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Dáil Éireann debate -
Tuesday, 25 Oct 1983

Vol. 345 No. 3

Private Members' Business. - Proposed Closure of ESB Stations: Motion.

I move:

That Dáil Éireann rejects the proposal to close in whole or in part 14 power stations and calls on the Government to give priority to indigenous fuel in its national energy policy and in particular because of the employment they provide in the midlands and the west, to ensure that the ESB's peat fuel stations are kept fully operative.

In my experience this motion has aroused more interest than most because I have been inundated with requests from Deputies to speak. I understand it has now been agreed between the parties that this debate will continue next week in order to accommodate some speakers on both sides, but certainly those on the Fianna Fáil side. There is a very long list indeed of Deputies who want to speak on this motion which they regard of crucial importance.

Is it not a remarkable thing that we are debating a document which none of us, with the exception of the Minister, has seen? We are debating a leaked document, leaked in the best traditions in which certain documents get leaked for certain purposes from certain quarters. It is very unsatisfactory that this House should have to have a major debate of this kind lasting for two weeks on a document no Member of the House other than the Minister has seen. In any sort of normal democracy, such plans — which have such fundamental and far-reaching effects on different parts of the country — should be laid before Parliament so that we might debate them openly without having to have recourse to information from leaks and surreptitiously. That is not good enough.

I shall set out for the House the contents of this proposal so far as I am aware of them but of course I cannot guarantee absolutely their accuracy. In the interests of worthwhile debate here — and the Minister is responsible also for Dáil reform and the improvement of procedures here — I would invite him forthwith to lay this document, which I think the ESB call their five-year strategic plan, before the House so that even though I do not have the advantage of reading it before the debate at least other Deputies who may contribute tomorrow or next week will be in a position to refer to it for that purpose. Since its essentials have been so well leaked, since it will have to be published at some time, the Minister would be only serving the best interests of this House and useful parliamentary debate if he were to publish it now and enable Deputies, other than myself, to avail of its contents.

Because this proposal, in the form of this motion, is now before us the Minister for Industry and Energy and the Government will have to take into account what is said in the course of this debate before taking any decision on it. They will not be doing so in a vacuum. The consequences of what the ESB propose — about which the Government have conveniently kept entirely quiet in an endeavour to distance themselves from it — will be spelled out in the course of this debate. The Minister and the Government will be aware of it. If they adopt this set of proposals from the ESB they will do so in the full knowledge of what are the circumstances.

I propose to put on the record of this House the basic proposals of the ESB. Therefore, they will have to take a decision whether or not to acknowledge what are the economic benefits of refusing what the ESB propose. Allowing these 14 closures, if they consent to this programme, or to much of it and allow the closures, that will serve as an indictment of them, a monument to their insensitivity. It will show a lack of realisation on the part of the Government to local, regional and national economic benefits.

In the absence of the document we are debating — it is very unreal that it should be absent and that we should have to debate a document of national importance by way of reference to leaks and nothing better and I do not think there is a Parliament in the world that would not insist on a document it was debating being made available to its Members who have to debate it — it is particularly ironic that the Minister for Industry and Energy is the Minister who has been designated as the Minister responsible for Dáil reform and parliamentary procedures and that he should be the man who has to reply to this debate. It really is laughably unreal that this is the position. But this it is and I have to devote five to ten minutes to setting out the contents of the document we have not seen.

There was not that much Dáil reform when the Deputy's party were in Government.

I do not think we ever had this joke that we are going through now.

The Deputy should be allowed make his contribution without interruption.

Deputy Collins frequently finds it hard to raise to the level of debating what is in fact being debated in the House——

I have a very good memory though.

——and he usually finds himself at a different level. The first of the proposed closures relates to the Ringsend station in Dublin city. It is proposed to close the entire station. It is a fairly big station with capacity in excess of 300 megawatts. There are at present somewhere between 200 and 250 men employed there. It has been a longstanding station in Dublin which has been modernised from time to time and is strategically located in the capital city where there is the major demand for electricity. The next station it is proposed to close in part at least is that at Tarbert in County Kerry. It is proposed more or less straightaway to close down 120 megawatts of its capacity. Tarbert is in a different situation from Ringsend because it is a very modern station. I recall only a few years ago officially opening the second part of Tarbert. I think it was within the last three years. It is, therefore, one of the most modern oil-burning stations in Europe. Its closure has started already. It is also proposed, in what the ESB describe as 1983 — but which I understand means up to 31 March 1984 because that is the end of their financial year — to close half of the Great Island station in County Wexford, also a relatively modern station. It is somewhat older than Tarbert; it was erected within the last 12 or 15 years. It is not an enormous station by any means. If half of it is closed down the argument will be advanced very quickly that there is no justification for keeping the remaining half going. Of course this is part of a semi-State technique, that if you do not want to do something in full, you put the particular project into such a situation that it is rendered uneconomic and then you come along a year later and say, "That is uneconomic, we are going to have to close the whole thing down. We did not really want to at the start." It means doing in two instalments what they really want to do in one.

