Vol. 381 No. 1
I move amendment No. 1:
In page 3, between lines 13 and 14, to insert the following definition:
"Moneypoint' means the property of the Board at Moneypoint, in the county of Clare;".
This is a technical amendment which defines Moneypoint as the property of the board.
Amendments Nos. 2 and 3 are related and may be taken together.
I move amendment No. 2:
In page 3, before section 2, to insert the following new section:
"2.—The Board shall seek to reduce electricity prices beneath those prevailing in EC Member States and to that end shall—
(i) set a target each year for price reduction relative to the EC Average,
(ii) shall publish each year detailed comparison of its tariffs with those prevailing in EC Member States.".
Amendment No. 4 is also related. In moving these amendments the purpose is essentially to recognise that we have before us a Bill dealing with the ESB. The ESB are a very large monopoly provider of service to consumers and industry here. It has become well recognised in managing the affairs of large companies like this that it is important that the Dáil make alternatives to the normal market pressures obtaining in cases of monopoly. The ESB have long had a monopoly. Regrettably it has been found that in the period after the late seventies ESB costs got badly out of line. We have learned to our disadvantage as an economy that where a company has a monopoly and is free from market pressures practices can build up that are to the disadvantage of the whole community and the ability of the community to provide both employment and cheap power for its people.
What I have put forward in these three amendments, Nos. 2, 3 and 4 are essentially the sort of proxies for market pressures that were advocated by the National Planning Board that reported in 1974. They are in the areas of pricing, investment and performance indicators generally. The ESB still has some way to go before they are competitive with European prices. We badly need them to be more than just competitive with the average. We need them to provide us with cheaper electricity than the average. It is only fair that we should request that they set annual targets and give us an indication of how they are proceeding on a regular basis in relation to the competition. This is what it is all about and what the Minister has, time and again, told us he wants to achieve. It is only reasonable that the Minister should accept an amendment under which the ESB will publicly account to us for their achievement in this area. That is the purpose of amendment No. 2.
Amendment No. 3 deals with pricing also and this arises directly out of the Jacobsen report where there was a proposal, as the Minister is aware, that ESB tariffs should be examined independently. To implement that we should have an energy tariff commission to look at the board's tariff policy. The Jacobsen report instances numerous cases where it felt the tariff policy was not being fairly applied to different consumers and it also dealt with many other issues which we do not have the time to go into such as the amortization charge that is highly controversial and needs to be carefully examined.
This amendment provides that there should be a small effective commission to look into these issues as the Jacobsen report suggested. I have provided the Minister with the power to extend the work of that commission to other energy products should he feel that is warranted and I think it is warranted in the case of other products where we have been labouring continually under high costs that are hardly justifiable.
Amendment No. 4 is also related in that it is asking that the ESB would be obliged to provide an appraisal of investments and also account for their performance in relation to investment. The case is sometimes made that, for commercial reasons, it would be unfair to require that the company provide this sort of information publicly, but let it be said that at the end of the day the taxpayer guarantees the loans of the ESB. We account to the taxpayers and we have the right to know if the ESB are making investments that they stand up and that after the event they can stand over them and say that they performed in the way they told us they would. When there is a monopoly that does not face commercial competition in the market it is not asking much to have that.
The other element of this amendment No. 4 is that we should have performance indicators relating to their efficiency and to their consumer services relative to other countries. That, again, is something the planning board felt was the only reasonable way in which to substitute for market pressures that are obviously weakened in the case of a State monopoly. It is important that State monopolies prove themselves to be of the highest quality of service, to provide the most effective service possible and to stand four square with any other country. Unless we provide, by way of statute, that this sort of information is forthcoming to the Dáil, the whole work of a committee like the Oireachtas Committee on State-Sponsored Bodies, which is a highly worthy committee, becomes something of a farce. If there is not sufficient information to judge from year to year as to how a company is faring, the Oireachtas Committee will flounder around with masses of information that it is very hard to make sense of. It is only by having fixed points where the company reports on an annual basis that that committee can really do its work effectively.
I hope the Minister will recognise amendment Nos. 2, 3 and 4 as a reasonable approach to the Dáil exacting the highest possible performance from the Electricity Supply Board.
I might as well say at the start, because it affects many of the other amendments that are down, that the purpose of this Bill is to allow the ESB to set up subsidiary companies. It is important that the board should have commercial freedom of operation. These amendments, together with other amendments to be proposed later, are designed to limit and restrict the operation of the company in various ways. I am not prepared to accept these amendments.
In relation to amendment No. 2, the latest material on electricity prices at 1 January 1988, published by the International Union of Producers and Distributors of Electricity Energy, reveal that on average Irish electricity prices compare favourably with those in other European countries. Domestic electricity prices are among the lowest in Europe and electricity for larger industrial users is priced lower than the European average, while prices for small industries are somewhat above the average price. Present Irish prices must be viewed against the background that, unlike the majority of other competitors, we do not have the benefit of an inter-connection or large scale cheap hydro power. Any significant price reductions would have to be based on production cost cuts. The ESB have certainly made progress in this direction in recent years. Since January 1985 Irish electricity prices have fallen on average by 19 per cent for industrial customers, 15 per cent for commercial users and 12 per cent for domestic users. In real terms the reductions are greater. In view of the above it is difficult to see any benefits arising from a statutory obligation on the ESB of having to set price targets. I believe it would be interfering with their commercial operations and I am not prepared to accept that.
I have repeatedly stressed in the Dáil that every opportunity of reducing ESB prices would be availed of and that in this respect ESB costs are being continually monitored by my Department. In relation to amendment No. 2 also, the International Union of Producers and Distributors of Electricity Energy regularly publish comparisons, which the ESB make widely available. That should deal with the question of publication. Also in this context the ESB are currently circulating such a comparison to all Members of the Oireachtas. On the question of a price control mechanism, which is now being proposed, I would remind the Deputy that it was the previous Administration which removed the price control mechanism. I see no reason why it should be introduced at this stage, because there is continuous monitoring at all times.
So far as amendment No. 4 is concerned, the ESB is a commercial organisation operating in a highly competitive market and it would not be appropriate to publish the specific details of these type of assessments of which the Deputy is speaking.
I agree with the Minister in this case because the amendment put forward by Deputy Bruton would be very restrictive. There is a continual reference to State monopolies. The country is full of monopolies, but the competition in the fuel and energy area is enormous. The ESB have to contend with that and that will keep their prices down. In the natural gas area and in the solid fuel area the competition is exceptionally high and it is forcing them to keep their prices as low as possible. If Deputy Bruton wants something specific in a Bill to ensure that they will set targets for the reduction of prices, he would need to specify also where his party stands in relation to what they are allowed to do in order to reduce prices. Would Deputy Bruton agree to their shutting down all the turf burning stations, which would help to reduce prices but would destroy Bord na Móna, would destroy thousands of jobs and would destroy the midlands? Would Deputy Bruton do something to ensure that an inter-connector could be re-established, as we are the only country in Europe who cannot connect up to another country's grid. As a result we have to build overcapacity in our power stations. These are the facts of the case. We must have at least a 35 per cent over-capacity in case of breakdown. In a case of breakdown we cannot plug in to some other country's grid. The same applies in the North; they have to have over-capacity as well. So it would certainly suit both of us if we could have the inter-connector re-established with some security. These are the things which Deputies must say they want to do if they are talking about bringing down the price of electricity and show precisely how far they are prepared to go to do that. The ESB could do all of these and it could reduce the price of electricity.
