considerable importance among public sector institutions. Their operations and the service they provide affects the entire economy and every citizen. It is a major source of employment and its expenditure budgets are very substantial by any standards. For example, in 1982 the total expected capital expenditure by the board is estimated at over £230 million of which some £125 million will be spent on generating plant and about £87 million on transmission and distribution networks.
It is, therefore, right and reasonable that this House, and I as responsible Minister, should be concerned with reviewing the overall activities and the trend of policies of the ESB, without inhibiting the board's freedom to pursue its day-to-day business. Before concluding, I would like to refer to two broad policy issues which are related and which I know are of much concern to Deputies as they are certainly to me. The fuel mix of the ESB's generating capacity is of vital importance because it affects our balance of payments and the use of certain valuable indigenous resources. It also has a major effect in the second area to which I would like to refer, namely, the level of ESB charges to consumers.
A main element of strategy on ESB fuel use must be to diversify away from oil as a primary energy source. Apart from the volatility of oil costs, the risk of major disruption of international markets is always present. In this context the coming on stream of the new coal burning facility at Moneypoint will be a major diversification. The proportion of our installed generating capacity that depends on oil has been falling off in recent years, and this trend will be maintained. The proportion which stood at 54 per cent a year ago, now stands at 51 per cent and by the end of the decade it will be about 35 per cent.
The other prong of our fuel strategy must be to maximise the proportion of native fuel used by the ESB. Of the 1,362 megawatt capacity approved for commissioning between now and the end of the decade, 88 megawatts will be fired by peat, including extensions to Shannon-bridge and Lanesboro generating stations, and 45 megawatts will be fired in a new station at Arigina using local low grade coal. The ESB are already using native natural gas in some of their power stations and, while the premium domestic market is building up for this gas, its use by the ESB is helping to stabilise electricity prices to the consumer and creating savings on oil imports which assist the balance of payments.
Electricity tariffs have been in the news lately. Over the past two years or so these have increased quite substantially although, of course, they were granted on the basis of allowable cost increases incurred by the board, including fuels, salaries and other unavoidable increases in overheads. The level of increases has, however, been disturbing not only for domestic consumers but also, and especially, for industry. It has been possible to limit the most recent increase granted to the board to 5 per cent, which is the most moderate for some years. I was also glad to announce, that, while allowing this increase for general purposes, there would be a reduction in the night-time electricity tariffs which would be of benefit to industry. Furthermore, I removed the fuel variation charge from ESB bills which had become a source of confusion — and indeed some annoyance — to electricity consumers.
I would like to assure the House that I will be concentrating my efforts to ensure that this desirable moderation in electricity increases which we have been able to achieve will be maintained in the immediate future at least. The Government have, in fact, decided that the position on electricity prices generally should be fully reviewed, particularly in the light of recent reports that, at least in some respects, our electricity prices compare unfavourably with general levels elsewhere. I am arranging to have this review carried out and I will be taking a personal interest in the results.
There are many other aspects of the activities of the board which could be mentioned. A number of these have been dealt with in the House recently, either in the course of questions or on other occasions. I have a high regard for the professional and technical competence of the ESB organisation, which has served this nation well over the years. I would emphasise, however, that I consider the broad policy objectives of the board, and the means of achieving these, as major areas of direct concern to me. I have a very satisfactory working relationship with the board and senior executives of the ESB and have every confidence that I will have their full co-operation in seeking to achieve the paramount objective of providing all consumers with a safe and continuous supply of electricity at the absolute minimum cost to them and to the economy.
I recommend this Bill to the House.