The next proposal for closures this year is part of Marina in Cork city. It is then proposed to close one of the three units in Portarlington on the Laois-Offaly border and the entire turf fired station at Miltown Malbay in Clare, in this financial year. One would consider that to be an adequate programme for closures, but it is only the first third of the subsequent three-year programme.

In 1984 it is proposed to close the remainder of Portarlington, all of Allenwood in Kildare, two sod peat stations which, it is alleged, are less efficient than the milled peat stations, and to close Cahirciveen, Screeb in west Galway and Gweedore in Donegal. It is worth noting in relation to Cahirciveen and Gweedore that this year both had very substantial supplies of privately won turf, much of which had been harvested in the last couple of years as a result of the incentives contained in the Turf Development Act, 1981, introduced by the late George Colley as Minister for Energy. It is particularly sad to see the proposal in relation to Cahirciveen, where 250 private suppliers, most of them local farmers, have become dependent to a fair extent on the money they can make from the supply of turf. They supplied 17,000 tonnes to that station last summer. I understand the situation in Gweedore is much the same — it is of considerable local social and economic importance.

In 1985 it is proposed to close a major part of the station at Ferbane, a milled peat station. It is also proposed in 1985 to close a major part of the station at Rhode and the whole of the station at Bellacorick in Mayo. This is particularly difficult for that area because it is the only such operation in Mayo. Indeed it is the only industrial activity of any kind in that remote area. A substantial hinterland is entirely dependent on that station. In the same year it is proposed to close Arigna coal station.

This is all in the context of a country like this, and it is frightening. The 14 stations listed cover most of the country, much of the midlands and most of the west coast and places in the south east, east and south. The consequences will be major. The ESB estimate that 1,460 fewer men will be needed because of this programme, if implemented in full. The consequences within the ESB will be very serious but they are even more serious for Bord na Móna because the midlands, which never got the level of development one would have wished for, is very dependent on the production of milled or sod peat produced by Bord na Móna. There is no point in producing turf in milled form unless it is burned by the ESB because there is ample capacity for the briquette factories which exist at the moment. The consequences in the midlands, mainly in Offaly but to a lesser extent in Kildare, will be direct loss of employment for between 800 and 1,000 people in Bord na Móna.

We can take stations like Portarlington and Allenwood. There is no possibility of them remaining in production of sod peat for sale to anyone other than the ESB because the market for that product is now being met by private producers. I welcome that development but it makes it all the more important that the bogs associated with stations like Allenwood and Portarlington simply should not be closed down. I understand there is some dispute about the exact life left in those sod peat bogs but it is estimated to be between five and ten years. If, as it is proposed, the production of sod peat from those bogs will cease next year it will mean we will have bogs that will not be one thing or the other — they will not be cutaway bogs that can be used for agricultural development and at the same time they will become sterile from the point of view of fuel production.

The bogs associated with Bellacorick and Ferbane are estimated to have a life of 20 years. If 20 years production of indigenous fuel in less developed parts of the country is to be thrown away because fashions have changed in the ESB, this House should say it will not tolerate it. In regard to Arigna, the position can be put in the same category. It shows how unfeeling the ESB are in their proposals. I am informed there is a life of between four and five years left in Arigna. The obvious thing to do is to mine that coal in the next four years, burn it and make electricity from it as has been the case in the last 20 or 30 years. When the coalfield has been mined there is nothing you can do anyway because you have to stop generating electricity from it. But when you have a mine almost worked out why do you go away and leave four years of coal in it?

The small turf stations in the west coast serve a very important social purpose. That is why they were established. When they were established originally, 25 years ago, the ESB opposed them, but later were very glad to have them. In my time as Minister for Energy, as recently as four years ago, the ESB had a serious shortage of plant. These stations can fulfil a purpose again in the future. Emphasis should be laid particularly on the Gweedore and Cahirciveen stations where a significant amount of privately produced turf is being supplied to the ESB. This serves to keep many people on the land. It gives remunerative employment in the summer and enables the people to study during the winter or otherwise to live in those localities.

The idea that many of our oil-fired stations are no longer worth keeping does not seem to gel with the optimistic noises that are being made in regard to the Waterford oilfield, because we might be lucky enough to be in receipt of our own oil in the next few years. We would look very foolish if we were to close down most of Great Island, which is only 20 or 30 miles from what we hope will be the first Irish oilfield. We would look rather foolish if a station like Tarbert were mothballed and we discovered that oil is not the hated, feared thing to be imported from the Gulf and other inaccessible places but is an indigenous fuel of our own, just like turf.