Natural gas would never have been brought ashore without the agreement of the ESB to establish a special power station to take the natural gas in Cork. That helped them to bring the gas ashore. When the gas was on shore they told the ESB that they did not want them to take any more gas because they wanted to distribute it to individual consumers. The ESB had to phase out gas and bring in Moneypoint. In other words, they are constantly subjected to political decisions of one kind or another which are essential for the running of the economy. If we want Bord na Móna established and if we want natural gas brought ashore, all of these things must be done; but the ESB are continually subject to political decisions. They do not know what political decisions they will be given next year, so how can they plan their prices for ten years on? All of these matters would need to be addressed by anybody who is talking about compelling the ESB to reduce their prices. There is sufficient incentive already to do that. I agree with the Minister that, rather than put further restrictions on the ESB, they should be given more freedom to use the tremendous potential they have in the technology area and in the expertise which they have shown in their consultative work in many other countries, to use that for developing jobs in industries here at home. I do not understand the reason for putting such restrictions on them.
Deputy Bruton was unable to say that the ESB were using taxpayers' money, because they are not. The implication is always there that they are using taxpayers' money. He made the point that the taxpayers are guaranteeing their loans. That is also coming to an end. He will not be able to say that in another year because the loans are not being guaranteed any more. They have to fight for their own loans on the open market, and they are successfully doing so, and they are not putting the taxpayer at risk even in the area of guaranteeing their loans. I do not see the need for any further restrictions on them.
I would like to speak against these amendments. There is a common thread running through these amendments in relation to the amount of interference by the Oireachtas in the affairs of the semi-State bodies. There are already mechanisms by which we supervise the running and the financial accounts of semi-State bodies and I do not believe that the Government should be encouraged to meddle any more in the internal affairs of a body like the ESB or indeed the other semi-State bodies. We in the Oireachtas should decide the policy issues and let the managers get on with the running of the company. There are a number of weaknesses in the amendments. The aspirations may be commendable in terms of a price reduction, which we all want. There have been substantial price reductions in recent years and I believe that that pattern will continue and we will have a favourable economic pricing climate. The first amendment makes no distinction between industrial and domestic tariffs, something which is very necessary in this context. It seeks to set a target, but it makes no effort to show how a target can be achieved. If we were to take it in the spirit in which it is proposed there is a possibility that it would lead to a large number of redundancies in the ESB. There is no reference to the sizeable contribution which is made to the Exchequer annually by the ESB.
I believe that amendment No. 3 would be piling bureaucracy on top of bureaucracy. The Minister and the Department of Energy are well in a position to monitor the situation. I do not think it takes into account the state of competitiveness of Irish electricity charges and it does not take into account the different charges and tariffs that apply and the fact that ESB costs have a far greater impact in some areas — for example, in heavy industry — than in modern hi-tech industries, where it could have very little impact. It is likely that it would have very little impact on electronic assembly, for instance. These things would have to be specified in great detail. For example, health costs are much more affected by ESB costs than costs in a great many industries.
I do not believe this is the appropriate Bill for looking at the competitiveness of the ESB but we would have to look at it over a wide range of topics. I do not believe this is a satisfactory way of doing it and for that reason we are opposing these amendments.
I am disappointed with the response of the parties who have spoken. I cannot agree with the Minister when he suggests the ESB must be commercial and therefore the Oireachtas has not the right to demand reporting of their success. There is an enormous difference between reporting and interference in the affairs of a company. For any company who control the market on an exclusive basis — call it monopoly if you wish — any company who are not subject to commercial pressures of the sort the Minister seems to think, there must be control, as everyone recognises. Deputy Spring says the existing controls are adequate, but we have learned to our cost in the last ten years that this was not the case. Jacobsen listed numerous examples of cost penalties that emerged in Ireland that should not have happened.
All these amendments are seeking is that the Oireachtas has the right to demand high performance from this company and I feel this is the mechanism through which it should be done. Deputy Mac Giolla says some of the burdens the company carry are political decisions and I agree with him wholeheartedly. The sooner we have transparency about our political decisions the better. We must not think we can sweep under the ESB carpet obligations they must carry that we as an Oireachtas are deciding. We should decide and stand over these things and not by nods and winks tell the ESB they should pay for them. That is the thrust of reports like those from the National Planning Board. Where we decide social interests demand certain things we should have the courage as an Oireachtas to stand over that and not expect the ESB, who are supposed to behave commercially, to carry the can for us. Deputy Mac Giolla is right. We should seek from the ESB that they exploit the enormous potential of their manpower and skills. We want to see that and we do not want to see them bogged down in political obligations for which they are not being compensated, which are only stifling their ability to get on with the job of their commercial mandate and dragging the State sector into disrepute. I feel these amendments are worthy but I recognise the opposition is enormous.
I believe everybody would like to have the ESB competitive and everybody is anxious that electricity prices should be competitive for both household consumers and industrial users of electricity. Moneypoint is the basis of this Bill. Its total estimated cost is in the region of £720 million, which has overrun the initial price considerably.
As far as I am aware — and I said this on Second Stage in the House and was not contradicted — when the ESB entered into contracts for the purchase of coal prior to 1982 a clause was included which allowed for an upward adjustment in the price of the coal, but I know of no provision for adjustment of the price downwards. The price of energy reduced from 1985 onwards. If we are to stand over decisions of the ESB we should be in a position to do so and we should not stand over unsatisfactory decisions. If a contractual or business decision is made it should be on a basis this House can justify. The deals entered into by the ESB at that time for the purchase of coal were, I understand, not particularly good transactions.
The ESB were involved in appliance sales, which in the 12 years to 1986 amounted to £86 million, and the ESB sustained a loss of £5.8 million on them. In regard to appliance repairs losses of £3 million on sales of £14 million were recorded over 12 years' trading.
I must ask the Deputy not to stray too far from the amendments under discussion.
We are looking to see the price of electricity reduced and targets set for each year. Bad deals entered into will affect the price of electricity. Deputy Mac Giolla talked about the effects on Bord na Móna. Deputy Spring was the Minister for Energy when we were in Government and the ESB produced a five year strategic plan then which would have had a dire effect on the midlands. I pay tribute to Deputy Spring publicly in this House. He was very helpful to the people in the midlands at that time, as were the then Minister for Finance and Taoiseach. That plan if proceeded with would have had a major effect on the midlands.
I recognise the benefit the ESB have been to the country and I pay tribute to them for the excellent work they have carried out in consultancy overseas. We in this House and the people are justifiably proud of their work.
We must stand over decisions that are correct. The decision taken to direct the ESB to enter into contracts for the purchase of turf was wise at the time.
I have already made my view known that I cannot accept amendments Nos. 2, 3 and 4. I accept the good faith of the Deputy in proposing them and that he is anxious to see reductions at all times in ESB charges and all charges to consumers. I accept that principle and assure him that ESB prices are being continually monitored by me in the Department. I have mentioned a list of reductions. Since 1985 Irish electricity prices have fallen on average by 19 per cent for industrial consumers, 15 per cent for commercial users and 12 per cent for domestic users and in real terms the reductions are even greater when you take inflation into account.
The ESB coal contract provides for a downward adjustment in price. It is also important to remember that coal is the cheapest of all fuels, at 1.2p per unit, for the production of electricity. I am sorry I cannot accept the amendments.
I move amendment No. 5:
In page 3, before section 2, to insert the following new section:
"5.—(1) The Minister may by order authorise any person to generate, distribute or supply, to the public generally or to particular members of the public, electricity for all purposes or for specified purposes subject to such conditions as may be specified in the order.
(2) The Minister shall consult with the Board before making such an order.
(3) Any person may apply to the Minister for such authorisation.
(4) Any order made under this section shall be laid before each House of the Oireachtas. It shall only come into force if a motion seeking its annulment has not been tabled within 21 sittings days of it being laid or if tabled has been disposed of.
(5) The Board shall purchase electricity from an authorised person at a price representing its full avoided costs.".
