Vol. 431 No. 5
11 Proinsias De Rossa asked the Minister for Transport, Energy and Communications his views on the request from the ESB for a price increase of around 4 per cent over each of the next five years; and if he will make a statement on the matter.
ESB prices have not increased since 1986. Following this lengthy period of price stability ESB has now applied for a price increase. My Department has been having discussions with the company on the price application. No decision has been taken on the matter.
When was the application for a price increase made? How long is his Department assessing this application? Let me draw the Minister's attention to a reply he gave on 3 March when he told the House that he was making recommendations to Government shortly in relation to the price increase. Have those recommendations been made yet? When can we expect an announcement on his agreement to an increase in electricity prices?
I cannot give the exact date but the application was in place when I became Minister. I am assessing the whole situation and I am not prepared to look at a proposal for a price increase in isolation from other factors that determine the level of electricity prices in the future. It is important that there is full consideration of the wider issues before I make any recommendation to Government.
Is it not the case that the application for a price increase has been with the Minister's Department for over 12 months? Have the wider implications that the Minister is referring to more to do with his wish to postpone the announcement of increased ESB charges until the storm has abated over the recently announced increases in telecommunication charges? Is he simply holding back from giving the punished consumer another dose of this Government's medicine of increasing prices one after the other?
The Deputy attributes Machiavellian attributes to me which are perhaps unjustified.
We will see.
The Department has been discussing a framework with the ESB for deciding on price increases. The objective is to strike a balance between the financial stability of the company and the need to minimise increases to consumers. There has been a long period of price stability, which the Deputy might acknowledge, given his stated commitment to semi-State companies. This has been an achievement for the ESB. If the Deputy is suggesting that this can continue ad infinitum without taking account of the capital requirements and the reorganisation that will take place in the company he is being over-optimistic. I am not prepared to examine this matter in isolation from the wider issues of the electricity market in Ireland and the need to ensure that we get the best possible deal for the consumer in all the circumstances.
What amount is sought in the application? Is it, as stated in the question, 4 per cent per annum for each of the next five years, which would amount cumulatively to 23 or 24 per cent?
The actual amount sought is in the region of 4 per cent. Obviously there are interdepartmental discussions and certain Departments have certain views. Until such time as there is a consensus on how we deal with the application, it would be premature to comment further.
The Minister confirmed that it is 4 per cent in a year. Is that the case in each of the next five years?
In reply to an earlier supplementary question I said that my Department is in consultation with the ESB to come up with a framework for deciding on price increases generally rather than taking an ad hoc approach, which involves delay and a lengthy consideration of the issues. We need a framework between the ESB and the Department for dealing with these issues in the future. Since no decision has been taken and presumably there will be a modification of the original proposal, it is premature to decide on the level of increase over the next year, not to mention the next five years.
I am not asking about the decision on the level of increase. I am asking about the amount on the application for the increase. The Minister has confirmed that it is 4 per cent in the first year. Is it 4 per cent per annum in each of the next five years?
The original proposal would be along those lines.
Does the Minister envisage divesting himself of responsibility for controlling ESB prices? Is that what he is telling us?
No.
We have established that the application is for 4 per cent over five years. This is tied into a proposal to upgrade the ESB's transmission services. In effect the price application is tied to a set of proposals as to the capitalisation of the transmission side of the ESB and has nothing to do with electricity generation.
That is part of the application. I am not prepared to accept certain presumptions on the ESB's part as to its future generating capacity. I want to see how that will help us to come up with a better deal for the consumer. The ESB is anxious to invest in transmission and the Deputy is correct in saying so.