All these proposals need to be thought out and debated very fully but they cannot be debated fully here if the document which sets out the proposals is not published. It is a sign of the unreality of life in this House and Irish political life generally that we are holding a major debate lasting two weeks on a document which the great majority of us have never seen.

It is worth looking at the strategy of the ESB as set out in this document. Their proposal is that they will use imported coal for a very large proportion of the generating capacity they need. They are rejecting indigenous fuels in support of that. In furtherance of that policy they have undertaken a very accelerated construction programme at Moneypoint to ensure that a third unit or set will be brought on there as rapidly as possible. The original proposals for Moneypoint were in respect of four units or sets of 1,200 megawatts. It was agreed in 1978 when there was a tremendous shortage of capacity here and a very high demand for electricity that construction of the first two sets should start as soon as possible. The third set seems to have slipped in somewhere along the line. It was apparently agreed or decided to start that in 1980, a year when the demand for electricity fell away enormously. Still for some reason the ESB decided to plough ahead.

Not just the ESB.

On inquiry to the ESB it appears that the level of commitment is so high that 90 per cent of the money will have to be spent anyway. This is an old gambit of semi-State bodies when they want to do something. They tell the Government of the day that they have got into a position where they cannot back away because the level of commitment is too high. When I sought to inquire what the penalty would be if they did not go ahead I was told that the figure would probably be £30 million. The amount which will be spent will, however, be substantially greater than that. This is at a time when an inquiry has been set up by the present Minister to look into the cost of electricity.

One of the most obvious reasons for the abnormally high cost of electricity here is the amount of capital investment particularly during the past five or six years. There was enormous investment, some of which many people would question and some of which was unavoidable. One would question the spending of £50 million since 1979 on the building of ESB offices.

It is somewhat disturbing to look at the breakdown of ESB borrowings and to find that 75 per cent of borrowings are made abroad. The devaluation of the IR£ which took place in March this year with the encouragement and full approval of the Government has cost the ESB about £100 million in extra repayments because most of their borrowings are in US dollars, Swiss/Deutschemarks, sterling and Japanese yen. The devaluation of the IR£ against these currencies has not been the 8.5 per cent average as against the EMS currencies but has been very substantially higher and in the case of the US dollar has been approaching 25 per cent over the past 12 months. More than a quarter of the ESB's borrowings are in US dollars. People ask plaintively why our electricity charges are so high and this one of the reasons which is not often adverted to. Further heavy investment will be funded primarily from foreign borrowing in non-EMS currencies where the rate of devaluation of the IR£ is extremely high.

It is worth contrasting the attitude of the authorities to the utilisation of indigenous energy resources with that of authorities in other countries. One country I visited recently for the purpose of looking at energy activities was Finland, a country not unlike ours in many ways, having a population roughly the same size and somewhat less well endowed with indigenous resources. It is a well-run and very successful country which is a leader in many aspects of energy technology and energy use and the electricity price to the consumer is substantially lower than here, in spite of their unfavourable climate.

On 24 February this year Finland published a White Paper on energy and I should like to quote two passages from this report which show the attitude in that country to their domestic or indigenous fuel resources and to contrast it with the attitude here which is to close down things which come from Ireland and to put all our eggs into the imported basket, adding further to the import bill. The White Paper states:

Finland's main energy policy objectives continue to lie within a relevant frame of reference from the point of view of the national economy:

— ensuring a secure supply of energy in accordance with the objectives established for national security and domestic economic activity.

— the economic use of energy, i.e. efficient, economic uses of energy that avoid waste

— increasing the share of domestic energy sources in the total supply by increasing the use of domestic sources and the share of other domestic production inputs in the energy economy.

Part of the White Paper deals with peat. Many of us may never have thought in terms of Finland having any peat and we may have regarded ourselves as the principal producers of peat. There are quite substantial reserves of peat in Finland, mainly in the northern part of the country around and inside the Arctic Circle. It is difficult to produce and the quality of the peat is poor. It is very fibrous and has nothing like the thermal efficiency of our peat. Notwithstanding that, the official policy of the Finnish Government as approved by the Finnish Parliament in February this year is as follows:

The production and use of peat as a fuel have grown rapidly in recent years. The experience gained has been encouraging. A distinct increase from the 1982 level of c. 17 million m³ is feasible both in terms of peat resources and of its potential level of consumption.

In order to ensure increased production of fuel peat, attempts will be made to secure in advance the availability of sufficient peatland for the producers. Possibilities for the acquisition of peatland by municipal and private peat producers and processing plants will be improved.

Sufficient peat production potential will be created by setting aside production areas in case of long-term interruptions in the availability of imported fuels. The readiness of consumers to use peat will be increased by installing stand-by equipment suitable for using peat, particularly in peat production, already at the construction stage. Sufficient availability of peat resources will be secured to meet the needs of possible new, peat-fired condensation power plants and chemical processing plants.