It is anomalous that at present the task of deciding whether someone should be authorised to generate electricity should be a matter for the ESB. The Minister should have the freedom to make such a decision. There is potential for the economy to exploit, albeit on a small scale, private hydro-generation and there is also considerable potential to exploit combined heat and power. The attitude of the ESB in refusing to purchase electricity from combined heat and power industries which install such systems handicaps our ability to use energy in the most effective way. There should be an obligation on the ESB to pay a price to these very worthwhile providers of electricity at a very low cost to the economy. They should provide them with a reasonable outlet where they would be paid a sum representing the ESB's full avoided costs. At present they are being paid only a fuel avoidance cost which handicaps the emergence of these cheap technologies in energy exploitation. It would be very desirable to see a change in this area.
I would be interested to hear the Minister's comments on this amendment. A constituent of mine was involved in private hydro-electricity generation and, from discussions he had with the Minister and his advisers, the ESB seem to be abusing their monopoly in relation to letting these people operate commercially and buying electricity from them at an economic cost. It is interesting to note that the EC recently decided to try to bring together, on a Community basis, various private hydro-producers to decide on a common policy as to how private hydro-electricity generating producers would be able to contribute to their respective national grids. From what I can gather, the Irish delegate — the constituent to whom I referred — found that the state of the industry in Ireland and its potential is far in excess of anything he had seen in other countries.
The ESB seem to be over-estimating the possible level of competition from these small hydro-producers; it would be no more than a meagre 1 per cent, 2 per cent or 3 per cent of the total grid. The price offered at present inhibits small hydro-producers from expanding and contributing to the national grid. The ESB are being a little over protective in relation to a small group of people who have a contribution to make. It is important to diversify the source of supply because there is a niche for small producers and the ESB should be a little bit more sympathetic towards them instead of seeing them as a threat.
I should like to sound a note of caution in regard to this amendment. It should be discussed in the context of our present supply of electricity, as we have an over-capacity and will have for a considerable time. However, there is an obligation on the ESB and the Department of Energy to carry out research, particularly into alternative sources of energy, for the future.
I will give two examples of hydro-electric generation. The people involved meant well. They thought they had a good project and good locations, one in County Donegal and the other in County Kerry. They got planning permission and went ahead with the projects and they made a small contribution to the national grid. However, the other costs of these projects far outweigh the benefits and the contributions which these suppliers make to the national supply.
We should be very conscious of the protection of the environment. Despite the good intentions of these individuals, the overall good and the preservation of our landscape must take precedence because it is far more important in the long term, particularly in the counties to which I referred because of their inherent value to tourism. Even small schemes greatly interfere with the landscape, which can never be restored to its original splendour. I am opposed to the amendment because it is unnecessary.
I should like to encourage the long term alternative energy research which is already taking place, but we should be looking at it on a scale that would make a valuable and large contribution to our energy requirements in the next ten to 15 years. Despite present over-capacity, we should be considering a major capital programme. I would be concerned, if this amendment was accepted, by the nature of political pressures, that far too many small projects would be allowed. In this case the means do not justify the end. I assume the Minister opposes the amendment but, in relation to a discussion we will have at a later stage in regard to alternative energy, we must attribute weight and priorities to these various possible schemes. However, we have an over-supply at present and we should leave it at that.
I am aware of the particular project in County Offaly and I have seen and discussed it with the person concerned. Initiative and enterprise have been shown and we should be supportive in that regard. I listened carefully to Deputy Spring talking about the environmental problems in Kerry and Donegal and the effect on the landscape——
It would even affect the midlands.
It would affect the whole country. I am very concerned about protecting our environment, but hydro-generators can be far more beneficial in this regard because they do not do as much damage as coal.
It does not generate the same amount of heat.
I accept that but we must consider the amount of electricity that was generated by hydro systems in the past. There is no doubt that a hydro system is the cleanest way of generating electricity. The Minister, who is very anxious to protect the environment, should bear that in mind when he examines my suggestions. There is no doubt that we should be carrying out research into alternative sources of energy such as water, wind and sun. As a small country we may not have sufficient resources to fund such research but we should support projects like those outlined by Deputy Cowen. The people involved should be given every opportunity to tap into the ESB grid. It is important to remember that by using our natural resources we save on imports and create local employment. That should be taken into account.
The sale of electricity from one private user to another is subject to the permission of the ESB under the Electricity Supply Act, 1927. The purpose of that legislation was to ensure an orderly development of an electricity infrastructure. In order to preserve the integrity of the ESB grid system, and for reasons of safety, it is appropriate and necessary that the sale of electricity from one private user to another should require ESB permission. On the question of pricing I should like to state that in view of the fall in the cost of fuels used by the ESB in recent years the price paid to private producers currently exceeds the cost of the electricity generated by the ESB. Any increase in price would, therefore, only serve to increase the cost to the consumer and not reduce cost, as suggested in the amendment.
In relation to combined heat and power I should like to state that the ESB are at present opposed to purchasing power from such schemes in view of the present over-capacity. The Bill will give the ESB power to get involved in joint ventures and subsidiaries. I am aware that the company are looking at a hydro system because they are aware it would help to replace imports. They are considering getting involved in small projects with landowners who have water on their holdings and buying the electricity produced by such small hydro units, as suggested by Deputy Cowen. It is important to stress that there is an over-capacity in the grid and that the price being paid to private producers is greater than the cost to the ESB of generating electricity.
I should like to tell Deputy Spring, who raised a point about the capital programme looking ten or 15 years ahead, that a major decision that will affect that programme is the question of whether it will be necessary to go ahead with an inter-connector with further extensions in the next ten or 15 years. At present there is an over-capacity of 30 per cent which must be kept in the grid at all times because we do not have an inter-connector. I am not necessarily referring to a North-South inter-connector, which is the ideal one, but to an east-west inter-connector. A high level group in the Department have been investigating this matter. They are about to report and when I have considered their findings I will be putting recommendations to the Government. I will inform the House at a later stage of the decisions arrived at in regard to an inter-connector east-west or from Ireland to France. The question of an inter-connector is a very important one when considering future capital requirements of the ESB.
In connection with amendment No. 6, I observe that amendment No. 7 in the names of Deputies Pat O'Malley and Richard Bruton, are related and I am suggesting that we debate amendments Nos. 6 and 7 together. Is that agreed? Agreed.
I move amendment No. 6.
In page 3, between lines 27 and 28, to insert the following subsections:
"(5) The Board shall establish each of its ancillary activities as subsidiary companies.
(6) The Board shall publish separate accounts for each of its subsidiary companies, along with its Annual Report. Such Report shall include details of any long-term contracts entered into by a company.
(7) (a) All such subsidiary companies and each of its ancillary activities shall conduct their affairs in a commercial manner in order to earn profits for their shareholders.
(b) The Board shall assess the operation of each company established within 5 years of its establishment and each 5 years thereafter and consider inter alia.
(i) the return on capital achieved,
(ii) the dividend paid to shareholders, and
(iii) the desirability of the Board retaining its shareholding in the company.
(8) The Board shall treat its subsidiary companies as commercially independent entities. In particular—
(a) the Board shall not make preferential loans to a company;
(b) the Board shall not provide any subsidies to a company;
(c) the Board shall not provide any loan guarantees to a company;
(d) the Board shall price any goods or services purchased from it by a company on the basis of full cost, and the prices charged shall be reported in the Annual Report of the company;
(e) the Board shall not become involved in personnel management or industrial relations of a company.".
