Mary Flaherty
Question:5 Miss Flaherty asked the Minister for Energy if he will clarify his plans for the restructuring of the ESB as outlined recently by him in public.
Ceisteanna—Questions. Oral Answers. - Restructuring of ESB.
Toddy O'Sullivan
Question:6 Mr. T. O'Sullivan asked the Minister for Energy if he will outline the reasons he is commissioning consultancy studies into the future of the ESB; and if he will make a statement on the matter.
Brendan McGahon
Question:32 Mr. McGahon asked the Minister for Energy if he will have direct and ongoing discussions with the unions at the ESB in relation to his restructuring proposals for the company.
Michael Finucane
Question:36 Mr. Finucane asked the Minister for Energy if he will outline his plans in relation to the future of the ESB.
Séamus Pattison
Question:37 Mr. Pattison asked the Minister for Energy if he will make a statement on reported proposals to split the ESB into two companies; if he will outline the consultations he has had with the ESB in the matter; if it is his intention that either, or both, of the new companies should be privatised; and if he will make a statement on the matter.
Michael Finucane
Question:41 Mr. Finucane asked the Minister for Energy if he has considered the privatisation of all or part of the ESB; and if he will make a statement on the matter.
Eric J. Byrne
Question:51 Mr. Byrne asked the Minister for Energy if he will outline his Government's proposals for the future ownership, structure and organisation of the ESB; whether the Government plan to privatise all or any part of the ESB or any of their services; and if he will make a statement on the matter.
Mary Flaherty
Question:81 Miss Flaherty asked the Minister for Energy if he will agree to have direct and ongoing discussions with the unions at the ESB in relation to the restructuring proposals for the company.
Ivor Callely
Question:87 Mr. Callely asked the Minister for Energy the consideration, if any, which has been given to amending existing legislation in connection with Ireland's electricity supply by way of a monopoly with the ESB; and if he will outline the EC Directive, if any, which exists regarding this matter.
John Bruton
Question:88 Mr. J. Bruton and Miss Flaherty asked the Minister for Energy if his attention has been drawn to the fact that the European Commission, in their recent proposals for the progressive achievement of the Internal Market in the electricity and gas sectors, stated it was necessary to create a transparent and non-discriminatory system for the granting of licences for the production of electricity; and if the present system in Ireland complies with this.
Mary Flaherty
Question:95 Miss Flaherty asked the Minister for Energy if he will agree to have direct and ongoing discussions with the unions at the ESB in relation to the restructuring proposals.
I propose to take Questions Nos. 5, 6, 32, 36, 37, 41, 51, 81, 87, 88 and 95 together.
The Deputies will be aware that the Government recently approved my proposal for a major review of the structure of the ESB.
The Electricity Supply Board have served the country well since 1927 in developing a reliable electricity supply system. During the development stages of the system, considerations of economy of scale and the relatively undeveloped stage of the economy dictated that the ESB should operate as a monopoly. The company are now, however, operating in a markedly different economic environment and the justification for such a monopoly is less apparent. For this reason I considered that the existing arrangements needed to be reviewed. While it is widely accepted that electricity transmission and distribution systems are natural monopolies, there would appear to be scope for competition in the generation side of the business. I believe that consumers are likely to benefit from the increased cost transparency which would be available if the network business is separated from generation and from the introduction of competition into the generation business.
I am currently in the process of appointing consultants to assist my Department in the review. There will be full consultation with the ESB. In this context I have invited both the board of ESB and the ESB group of unions to make submissions as part of the review process. I would like to make it clear that, in devising a new framework for the electricity industry, I do not envisage a change from public to private ownership of the existing ESB assets. Until the study has been completed I am not able to be more specific about the exact arrangements. I hope to be able to report to Government on this important matter before the end of July.
In parallel with my own belief that it is time to reconsider our electricity business, the EC Commission is pressing member states for increased competition and more openness in the electricity sectors with the advent of the European Single Market in 1993. Discussions with member states on a draft directive dealing with the Commission's proposals in this area have started recently. I consider that the review will be an important element in formulating Ireland's position on these proposals. As no final decision has been taken on the EC proposals, the question of Ireland's compliance does not arise.
Any necessary legislative changes will not be considered until the review has been completed and Government have had the opportunity of considering the matter in detail.
Can the Minister say whether he has taken a decision in principle or if it will be dependent on the outcome of this report?
The only decision in principle the Minister and Government have taken is that the operations of the ESB are to be reviewed in a comprehensive way with the objective of ascertaining whether competition can be introduced into the electricity generating business here and how best that might be done. Outside of that decision in principle no other decision has yet been taken.
The Government and I expressed a preference, in order to achieve the intention of competition, for splitting the ESB into two separate companies, one a generating company, the other a transmission-distribution company with the intention of introducing the competition element through the generation side of the electricity business of opening it up to private investment in new power generation companies who would then be in competition with the existing ESB generating company who would sell into the transmission company. That is merely a suggested manner in which competition could be achieved; it is by no means a requirement of the proposals. No decisions have been taken in relation to how best we might achieve competition in this business for the benefit of consumers.
Is the Minister aware of the depth of concern these proposals have caused the unions? When replying he indicated he was seeking submissions. Would he give a commitment in the House to personally meet the unions and maintain close, open discussion with them throughout the process of this study?
I have two other specific questions. First, in the context of this study would the Minister undertake to examine the relative size of the Irish network saying whether it would be appropriate, without incurring diseconomies, to create two new management systems, being aware of his recent experience of merely pursuing competition for its own sake, when he had to row back from that position? Furthermore, would the Minister give the House a commitment that he would closely examine the experience of restructuring and privatisation of electricity in Britain, the consequences of which proved to be very different from what had been expected by those who undertook it?
I understand the Deputy's leader recently spoke strongly in favour of the necessity to introduce competition into every aspect of economic life here. I would be surprised if the Deputy was in any way critical of the attempts of this Government and I to seek to achieve that worthwhile objective in the interests of our consumers. The concerns to which the Deputy referred, I might suggest, arose largely as a result of inaccurate press reporting in relation to the Government's decision when it was incorrectly stated — in broad headlines — that the Government and I were on a path to privatise the Electricity Supply Board. As I have clearly outlined, that is not the position as was clearly stated when that decision was first referred to in the initial press release, in numerous press statements and in replies to questions in this House on this matter previously.
Will the Minister specifically undertake to meet the unions in person and maintain close contact with them throughout the duration of the study? Would he respond to my question about the experience of privatisation and restructuring of public utilities in Britain?
As the Deputy will appreciate, at this stage the focus is on identifying and evaluating restructuring options. As I have said, I have already invited the unions to make a submission to me in relation to how best they consider that the Electricity Supply Board might be structured in future years. There is wide acceptance throughout the electricity industry here that competition has to be introduced. Indeed, many ESB management personnel and employees at different levels to whom I have spoken are fully cognisant of this fact and, they have told me personally, welcome the idea of introducing competition into their industry.
Meet them.
There is no problem about meeting them. The question of discussions at that level must be left in abeyance until some of the initial ground work on this matter has been completed. I have not yet received a submission from the unions but it is my intention to keep in touch with the ESB management during the course of this review and to carefully examine union submissions. I would not close the door on the idea of meeting them before I make any formal proposals in relation to the matter.