That gives an idea of the attitude of the government and the people in Finland today. They used to lag very far behind us, have nothing like the value of our resources in peat and would gladly use our peat if they could. They are using inferior peat that can only be recovered in difficult areas, some of it close to the Arctic Circle, and here we are with one of the mildest climates in the world and with the best quality peat in the world proposing to close down stations so that we can use coal from the United States which we will pay for in dollars, from Poland which we will pay for in sterling and from Australia which we will also pay for in US dollars.

Finland would regard us as mad to be doing what we are doing. If we have the opportunity to debate this programme properly, this House will be convinced also that we are mad to be doing what the ESB are now trying to do in this silly, surreptitious way. Are they ashamed to publish what they want to do? One of the reasons that the ESB have been given an excuse to stop using peat is because of the pricing policy in relation to peat that has been adopted here in recent years. There has been a major price jump — I could not lay my hands on the exact figures — of something in the region of 115 per cent in the last few years. The ambition, as I well remember, of Bord na Móna when I was dealing with them and when I said no to them every time, was to get the price of peat up to an oil-related level. I ask the House to consider why should we, as a sovereign nation, able to make our own decisions, choose to price an indigenous resource at an arbitrary figure that is dependent on things like revolutions in Iran, the blocking of the Straits of Hormuz, the Arab-Israeli conflict and other factors which over the last decade have led to or can potentially lead to increases in the price of oil? This is our resource which we should use for the benefit of our people.

After I left the Depatment of Energy, Bord na Móna got a major price increase but the very thing I said would happen has happened, the ESB are given an excuse not to use it. Our trouble in energy as in so many other things is that every body likes to see themselves as independent and autonomous and there is no drawing together of all these bodies to make their policies coherent and cohesive in the national interest. Each one is allowed to bang and hammer off the other. That is the function of the Department and the function of a Minister and I invite him, in this case in particular, instead of letting them bang against one another, contrary to the national interest, to bang their heads together and put some sense into them. Unless they are treated that way they will develop a form of arrogant autonomy which puts their body before the national interest. That cannot be tolerated and this House should not tolerate it.

At present the delivered price of milled peat to ESB power stations is IR£15.90. The FOB ex-bog price is hard to calculate because it is never given but since the transport distances are only a few kilometres at most, it is probably somewhere in the region of £14 to £15 ex-bog. It is interesting to compare the fact that the ex-bog price in Finland of similar milled peat is £9. If Bord na Móna, instead of striving for an enormously healthy profit and loss account and balance sheet, were to reduce the price of milled peat to their only customer, the ESB, by £5 per ton and bring it down to say, £11 or thereabouts, the ESB would have no excuse for not using a lot of it. It would be in the national interest, both economically and socially, to do that and it should certainly be done because it is the only solution I see to this situation.

It is projected that this year Bord na Móna will make a profit of £15 million on a relatively small turnover. They are not in the same league as the ESB. What is the point of Bord na Móna making a profit of £15 million? The previous chief executive, now retired and I wish him well in his retirement, told me that unless they could make good profits of that kind they would not be able to build various major capital projects which they planned to do such as the Ballyforan briquette plant. We know that Ballyforan is now off the map but they are still holding on to their £15 million profit. What is the point of this kind of activity? Why should a semi-State body unnecessarily generate profit of that kind? If there has to be some external level to which the price of peat must be fixed, the obvious thing on which to peg it is the price of coal because it is much closer to coal both in thermal value and in the nature of the product. The price of coal in comparison with oil is about two-thirds or a little less. If you had, therefore, a one-third reduction to the ESB in the price of milled peat, the ESB would have no reason not to continue to burn peat for electricity generation and not to do the very same things as Finland are doing, because I have seen them building peat burning stations in many parts of that country. The economics of it are all against them because milled peat has to be transported long distances in that country. It has only to be transported very short distances here and we are fortunate that most of our best milled peat reserves are in the centre of the country. We have tremendous potential and we are throwing it away and going into enormous capital expenditure, most of which is imported and has to be paid for in foreign currencies and tremendous loss to our economy, unemployment in the ESB and, more particularly, in Bord na Móna. The ESB at least have some scope to offer to unemployed staff as they may be able to redeploy them elsewhere. The people who are disemployed in Bord na Móna have no prospect whatever of employment in any other sphere of activity in that company. I wish to conclude by asking the House to pass this motion:

That Dáil Éireann rejects the proposal to close in whole or in part 14 power stations and calls on the Government to give priority to indigenous fuel in its national energy policy and in particular because of the employment they provide in the midlands and the west, to ensure that the ESB's peat fuel stations are kept fully operative.

and to reject this amendment which we got in the last hour. I do not know whether it was in order or not because I understood some notice has to be given with amendments.

I have received it.