The essence of these amendments is that when the board embarks on the project of setting up companies that they be set up in a way that is entirely at arm's length and transparent from the rest of the business. We have to recognise that the ESB have a captive audience of 1.5 million consumers. It would be a terrible misfortune if any of the companies established by the ESB got into difficulties and the consumer found himself or herself forced to support their continued existence. It is important that we establish from the outset that the new companies the ESB are being given the power to establish in order to enable them to exploit the opportunities they have and the potential of their staff are seen to be stand-alone companies.
In amendment No. 6 I am suggesting that the board should publish separate accounts, should see themselves as being commercial in their operations, that the board would not be permitted to make preferential loans to the new companies, would not be permitted to pay them any subsidies, would not be permitted to offer loan guarantees and would not be permitted to sell any goods or services at a discount or knock-down price. It is important that that is made clear from the outset. If my amendment is not accepted, a company that gets into difficulties may affect consumers. The Minister on Second Stage adverted to the fact that appliance trading was no longer a losing entity. For a long time it was losing money and consumers were asked to prop it up.
We are giving the ESB power to establish new companies and in my view it is only right that in order to protect consumers we should insist that the provisions outlined in the amendments are included in the Bill. The amendment also contains a review clause under which the company would look from time to time at the operations of the new companies to see the sort of return they are achieving and whether it is desirable to retain them. I support the approach taken by the previous Government in connection with their proposals for a national development corporation. The State needs to get involved in the establishment of businesses because in many cases if the State does not do so such businesses may not be established. However, the State need not always remain involved in them if after their successful establishment it can make a substantial profit by selling off its share. Such resources could be used to exploit a new opportunity. That possibility should be open to the board in dealing with the companies it establishes. We should alert the board to the fact that we would be quite happy to see them behave in that way if their assessment showed it was justifiable.
Another element I should like to advert to in the amendment is the suggestion that the board should not become involved in personnel management and industrial relations of the new companies. My fear is the natural one if the ESB is involved in coal and electricity. An industrial dispute in the docks handling the coal should not spill over to the extent that the electricity supply is interfered with. Obviously legislation cannot prevent that, but an effort should be made by the board to keep these entities as distinct as possible in separate premises with separate industrial relations mechanisms and separate personnel management. As legislators we would be doing the sensible thing in preventing the electricity consumer suffering from the possible dangers of a dispute in coal trading which would not involve the electricity arm of the business.
Amendment No. 7 seeks to delete from the Bill section 2 (5). That subsection gives extraordinary powers to the ESB and if the Bill is passed in its present form it will enable them to set up what amounts to be a banking service. They would be allowed to lend money to companies with whom they are associated on terms and conditions they considered to be proper. There is no restraint as to the level of interest at which they would lend this money. Obviously the companies in association with them would have an unfair advantage over other companies trading in that sector. If the ESB are able to lend money to a company in the coal trading sector with which they are associated at a cost below that at which a competing company can borrow, then the ESB company has a major advantage. The likely prospect is that there would be a detrimental effect on the trading prospects of the other company engaged in coal trading. Ultimately, existing coal trading companies could be determined to the extent that they would be forced out of the market and the monopoly the ESB currently enjoy in one sector of the energy market would be extended further to other areas of that market.
Another extraordinary provision in subsection (5) enables the ESB to guarantee the borrowings of these companies. The net effect is that the Irish taxpayer would actually guarantee the borrowings and would have to pick up the tab in the event of the companies going into receivership.
The definition of "company" as it relates to subsection (5) is a matter I want to raise with the Minister. As I understand it, the company to which the ESB can lend money does not have to have any relationship with the ESB. At the start of section 2 the word "company" is defined as a company within the meaning of the Companies Act, 1963. There does not appear to be any necessity for the company to which the ESB lend money to have an association with the ESB. It is not required that the ESB should have a shareholding in such a company. That company or any such company need not necessarily be an Irish company but could be located overseas. The ESB can literally lend money to a company with which they have no connection and which may be engaged in a business unconnected with that of the ESB. This appears to be farcical. Perhaps the Minister would indicate if this is not the case.
It comes as a surprise to me to find that the two previous speakers, from parties who I imagine would want to allow the ESB the same latitude as a company in the private sector, would want to restrict the activities of the ESB in their arrangements with subsidiary companies.
Private sector companies cannot get preferential borrowings.
We are well aware of the deals done between companies in the private sector. Anybody who reads today's paper will be aware of the problems Mr. Quinn is having with regard to a new business in St. Stephen's Green Arrangements can be made between private companies to encourage or prevent activities in a particular area. The Minister has covered any concerns in this area by the provisions in section 2 (6).
Deputy Bruton has run amok in his amendment where he lists various arrangements which the ESB cannot enter into. This party could not agree with these proposals in his amendment.
The intent of both these amendments is to prevent the ESB getting into the business which this Bill will allow and to maintain this whole area for the private sector. Our attitude is that the ESB have a perfect right to be involved in this business. We oppose the amendments.
I oppose both these amendments. Deputy O'Malley has no great cause for the concern he expressed because the following subsection clearly places the authority on the Minister. Section 2 (6) states:
The exercise by the Board of any power conferred by this section shall be subject to the consent of the Minister and the Minister for Finance given after consultation with any other Minister of the Government who, in the opinion of the Minister, having regard to the functions of the Minister of the Government, ought to be consulted.
It is totally subject to ministerial, Government and parliamentary control. Once the Minister has responsibility we can ask parliamentary questions. I take it the purpose is to allow joint ventures or assistance to companies.
Deputy Bruton's amendment is extraordinary. A change in the Companies Act would be required before he would be able to get agreement on all of this amendment. There has been talk about changing the Companies Act for at least six years but nobody seems to be capable of making any changes with regard to the private sector and what can be done with companies and their subsidiaries regarding price fixing, liquidations and the setting up of new companies.
Deputy Bruton provides that the board can set up ancillary activities as subsidiary companies and that the board shall publish separate accounts for each subsidiary, along with its annual report. All such subsidiaries are to conduct their affairs in a commercial manner. I agree with all that. The amendment then provides that the board shall be totally responsible for all their subsidiary companies and their annual reports but shall have nothing whatever to do with them. They shall not make preferential loans or act as guarantors for a loan to their subsidiary company. They shall not provide any subsidies and any goods or services purchased by a company must be on the basis of full cost. Furthermore, they cannot have any involvement whatsoever in the personal management or industrial relations of the company.
These are subsidiary companies. I do not see what the purpose of the board would be or how they would effectively use the expertise that we have already talked about tonight — their expertise and their skills in order to establish new companies, provide jobs in new areas and so on. How can they do that if they are not allowed to use their excellent skills even in the industrial relations sector or in the personnel management area. They cannot in any way assist these companies with finance, even by guaranteeing their loans. They cannot give them subsidies or give them any special pricing. Anyone else could set up the companies just the same as the board if they cannot do anything for them. How can they set up subsidiary companies? The whole amendment is self-defeating. The original portion of it is acceptable in that the board have total responsibility for the companies, but the second portion of it means that they cannot have any responsibility for them whatsoever. They cannot assist them by their personnel, their money, their electricity, their skills or in any way that would get the companies up and moving. The whole purpose of the Bill would be destroyed if any amendment such as that was accepted.
I would like to say a few words on these two amendments, particularly on amendment No. 7, in the name of Deputy Pat O'Malley, which I think is the more important one in the sense that it is more pertinent to the Bill before the House. Amendment No. 6 proposes to insert a new section. I agree with the sentiments in that amendment, put down by Deputy Bruton. It is perfectly right that he should suggest that the ESB should establish each of its ancillary activities as a subsidiary company, publish separate accounts for them, treat them as commercially independent entities and treat them at arm's length in commercial terms. It is important and quite valid that Deputy Bruton should suggest that because the ESB over the years have treated much of their ancillary or subsidiary activities at anything but commercial arm's length. They have heavily subsidised, at the cost of the power consumer, various activities in which they chose to involve themselves in competition with people who have to bear the full brunt of the market place; and they have done so in a way that has been grossly unfair, to say the least.
It is particularly vital that subsection (5) should be taken out of section 2. I do not agree with section 2 anyway, but I could perhaps live with it if subsection (5) were not there. That is where the real problem will arise. It gives the board power to lend money, on such terms and conditions as they may determine, to a company and to guarantee, in such form and manner and on such terms and conditions as they think fit, the due repayment by a company of the principal or any other moneys.
Deputy Mac Giolla was quite erroneous in his statement that this applies only to subsidiaries of the ESB. That is not so. It applies to any and every company. The ESB can act as bankers to anybody. I presume that it is intended to apply to subsidiaries or other ancillary activities but that is not so. It applies to any company formed under the Companies Act, 1963, or indeed to any company established under the laws of the State, other than the State, which is a company. They can act as banker, at the expense of the electricity consumers, to any other company either in Ireland or abroad whether or not they have anything to do with electricity or any of its connected activities. That is far too wide a power to give. It is cut down somewhat by section 6 in the sense that they have to get the consent of the Minister for Energy and the Minister for Finance. I have some experience of knowing how that consent can be forced from a Minister in some circumstances. The ESB are not the easiest people to deal with.
That depends on the Minister they are dealing with.
I have particular recollection of my efforts to change the extraordinary and unparalleled accountancy provisions in the Electricity Act, 1927, which allows the ESB a double write off. I thought it would be possible to amend that section of the Act. At that time the ESB threatened the Department of Finance with all kinds of consequences, in terms of looking to the public purse for capital which they very badly needed, if that change were made and ordinary accountancy rules were made to apply to the ESB. As a result, the Department of Finance panicked and decided to leave the matter as it was rather than put themselves in that position. That is what I have in mind in saying what I have said. I have said so very advisely on the basis of my own experience. It is wrong that, even with these consents being necessary, the ESB should be given that general power to act as banker to any company of any kind in Ireland or anywhere else in the world. They can lend them money at, say, ½ per cent. They may have to borrow the money at 10 per cent, but the difference is made up by the electricity consumer, as it has been in so many of the commercial activities of the ESB. That is wrong. They should not be given that sort of power, because I could envisage a situation arising where they will put on pressure to claim the right to be allowed to exercise the rights they would have under subsection (5), whether it was justifiable or not.
We are in a different situation to day from that eight, nine or ten years ago when the ESB were grossly, some might say negligently, short of generating capacity. They are now grossly, some might say almost negligently, overplanted in terms of their capacity. They have gone from one extreme to the other. It is unsatisfactory that they should be given these extraordinarily wide powers to, more or less, do anything they like.
The original purpose of this Bill and of its predecessor was to allow the ESB to deal in coal. If the House looks at this section, which gives them the right to establish or acquire a company, in conjunction with the following section it will see that all the coal provisions will be operated through this section, plus almost anything else. Section 3 does not confine itself to dealing with coal. It gives the board power to deal with any other substance or product. We should be slow to cede such extraordinarily wide powers. In particular it is wrong to give the powers that are proposed in subsection (5). What is contained in amendment No. 6, in Deputy Bruton's name, is the ideal if it could be achieved; but I do not realistically see a great chance of that being agreed to. For example, in a country where monopoly powers are fully and properly controlled — this is not one of them — the sort of powers that are proposed in amendment No. 6 would be written into appropriate legislation.
I urge on the Minister and the House the acceptance, if not of amendment No. 6, certainly of amendment No. 7. It is not necessary to give these general banking powers to the ESB. It is undesirable to do so. It is only an encouragement to act in a way that is quite unnecessary and could be extremely hazardous and costly.
May I at this juncture make a few comments on the amendments before us and perhaps you will allow me that latitude of incorporating the ideas behind sections 3 and 4, which give new powers to the ESB to get involved in the importation and distribution of coal and the power of the board to manufacture and sell certain products. This ties in with the section under discussion which deals with financing of subsidiary companies.
What exactly is strategic planning in relation to our energy policy and where will the fuels used in the generation of electricity fit in the new scheme which has developed over the last three or four years? Energy prices have dropped by between 60 per cent and 75 per cent. At the time of the oil crisis we were very glad of our turf-fired stations which averted a national catastrophe.
This Bill allows the ESB to import coal at Moneypoint and to redistribute it at various harbours. The idea behind it is that the reductions in the world price of coal have not been reflected sufficiently here and it is envisaged that we should be able to get a further reduction of 20 per cent in the price of coal as a result of these new measures. If we have further reductions in the price of coal to that extent, what impact do the Department envisage this will have on other fuels, particularly indigenous fuels? Bord na Móna products are what I have in mind. What share of the market does coal account for? If we reduce the price of coal by a further 20 per cent, what will be their envisaged increased market share? Have the Department any idea what impact that will have on the sale of peat briquettes? Sales of briquettes have gone very bad at the moment as a result of a mild winter and because of price, plus the fact that peat briquettes are not an acceptable fuel in the smokeless zones being designated by Dublin Corporation in the city of Dublin.
The ESB have always had a competitive advantage vis-à-vis Bord na Móna. The price fixing arrangements for milled peat, which are due for negotiation again next year, will find Bord na Móna in a very vulnerable position, because of over-capacity, 350 MW, at Moneypoint. An extra generating set in Moneypoint will be sufficient to do away with every turf-burning station in the midlands. Where do Bord na Móna fit in? This is my concern and the concern of many people I represent. I find it a little disconcerting that, while we are discussing the expansion of activities of the ESB and the possible introduction of the ESB into activities which would bring them into direct competition with Bord na Móna in relation to indigenous fuels and the distribution of fuels, there is also a great air of uncertainty in my area as to where Bord na Móna are going in the immediate, mid-term and long-term future. I accept that the Minister has sent in a team of consultants to see where Bord na Móna will fit in, but I am very concerned that while we are awaiting the report the ESB are getting increased powers and opportunities to come into direct competition with Bord na Móna.
The proposed new power will allow the ESB to import coal. I accept that, because coal is being imported anyway. I think the idea in the Department is that since the ESB are importing so much coal for the station at Moneypoint why not let them bring in coal which is of a sufficient quality for the consumer market? That is fine as far as it goes; but not alone are we allowing them to do that but we are allowing them to get involved in the manufacture and sale of coal or by-products of coal and we are allowing the board to set up a subsidiary company and to finance them with preferential loans. For example, they can get into the area of producing brown coal briquettes. If that happens where will Bord na Móna fit in? We are already at a competitive disadvantage and we are now talking about the ESB manufacturing an alternative to our indigenous fuel product; and by reason of their economic strength vis-à-vis Bord na Móna, the ESB will be in a very easy position potentially to undermine the future level of sales of Bord na Móna peat briquettes.
What strategic planning is exactly is evading me at present. One has to be acutely conscious of the effects the proposed expansion for the ESB may have on existing semi-State companies like Bord na Móna. Let it be remembered that the subsidiary companies envisaged here financed by the main board at preferential rates, will be set up. But before Bord na Móna introduced their development programmes they had to go on the open market without any State assistance and borrow at very high interest rates to continue expansion and had to pay a dividend of 15 per cent — that was the rate of interest they were being charged. The Michael Smurfits of this world cannot give effective dividends of 15 per cent annually. That is precisely what happened; and, as a result of a couple of bad years and a mild winter, Bord na Móna have 100,000 tonnes of peat briquettes and are building makeshift stores to hold the briquettes they cannot sell. At the same time we are envisaging setting up subsidiary companies to get into areas of activity producing products like brown coal briquettes which will be in direct competition with Bord na Móna products. These companies will be set up in such a way as to be more advantageous in terms of price than Bord na Móna can manage at the moment.