You have received it so I suppose I have to assume that it is going to be taken and put. The amendment is a wishy-washy one to endorse the action of the Government setting up an inquiry to investigate prices and so on, a vague sort of amendment. Anyone who has the interest of many parts of this country at heart and who has the interest of the sensible utilisation of our own resources as an independent nation and who rejects the unnecessary import sources of energy which puts our whole electricity generation scene under a certain amount of unnecessary strain and risk, must vote for this motion, to ensure that we will not in the eighties turn our backs on the very good work that was done by men of vision and idealism in the thirties, forties and fifties to ensure that our principal indigenous fuel would be properly developed for the benefit of the country. They did that at a time when that fuel was laughed at and was little more than a musichall joke. The ESB's memory in this matter has been very short because four years ago they were more than glad of it. My forecast is that in the not too distant future they may well be glad of it again.

I move amendment No 1:

To delete all words after "Dáil Éireann" and insert:

"endorses the action of the Government in setting up the Inquiry to investigate systematically the reasons for the high cost of electricity, notes that the ESB has submitted to the Government a five year Strategic Plan and calls on the Government to have due regard to the social, regional and strategic implications of the use of indigenous fuel in national energy policy when considering this Plan."

As I have made quite clear in a number of public statements since the matter was leaked, the Government have not made any decisions on these proposals. I fully agree with Deputy O'Malley and others that they are proposals of serious implications in terms of employment, social implications and so on. I also, however, have to concede, as I have said, that the cost of electricity is very high here. As far as industrial consumers are concerned, of 16 major competing electricity utilities in Europe — I say competing because the people who use Irish electricity have to compete with whatever products they are selling with people who are using electricity generated elsewhere — Irish electricity was either the highest or second highest of all. As a country which depends to the extent of 48 per cent of all we produce on exports we cannot afford to be carrying costs that are unduly high. This is something which the ESB realise.

Firstly, they realise that their survival as a public utility, and the survival of all State companies, the ESB and those supplying that concern such as Bord na Mona, depends on the ability of the competitive export sector of our economy to sell abroad. There is no doubt that this competitive export sector of our economy is handicapped by high electricity costs. I have been at considerable pains to make the point that it is in the first instance the responsibility of the boards to take this matter into account. In the case of the ESB they have been appointed as the experts on electricity generation and, if they find that the cost of what they are producing is higher than the cost of other utilities with whom their customers must compete, it is undoubtedly part of the responsibility conferred on them by this House to do something about that situation. The same goes for Bord na Móna and the other utilities.

Deputy O'Malley asked about the possibility of publishing the strategic plan. It is not my document; it is the ESB's strategic plan. They brought it forward as an internal document and sent a copy to me. I would be prepared to consider Deputy O'Malley's request. Deputy O'Malley has not made an unreasonable point, but I would not like to give him a commitment about it this minute; I will need to have some consultations. Deputy O'Malley put a lot of weight — I do not disagree with him — on the very heavy overcapacity the ESB have. Their interest charges in respect of capacity at present represent 25p out of every pound a consumer pays for electricity.

Deputy O'Malley mentioned the Moneypoint situation. I should like to say that the Minister for Industry and Commerce at the time, Deputy O'Malley, on 18 July 1978 announced that he had given approval to the ESB for this major coal-fired generating station at Moneypoint. That was in regard to the general project. As far as phase three, which Deputy O'Malley said the ESB have started, is concerned, the Deputy might have mentioned that on 28 March 1980 the late Mr. George Colley, who was then Minister for Energy, gave full approval for the third coal-fired 300 megawatt generating unit at Moneypoint, subject to the condition that it would be dual-firing and would be capable, like the other two units, of operating on oil if circumstances so required. Deputy O'Malley also put considerable weight — I do not really disagree with him — on the question of oil-related peat prices. It is no harm to recall that those prices were set by my predecessor, Deputy Reynolds when Minister for Industry and Energy. I mention those matters to put the record straight. Deputy O'Malley's speech was a constructive and interesting one and it is one that will be helpful to the House in looking at this issue. I hope I can respond in a similar manner.

I should like to summarise the difficulties now facing the ESB and how important the different elements in this are. The board have submitted a strategic plan which represents their blueprint to solve their problems. It has certain assumptions and one is that the recovery from the recession will be slow and, consequently, growth in electricity demand will also be slow. Other assumptions are that the ESB will face competition from other energies, that foreign borrowings will continue to be expensive and that living standards will not rise as fast as they did in the sixties and seventies. In all of those circumstances they say — and I believe they are correct — that they have to cut costs in their operation if they are to be able to sell the product and compete both with its competitors in Ireland and so that its customers can compete with their competitors abroad. The board proposes to reduce costs by way of reduced staff numbers, improvements in administration and accounting procedures and the decommissioning of older stations. These include some turf-burning stations which range in age from 25 to 33 years.