These issues deeply concern my constituents. I would be very grateful if the Minister could give the House an idea of what the strategic planning will be, what impact it is envisaged these increased powers will have and where will Bord na Móna fit in. That company has given a very good service, which was gratefully accepted by Irish people over many decades.
Before getting to the specific amendment may I refer to the points raised by Deputy Cowen? I understand and appreciate the deep concern Deputy Cowen has for the future viability, strength and employment potential of Bord na Móna in his area of Laois-Offaly and throughout the country generally.
Bord na Móna are a very important company in the national scheme of things and I want to assure the Deputy that this Government are totally committed to having a viable Bord na Móna operating and using the resources under their control — the bogs — into the next century. At the moment there is a very close relationship between Bord na Móna and the ESB in regard to the generation of electricity, and that will continue.
The Deputy will appreciate that it is very important for the future of Bord na Móna, with the changing situation worldwide and the changing situation in their last 20 years of operation, that the whole structure of the board should be reviewed, that there should be greater concentration on marketing their products rather than just on production which, unfortunately, has been the situation up to now. There is a new chief executive in Bord na Móna who, with the co-operation of the board, the unions and the workforce, has been doing an excellent job in rationalising the operations of the company. The Government in their commitment to the future of Bord na Móna are appointing consultants with a mandate to report before the end of the year, to review the operations of that company and to help, in co-operation with the board, the management and workers to ensure that after the consultancy we will have a viable company with secure jobs for the employees.
The coal is already being imported. What is intended is that the coal that is being imported will be screened and made available by cargo vessel to ports in Ireland to try to break the existing monopoly in relation to the importation of Polish coal. We estimate a reduction of about 20 per cent in price available to Irish consumers. That is very important. At the moment the relationship between turf and coal in domestic use is that use of turf is about one-fifth that of coal for commercial sales. Rather than the ESB being in direct competition with Bord na Móna, I would see a situation in the future of their working very closely together.
As regards the amendments put down. the primary function of the Bill is to give commercial freedom to the ESB. The amendments are, in my view, unduly restrictive and would erode the freedom the Bill purports to give them.
In relation to amendment 6, paragraph (6) the main purpose of the Bill is to allow the ESB to set up subsidiary companies. It is important that the board of the ESB should have the commercial freedom to decide for themselves when and where it is appropriate to establish subsidiary companies. It is the board's intention to set up such companies — this is for the information of the House — to handle their external consultancy, their fisheries and their coal trading facilities.
In relation to amendment No. 6 (6) the situation there is that the statutory framework, section 7 of the 1927 Act, is already in place to enable the Minister to direct the ESB as to the form of their accounts. In addition, under section 2 (6) of this Bill the power of the ESB to set up subsidiary companies is subject to the approval of the Ministers for Energy and for Finance.
In relation to amendment No. 6 (7) (a), the subsidiary companies will be established with a view, obviously, to making a profit and the electricity customer will be protected as these subsidiaries will be set up under the Companies Act with limited liability. There may be occasions — I want to admit this here — when a subsidiary company is established with little likelihood of making a profit. For example, in the foreign consultancy areas the ESB may participate in the venture in order to break into a market. There may be only a slight chance of that particular venture showing a profit but further opportunities that it could open up would justify the participation in the venture itself.
In relation to amendment No. 6 (7) (b), as a commercial organisation the ESB would be expected to continually assess the performance of their subsidiary companies. However, I do not consider that the inclusion of this as a statutory requirement is warranted.
On the question of the borrowing power which has been spoken about at length here, section 2 (5) of the Bill is an important provision which will greatly assist the ESB in the expansion of their anciliary activities. Despite what was said, it is not unusual for private companies to lend money and it is desirable that the ESB should be given similar commercial freedom. There are many situations in which they may wish to lend money to a subsidiary or other company. In the case of a subsidiary company there is an obvious need to allow the ESB to provide the necessary finance to establish the company in the first place.
In the consultancy and external activities area it may be necessary to make loans to companies in which the board have an interest, in order to keep pace with the attitude, agreement and response of other shareholders. Indeed, it is often a condition of entry into a consortium that the participants advance money to the company by way of loans.
To refer back to a point mentioned by Deputy Cowen earlier, in developing small hydro schemes it may be necessary to help out the local developer who may have the necessary land, water and expertise but not the capital to invest in a limited company. In other cases it might be good business to advance money to a company to help them in extension or improvement of their business. The powers conferred by this section are, of course, subject to the consent of the Ministers for Energy and for Finance. Necessary safeguards will be attached to such consent, which will ensure that the ESB will not be allowed to make loans to or guarantee borrowings for all and sundry.
I see a certain amount of merit in the amendments we are discussing here, with regard to returning capital, the dividend paid to shareholders and the desirability of the board retaining their shareholding in the company. If the ESB are entering into very challenging enterprises in Ireland or outside Ireland, there should be some method of recompense or reimbursement to the staff of the ESB in the form of shareholdings in one form or another. This is something that should be looked into. If the workers employed by the ESB had some type of incentive they would be able to select a specific area, go in there and, as Deputy Bruton has said, there would be an arm's length company which would have to pay their way by showing particular initiative in an area. It would be desirable and in the public interest that workers would be involved and have the opportunity of purchasing shares in the company and that they would have the benefit of participation in the profits.
The Minister made a point about the overall purpose of the Bill being the setting up of these subsidiary companies. Let there be no doubt about it, this Bill really is about the importation of coal.
The Deputy is wrong. It is not. That is one part of it but foreign consultancy is very important.
The importation of coal is one of the major issues, but I do not want to enter into a specific argument about that. I express a certain amount of concern with regard to this question. The Irish Independent some time ago had an editorial which made the point that I made a special pleading because I was from the midlands and represented an area in which Bord na Móna and the ESB had a particular interest. Let us be honest, I make no bones about it. I am not just making a special pleading on a weak case. I am making a special pleading on a very important national situation. We are bringing in a Tobacco Bill in order to combat air pollution but let there be no doubt about it, acid rain poses a very great threat to the health and wellbeing of many people in this country. A report was published by a subcommittee of the House of Commons in Canada dealing with acid rain. I quote from page 11 of that report:
Canada is facing the greatest environmental threat in the 114 years of existence as a nation. The cleansing rains and pristine snows that once fell on this land have become dangerously acidic and destructive.
Acid rain, a term unknown a decade ago, has become the most pervasive and most feared environmental pollutant in North America.
The Honourable John Roberts, who is Minister for the Environment in Canada, told an American audience that acid rain is the most serious air pollution problem facing their two countries today, that the situation is already intolerable and that unless they take swift action it is going to get worse instead of better in the years ahead.
In recent years serious problems have arisen in Dublin because of smog. Earlier we spoke about different types of energy generation. The burning of turf or peat is one way of generating electricity, but the burning of large amounts of coal imported through Moneypoint will have a serious effect on the environment, particularly our larger towns and cities. I put it to the Minister that we should be seeking ways to avoid this. The Minister has said that he is anxious to see Board na Móna retained as a viable unit. That is important. But let there be no doubt that the burning of large amounts of imported coal is going to have major damaging effect on the environment.
I hope the points which the Deputy is making are pertinent to the section. It strikes me that we have been straying too far from the section. However, I am not privy to what happened earlier. It seems that the provisions of section 2 would enable the ESB to establish subsidiary companies and that this is being used by the Deputy as a licence to discuss the environment, pollution and other matters to which passing references could be made. These should not be developed considering that there is a time limit on this debate.
With the greatest of respect, what we are discussing here is the setting up of a subsidiary company which would import coal to be used for domestic purposes. I think I am in order to speak about the damage which is going to be caused to our environment by the burning of this coal and on the effects the importation of this coal is going to have on my constituency. According to a recent article, Bord na Móna plan to cut 1,500 jobs and the point which I wish to make——
The Deputy will appreciate that, if the same licence is given to or is sought by all the other Deputies who are present in the House, there will not be too many contributions made before 10.30 p.m.
I did not make that order of the House.
The Deputy is entitled to make passing references, but he should not make a meal out of it. I hope the Deputy will accept this.
The provisions contained in this Bill will have very serious consequences for the constituency which I represent and for the livelihoods of the people I represent. My constituency will be affected far more than most other constituencies.
The point which the Deputy is making are more relevant to section 3 or section 4.
Am I in order to discuss the setting up by the ESB of a subsidiary company to import coal the importation of which is going to affect my constituency?
It would be perfectly in order for the Deputy to do so when we come to deal with sections 3 and 4 of the Bill.
Section 2 relates to the establishment and acquisition of companies and interests in companies by the board. These companies are going to import coal from Australia, China and America the burning of which is going to have serious and detrimental effects on the environment. In the long term the importation of this coal is also going to lead to job losses in my constituency. We need to be very careful as by importing coal we would affect the balance of trade and cause job losses. I have great reservations about the setting up of a subsidiary to import coal.
The ESB have closed down the power station in Portarlington. Let them set up a subsidiary if they so wish, but they should utilise and adapt the power station in Portarlington and create jobs there. I cannot say the particular value of this station but I suggest that the setting up of a subsidiary company in Portarlington would be of benefit to the area and I would urge the Minister to consider this.
As I have said, I have great reservations about this matter. I welcome the ESB diversifying into other areas as this will be of benefit to our people and economy. I ask the Minister to refrain from importing coal because the burning of that coal is going to have damaging effects on our environment and, secondly, the importation of that coal is going to result in job losses.
There are two brief questions which I would like to ask the Minister. The Minister said that preferential loans would be subject to ministerial consent. Can he tell us whether ministerial consent would be required in respect of the subsidies which the board may provide to subsidiary companies and whether ministerial consent would be required if the board decided to provide goods or services at something less than full cost?
I can tell the Deputy that the provisions of section 2 would enable me to attach conditions to the setting up of the companies. While I am on my feet lest what Deputy Enright has said may be taken as factual, let me respond to some of the points which he made. Listening to Deputy Enright one would think that coal has never been imported into this country before. Let me point out that under the provisions of this Bill a valuable national asset — constructed with taxpayers' money at Moneypoint — which is already being used in the importation of coal will be used now for the benefit of our people and economy to replace coal at present being imported from other sources, at an estimated saving because of the bulk buying the ESB must engage in for their coal burning station at Moneypoint, of approximately 20 per cent to those who burn coal at present.
I deny the allegations which have been made by the Deputy in that the burning of this coal will have serious effects on the environment and that importation of this coal will have serious effects for his constituents in Laois-Offaly. The ESB have had a role in providing employment in Laois-Offaly in the past and will continue to do so. As I have already mentioned, it is important that Bord na Móna be turned into a viable entity. That is underway at present. As far as the closure in Portarlington is concerned, the Deputy should not be the one to speak about the closure of Portarlington, because the decision to close the power station there was taken by the previous administration of which the Deputy was a loyal and true supporter. It was postponed by them many times but was eventually targeted for its operational date and the Deputy was involved in it.
I should like to say a few brief words in reply to what the Minister has said on the question of the importation of coal and its sale by the ESB. The jetty at Moneypoint was built, not for the purpose of importing coal for wholesale or retail distribution in this country but, at the request of the ESB, to the size that it is, for a totally different purpose altogether. It was built when they had in mind the building of another coal-powered station in the area of Belmullet, County Mayo. They came to me, I think in 1979, and asked me would I agree to the jetty at Moneypoint being extended outwards by some 60 or 70 metres to allow much larger ships to come in than they would need at Moneypoint because they would be bringing in much bigger cargoes, as they saw themselves setting up a second Moneypoint-type operation in the Belmullet area and there was not sufficient water in Belmullet to import the coal directly. Having given it some thought I agreed because the additional marginal cost was relatively small by comparison with the original cost of the jetty. They are now trying to use that argument to justify the sale of coal, which they say they will be able to sell at 20 per cent less than it costs in this country at present. Possibly they will be able to sell it at 20 per cent less. I would rejoice in that fact if I felt it was necessarily fair trading. But I have the gravest doubts as to whether it will be fair trading. I fear it will be somewhat similar to their practice of selling washing machines, fridges or other electrical goods cheaper than anyone else. They do so at the expense of the ordinary consumers of electricity here who are paying higher than their counterparts, particularly if they are industrial consumers anywhere else in Europe.
They sell them dearer than anybody else.
Significantly higher.
Might I seek Deputy O'Malley's indulgence. As an experienced Member of the House he will note that section 3 refers to the power of the board to distribute and sell coal and any other substance or product and so on. There are specific sections where the discussion we are now having would be appropriate. We have here an example of what happens when a Deputy presumes to introduce matter on a certain section which is not relevant to it. Everybody then seems to accept the licence to go in pursuit of that which ab initio is out of order. I would ask Deputy O'Malley not to continue the malpractices that have been tolerated to date.
A Leas-Cheann Comhairle, in case you are referring to me I should say that, prior to your occupying the Chair, the matter had been discussed at length by two other speakers before me.
Perhaps, but it still would not be in order.
Your predecessor, the Ceann Comhairle, had allowed it to take place.
Every occupant of the Chair is entitled to interpret in his fashion what is before the House.
The Deputy knows that.
I would say to Deputy Enright or any other Deputy: if conscience doth make cowards of us, I cannot help that.
I was inspired to say what I have to say because of the Minister's remarks. The matter is by no means as simple or as straightforward as he suggests. It may well have serious long-term repercussions here. It is a matter that should be thought out more fully. I greatly regret that, at 10.14 p.m., we are only beginning the discussion of what is the central point of this Bill. The Bill is guillotined to finish at 10.30 p.m., which is very unfortunate. It means that a whole lot of major amendments in the Minister's name go through by default and a whole lot of significant and important amendments in the names of various other Deputies are not even discussed. That is a great pity.
All I can do, in the very short time at my disposal, is to register my serious reservations about the provisions of this Bill. I was opposed to it when it was introduced by the previous Government. There is one change of significance as between the previous Bill and this one, which relates simply to shipping out of Moneypoint. The principle of what is involved is wrong. It is very questionable whether we should put two important sources of energy, electricity and coal, effectively under the total control of the ESB. We have encountered serious problems in the past with the supply of electricity. Are we going to compound those problems in the future by potentially tying up most of our coal supplies also if the ESB run into some of the industrial relations or other problems they have encountered in the past? It is dangerous. The House would have been well advised to have given a great deal more time to it.
This is not appropriate to this section.
I want to ask the Minister one question. Will the additional coal be imported at a lower price — and presumably sold in larger quantities — be smokeless fuel and if not, does he think it is a good idea?
I cannot give the Deputy that assurance. As far as Deputy O'Malley's contribution is concerned I might congratulate him on his foresight in 1979 in having allowed such a jetty to be built at Moneypoint. It is a great natural amenity of importance to us, a national infrastructure, which can be used not only for coal but hopefully, with the deep water facility there, also for the transhipment of other products from around the world coming to Moneypoint and to the rest of Europe. That potential is there under the provisions of the Bill also.
As far as Deputy O'Malley's statement that coal will now be under the total control of the ESB, I should say that is not true. The position is that the private sector will still exist but the monopoly of the private sector will be broken. The Deputy will be well aware — since he referred back to 1979 — exactly the position in which we found ourselves then in relation to the importation of coal here, when we had to scrimp and scrape around the United States, to Australia to try to find sources of coal, when our only market was in Poland tied up with one monopoly group.