It is interesting to put this debate in context and I urge Members to look at the most recently published annual report of the ESB when preparing their speeches. At the end of that report there are statements about the relative costs, the works costs and fuel costs, of different electricity generating stations. In a lot of the proposals that have been made by the ESB one can see how rational or not they are by comparing them with the actual cost. For instance, to take the oil-fired station in Great Island in Wexford, the fuel cost there is 3.9p and the other works cost 1p making a total of about 4.9p. Compare that with the small sod peat stations where the fuel cost is 4.9p but the other works cost per unit sent out comes to 9.3p giving a total cost per unit of 14p as against 4.9p in the other case. For example at Aghada, County Cork, a gas station, the fuel cost per unit sent out is 1.7p and the other works cost is 0.2p. We are talking there of a cost less than 2p.

On a point of order, I should like to ask the Minister if he is quoting from the report by the ESB for the year ending 31 March 1983?

I am quoting more recent figures.

The 1983 report has not been published yet.

This information is available to me. The Deputy will find similar information in the report he has to hand and that indicates similar magnitudes, although not the precise figures. In giving figures I felt it would be better, rather than quoting from the report, to give the House the latest figures I have. The ESB report for the most recent year will be available soon and Deputies will be able to verify the information I have given.

The plan envisages a reduction in staffing numbers by 5 per cent per annum. In marketing they envisage the maintenance of a strong presence of electricity in the energy market by developing new uses for electricity and the shaping of loads to give satisfactory financial contribution. Scope is also seen for developing tariff structures which achieve financial objectives.

I have appointed an inquiry group of personnel from the Departments of Industry and Energy, Finance, and Trade, Commerce and Tourism with a representative from Irish industry. The group is chaired by an independent chairman who is managing director of a major electricity utility in Denmark. Its main terms of reference are to identify costs that are higher in Ireland compared with other countries——

I wish to bring to the notice of the Chair that I cannot hear one word the Minister is saying. I do not know if other Members are in the same situation. Is anyone in charge of the amplification system? I am interested in the matter we are discussing but I find it impossible to hear what the Minister is saying.

I will try to shout.

There is no need for the Minister to shout.

I will raise my voice. The main terms of reference of the group are to identify costs which are higher in Ireland compared with other countries, to identify and analyse the reasons for those higher costs, to make recommendations to achieve lower prices in the short and in the long terms and to consider the scope for reducing prices arising from greater use of private electricity facilities. The group held their first meeting early last month and are required to report finally to me within six months of that date on the outcome of their inquiry. However, the group are required to report to me within two months on those factors which, in their view, are susceptible to speedy quantification and early action. The interim report will be due early next month. Obviously I do not want to anticipate the findings of the group. I have indicated already that Irish prices are considerably higher. The unit cost to a representative industrial user was 5.62p in Ireland as compared with 4.44p in the EEC. This latter comparison gives an excess for the Irish price over the European average of 26.6 per cent.

Will the Minister please repeat those figures?

The figure was 5.62 in Ireland as compared to 4.44p in the EEC. I have already read out the statistics. It is not entirely my fault if the Deputy did not hear. A script of my speech is being distributed.

What is the relevant page of the script?

It is on page 5. I am hitting it in spots.

What will we do with the spots the Minister did not hit?

The Deputies may read the script. I can give them graphs also if they wish.

On a point of order, the Minister is suggesting that he is only hitting his speech in spots. Are we to take it that his script will be incorporated in the Official Report?

All that will be in the Official Report is what the Minister actually says in the House.

The Deputies may make use of what I have given. The problem is that I wish to reply to the points made by Deputy O'Malley. That means I have to abbreviate the full-length script I have with me.

I would hate to write the script for the Minister if it is to be publicly rejected in this fashion.

I am afraid it is a common experience.

On a point of order, is there any reason why some Deputies have received copies of the script and others have not?

It is true that decisions by successive Governments have affected the ESB's financial position. Successive Governments have been reluctant to approve ESB price increases when recommended by the National Prices Commission. Those delays had an effect on the board's income. Charges in lieu of rates have been levied on previously exempted properties. These costs represent a part of the picture which must be objectively assessed, but only part of the picture. Compared with total ESB costs they are a very small proportion. In the case of rates, the cost would represent only about 3.5 per cent of total ESB costs.

The more important consideration is that the general recession has contributed to a cut in the yearly growth rates of over 8 per cent in electricity demand down to, or indeed below, zero. Demand has picked up from this low point but future projected growth is nothing like what the ESB have become accustomed to.

How do the various components of ESB costs measure up to each other in relative importance? This is best illustrated by looking at the costs that have to be met from every £1 collected by the ESB from their customers. Taking the 1982-1983 position, 42p went on fuel, 25p to service capital, 22p on payroll costs and 11p on miscellaneous expenses. The ESB, understandably, have laid great stress on their fuel costs and suggest this is the critical variable. It has also been the element for which they have tended to blame the Government of the day and this is something I should like to look at now.