I do not want to widen the debate on this section or the amendments to it. The Minister is talking about breaking a coal monopoly. Certainly while I have been in the House he has not referred at all to the other monopoly, that is the monopoly of electricity that the ESB represents. As I understand it, the law does not provide for any other company, private or otherwise, to generate electricity and offer it to any significant part of this country. On the other hand the law does not prohibit any private sector company providing competition against the present coal monopoly. There would appear to be a little schizophrenia in the Minister's attitude: he is concerned to break a coal monopoly which could be broken by private enterprise anyway, but shows no concern at all about breaking the ESB monopoly which, I would submit, is a more worrying one and has led to great inefficiency, very high cost electricity——
On a point of Order, a Leas Cheann-Comhairle, is this in order? We discussed the whole question of State monopolies on the very first amendment when Deputy Mitchell was not in the House. It has nothing to do with the amendments now before the House.
The Deputy is responding to the Minister.
Unfortunately, Deputy Mitchell would appear to be in fashion. He is out of order. I thought he was going to make a passing reference to this matter. I would direct Deputy Mitchell's attention to the section and the amendments we are discussing.
I am on my feet for two minutes. The Minister talked about breaking up the coal monopoly. If that is the purpose of the section, it is reasonable to ask him what is his attitude to breaking up the electricity monopoly.
Schizophrenia is not confined to the Minister's side of the House. There is, on all sides of the House, a schizophrenic attitude to the State sector. We want the State sector to be profitable and we complain bitterly when it is not. On the other hand, we frequently want to tie its hands behind its back. Why is that? In this case, and this is where my submission is very relevant, the ESB are a statutory corporation and can only do what they are specifically allowed by statute. They are not a company and because of that they cannot have private participation. I submit that one of the things we might have expected from the Minister in this Bill would be to change the status of the ESB from a statutory corporation to a company so that at least there would be the prospect, at some time in the future, of having some private participation in the ESB to bring some sort of commercial criteria into their operations. This is the purpose of the amendments before the House. It is because there is a worry there is not any real commercial criteria that Deputies Bruton and O'Malley have tabled their amendments. It is because of the concern that there is not fair trading, that there are not commercial practices in the ESB and that because it is a monopoly it is protected.
I believe the next ESB Bill should be a Bill to break up the ESB monopoly. It would be good for the country and for ESB consumers, and we would not then have to deal with amendments of the type that are now before us.
Is Deputy Bruton pressing his amendment?
Did the Minister make it quite clear that he would be attaching conditions to any permission from his Department that subsidies and full cost pricing would have to be practised by the board in relation to these subsidiaries?
What I said was that I have the power to do that and it is something I will examine as we go along.
Will the Minister do it?
That is something I will examine as each case comes before me. I am sure that whoever happens to be Minister at any one time would do the same thing.
Is the Minister quite happy to see preferential loans and subsidies and so on?
I am quite happy to see a situation where one of our major State companies is being given extended powers to involve itself in further commercial opportunities which will provide jobs for our people here at a time when we have about a quarter of a million unemployed. I want to see whatever management skills and potential that have been developed in the ESB since its inception used to the benefit of the Irish people. That is what that Bill is about.
That is not the question I asked the Minister.
Answer the question.
The Minister talks about jobs. The loading of coal off a ship will provide some jobs but far less than will be lost across the midlands. I asked the Minister if the Department intended to provide some sort of subsidiary company in Portarlington power station and the Minister came back with an attack on the previous Government. In fairness to that Government we kept those stations open. What the Minister's colleagues were shouting during the last election sounds very hollow now; they did not keep Portarlington open. Has the Minister something positive in mind in regard to Portarlington, apart from political points scoring?
That seems to be a question suitable to be put down at Question Time.
I was trying to avoid coming in, hoping that we would get to other sections. Obviously we will not now. Speakers have continually referred to the question of the ESB importing coal as if that was all that this Bill was about. It refers to any product, including coal, so it is a wide power in relation to all products. As we develop smokeless zones around the country I hope that the importation of coal will be reduced to such an extent that the ESB will probably cease importing coal and will import other products.
The whole purpose of the Bill in regard to jobs is to allow the ESB to use their expertise. I would hope that as they develop they would be in a position to go into a joint venture with some other company in the area of building, say, a lead and zinc smelter which would use the over-capacity which the ESB have for electricity and which would also be of tremendous benefit to the State in the use of our natural resources, in the provision of jobs and in creating a whole new industry. I hope nothing will be done by way of amendment to this Bill that will prevent the ESB from going into such a joint venture for the benefit of the State. As has been pointed out, in subsection (6) of this section all is subject to ministerial control. I fail to see the dangers.
As Deputy Cowen was speaking I felt he was wrong in saying that there is a danger to Bord na Móna because the ESB had over-capacity before, but still under the law the ESB must use the Bord na Móna turf fuel so there is no problem with Bord na Móna. As soon as the Minister got up to reassure Deputy Cowen about Bord na Móna I became very worried as I heard words about rationalisation, consultancy, viability. With the Minister's reassurance I became very worried about Bord na Móna and I began to think that perhaps Deputy Cowen was right, that there is some problem there of which I was not aware. That did concern me greatly but I do not think this Bill of itself is any danger to Bord na Móna. It should not be.
The Minister is an excellent and dynamic Minister. Deputy Mitchell spoke about not tying the hands of the State sector behind their back. I agree with that. My simple concern is that under this section it will be possible for the ESB to set up subsidiary companies and get involved in the manufacture of brown coal briquettes which will be in direct competition with peat briquettes and Bord na Móna. I am all for the expansion of the ESB and for them getting into as many commercial areas as possible. The point I make is that at the moment Bord na Móna have to adjust. They are doing so at a considerable cost to themselves and the workers. What I am saying is, having rationalised, could we then, as a result of this legislation, have ESB subsidiaries involved in direct competition in the indigenous fuel market with Bord na Móna and its products? That is what I am afraid of. There are enough things the ESB can get into.
The Department of Energy should be guarding against the possibility of the ESB getting into direct competition with another semi-State company which is in the process of rationalisation. I have great respect for Deputy Mac Giolla but I find it amazing that a former leader of The Workers' Party would not know about it. It is important that we make sure the ESB do not get into a position where they are in direct competition with another semi-State company which is in the process of rationalisation which we must make more market-orientated, more export-orientated, etc. Having rationalised I do not want the possibility of a situation developing where an ESB subsidiary could come in, with the economic advantages the ESB have over Bord na Móna, with the preferential loans the board would be able to give that subsidiary company, and get involved in direct competition with the indigenous fuel market by the production of brown coal briquettes. That is my simple concern.
Is the Deputy going to vote against the Bill?
I will not vote against the Bill. Is Deputy Mitchell going to vote for the Bill?
The Deputy is being two-faced.
I am not two-faced.
Order, please.
It is similar to a Bill introduced by the Government of which Deputy Mitchell was a member.
I do not know anything about that.
It is similar to a Bill introduced by Deputy Mitchell's Government. I am very proud of this legislation. I can assure Deputy Cowen——
It will cause environmental problems.
——that the intention of this Bill, in relation to the whole business, is that it will replace very expensive coal which Irish consumers have to purchase at this stage and not to be involved in competition with Bord na Móna.
As it is now 10.30 p.m. I am required to put the following question in accordance with a resolution of the Dáil: "That the amendments set down by the Minister for Energy and not disposed of are hereby made to the Bill and the Bill, as amended, is hereby agreed to in Committee, and is reported to the House and Report Stage is hereby completed and the Bill is hereby passed".