The 1982-1983 fuel bill was nearly £240 million. These fuels were used to generate electricity as follows: natural gas provided 51.5 per cent of the units exported from generating plant and the fuel cost of these units was 1.79p per unit; oil provided 26 per cent of the units and the fuel cost of these units was 3.81p per unit, considerably higher than natural gas. The ESB have tended to blame the Government for the high price of this fuel. Peat provided 16 per cent for which the unit fuel cost was 3.20p in the case of milled peat, 3.77p in the case of sod peat and 3.28p per unit cost for all peat. The figure of 42 per cent of all fuels, although it was the highest single cost component, was lower as a percentage of costs than it had been for the past eight years.

Thus, while oil only provided 26 per cent of the units, its cost was 40 per cent of the fuel bill. By contrast, natural gas which supplied over 50 per cent of the units accounted for only 37 per cent of the bill. Had natural gas not been available to the ESB, their fuel bill for imported oil would have risen by some £95 million. This fact needs to be borne in mind when the ESB complain, as they sometimes do, about the price of natural gas to them. The position has changed this year by virtue of changes in the price of both milled peat and natural gas. The natural gas bill for the ESB will increase to £132 million in 1983-84, still £52 million below what it would be if oil had to be used. In addition, a significant improvement in the efficiency of gas utilisation will occur both by virtue of the more efficient plant becoming available at North Wall and Poolbeg, and because of a reduction in transmission losses in sending power from Cork to Dublin. The change in peat prices approved by the previous Government means an increase which will add 5.5 per cent to the ESB peat fuel bill in 1983-84, at 1982-83 levels of consumption.

The ESB are at present getting an average of about 150 million cubic feet per day of natural gas. This represents progressive increases over a period of years on their original allocation. As I have indicated, last year they met about 51 per cent of their electricity demand from this fuel. They are currently paying 24p per therm for the gas. The price originally payable by the ESB was, effectively, a cost price and did not remotely represent the intrinsic value of this versatile fuel. Although the price has since been adjusted upwards, it is still very low. If the ESB were getting no natural gas they would be using fuel oil which, on the basis of recent oil market prices, would cost them about 37p per therm as against 24p.

Base load electricity generation is not the most desirable use of natural gas. It can be far more efficiently used in the premium fuel markets which would include domestic, commercial and industrial heating and cooking and also certain industrial processes. An advantage of selling gas in these markets is that we will be substituting it for the high-cost imported premium fuels which have been used by these customers. In this way the most efficient possible use is made of the gas, the impact on our balance of payments is maximised and the market can competitively bear a price which will generate much-needed revenue to the Exchequer for redistribution to the community, in respect of a commodity that belongs to them.

I am not suggesting that the gas should not have been given to the ESB or that they should not continue to get gas for a few more years. It is only within the past year that we have got the infrastructure to start distributing natural gas direct to the consumer. The sale of gas to the ESB provided a basis initially for the development of the Kinsale Head field and for the extension of the distribution system which has been carried out. I believe that the role played by the ESB in this has been very adequately recognised by the favourable price which they have enjoyed for a number of years and which they continue to enjoy at present.

The board take the view that successive Governments have been treating them badly on the gas issue and they have proposed an additional short-term annual allocation of 30 million cubic feet per day at a price of 16.9p. I do not accept that successive Governments have treated them badly. This would constitute a further subsidy of around £20 million as compared with the price of HFO.

There has also been reference to additional fuel oil costs arising from Whitegate although the ESB have not recently belaboured this point. When Whitegate restarted it was locked into quite expensive crude supplies during the very turbulent period in the oil market before the reduction in official selling prices came into operation. The purchase of Whitegate fuel oil involved a significant cost penalty for the ESB at that time. Since then the fuel oil market has developed in a way that the HFO from Whitegate has a value as a feed-stock for further processing in modern refineries which is higher than its straight fuel value. As a result most of the oil which the ESB would have taken has been exported and has reduced the impact of Whitegate on ESB oil to insignificant proportions.

The development of our turf resources has been regarded as a national objective on which there has been a large measure of consensus for decades. At certain times this policy has served us particularly well. At all times it has served objectives which some people would say transcend purely economic criteria.

There is not, however, so far as I can ascertain — certainly not publicly available — an authoritative analysis of what the costs and benefits are of having turf-based electricity generation. I am certainly not suggesting that it is a bad policy and that we should move from it. It is simply that, in the absence of complete and objective information, everyone is free to take any view he likes without having to support it with the use of data. The starting point for the debate should be to establish clearly whether, and if so to what extent, ESB consumers are subsidising Bord na Móna's turf development programme. If there is such a subsidy and the size of it can be clearly identified it would be a matter for the Government and, indeed, for the community as a whole to reach a conclusion on whether this subsidy was value for money in national terms. The practice down the years when successive development programmes and projects have been launched, largely without full analysis in national terms, has clearly proved to be unsatisfactory.

I agree with what Deputy O'Malley said about this matter, I have taken the unusual initiative of bringing all of these bodies together — for the first time they have ever to my knowledge been brought together — to discuss their overall corporate management proposals. I believe, as I take it he does, that an overall view should be taken of the operation of these boards and their interactions and that they should not be allowed to treat themselves as independent republics. They are part of this great republic of Ireland and they should be seen as such.

In relation to the ESB strategic plan, and specifically to the ESB proposals to phase out certain turf-burning capacity, I will get the two boards to go, between them, into the whole area of turf usage and prices. It may be necessary to bring other judgments to bear on what the boards report to me but this is a necessary first step. My own present feeling is that, given the relativities that exist today, the cost of peat-fired electricity is out of line as compared with electricity generated from other fuels and there may be a case for some reduction in the price of milled peat to the ESB. Before arriving at a clear and final view on this I will need to have the results of the review which I have mentioned.

Clearly, if that were to happen it would change the economics of some of the proposals that are now being made in the ESB strategic plan. That economic derives, as I have indicated, from a decision taken by the previous Government to raise this milled peat price charged to the ESB.

Could the Minister say how long the review is expected to take?

I would not like to say that now. It is apparent from the 1982-83 published accounts of the ESB that 25p in every £ of income goes towards servicing capital. As one looks ahead towards the completed costs of Moneypoint one observes that the ESB will have to cope with a capital investment totalling £800 million—£900 million. This major extension to generating capacity will undoubtedly add to the security of electricity supplies to the country, based as it is on coal.

It is worth recollecting that 80 per cent of the world's energy reserves are in the form of coal and only 20 per cent in the form of oil and gas hence coal generating capacity is an important strategic security consideration. However, the cost of this major capital project will have to be borne by the ESB in high interest charges for many years to come.

The third most important element in ESB costs arises in respect of payroll. This is an area where it is not realistic to look for quick and dramatic savings. The ESB have, through natural wastage, secured certain staff reductions. The board's strategic plan, however, intends to achieve further reductions.

In the time available to me. I have attempted to put before the House a balanced presentation of the more important elements affecting the ESB. What is immediately apparent is the great number of significant variables in this complicated equation. The interaction of all costs involved in the generation of electricity, together with regional and economic implications, is one that requires very careful consideration. I would like to assure the House that I intend to ensure that all of these facts are properly considered. I will not be rushed into hasty decisions on any proposals emanating from the ESB, whether they have been leaked to the papers or not.

Time is getting short.

I know that.

I am glad the Minister agrees.

I believe that the proposal put forward by the Opposition would clearly restrict the freedom of the Government, the ESB and the other boards to do their job. We have a considerable amount of expertise available to us and we should use it. We should make sure, however, that the overall national considerations are taken into account.

This debate is a useful one. The contribution made by Deputy O'Malley is a useful one. I look forward to contributions from other Deputies. The only point I would like to make — I have made it already but I would like to stress it — to Deputies who will contribute to this debate is that they should look at the most recent annual report of the ESB.

We cannot get it. It was given to the Minister on 13 July and it has still not been published and this is 25 October.

The most recently published annual report.

That is hopelessly out of date. It is nearly two years out of date.

It is not.

Why will the Minister not publish the one he has in front of him?

It will be published soon. There are certain procedures which have to be gone through, as the House knows.

(Interruptions.)

I ask the Members who are contributing to this debate to look at the relative costs of the different methods of generating electricity and to address their comments to this. We must realise that (a) we have over-capacity, (b) some forms of generating electricity cost more than others and it is not possible simply to ignore these and ignore the cost imposed on the consumer. If we are to have a useful debate I hope that the contents of the 1981-82 annual report and the appendix in regard to relative generating costs, both works costs and fuel costs, will be borne in mind by Deputies in their contributions. If they do not do so I do not believe we will have a realistic debate.

I would like to support the motion:

That Dáil Éireann rejects the proposal to close in whole or in part 14 power stations and calls on the Government to give priority to indigenous fuel in its national energy policy and in particular because of the employment they provide in the midlands and the west, to ensure that the ESB's peat fuel stations are kept fully operative.

In the short time left to me now I would like to ask the Minister to publish this leaked document that came into our hands. I believe it was a deliberate leak. I was first informed about this verbally last July and I was told it would have far-reaching consequences for the midlands and for the west. I cannot believe that the management and directors of the ESB would propose to bring in a plan of the nature of that now on the Minister's desk.

Debate adjourned.
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