Michael Lowry
Question:11 Mr. Lowry asked the Minister for Transport, Energy and Communications his views on competition for the ESB in the generation of electricity; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Electricity Generation.
Pat Rabbitte
Question:13 Mr. Rabbitte asked the Minister for Transport, Energy and Communications in regard to his announcement of 11 March 1994 the terms of reference of the proposed review of costs at the ESB, by whom the review will be undertaken; when it is expected to be completed; and if he will make a statement on the matter.
Robert Molloy
Question:25 Mr. Molloy asked the Minister for Transport, Energy and Communications if he has appointed an international consultancy to carry out a wide-ranging examination of the Irish electricity industry; if so, if he will give details of the brief under which they will operate; and if he will make a statement on the matter.
Michael Lowry
Question:29 Mr. Lowry asked the Minister for Transport, Energy and Communications if he will publish the Coopers & Lybrand Report relating to competition for electricity generation.
Phil Hogan
Question:71 Mr. Hogan asked the Minister for Transport, Energy and Communications the proposals, if any, he has to remove the ESB monopoly in respect of electricity generation; and if he will make a statement on the matter.
I propose to take Questions Nos. 11, 13, 25, 29 and 71 together.
In December 1992, Coopers & Lybrand reported on proposals to restructure the electricity industry. This report contains information of a commercially sensitive nature, and I do not consider it appropriate to publish it.
In May 1993, the Government decided on the restructuring of the ESB, and I am now in the process of selecting consultants to advise me regarding the detailed implementation of this decision. In broad terms, this will include the new regulatory arrangements, drafting of licences and agreements, requirement for new legislation and advice on the arrangements for the future control and monitoring of the industry.
I also recently announced a cost and competitiveness review of the ESB, to be carried out by the ESB management and trade unions, assisted by consultants. Officials in my Department will participate in the management of this review, and will obtain independent expert advice as required. This review will examine how ESB operations compare with best international practice, and will serve to inform the Government in its assessment of the need for a price increase and on the appropriateness of the ESB's proposed capital expenditure programme.
The international management consultants, McKinseys, who are thoroughly familiar with the company, will undertake the bulk of the work. Other consultants are being selected to advise on certain technical matters. I expect that the review will be completed by the middle of the year.
With regard to the provision of additional generating capacity, options in this area are under review, and is a matter for decision by the Government in the light of future generation requirements. The ESB does not have a monopoly on the generation of electricity, and there are numerous private generators of electricity. However, the ESB does have a monopoly on the sale of electricity to consumers, and, as part of the restructuring of the electricity sector, the Government has decided that this monopoly should end.
Will the Minister indicate what discussions are taking place between management, unions and the Department on the future of electricity generation and distribution? As there is 33 per cent over capacity in the generation of electricity, will the Minister indicate if he is open to suggestions of a strategic alliance or partial privatisation of the generation and distribution of electricity?
The Deputy's last point is not an issue. The cost and competitiveness review group began its deliberations in the past week or two. We have agreed to participate in the joint management of a review of the ESB's cost and the study will be carried out by a cost review working group, comprising ESB management and trade unions assisted by McKinseys, who are already very familiar with the company. The selection of consultants to advise the Department's officials on matters that may arise in the course of the review is under way. The Department's participation in the management of the review will enable me to reassure the Government that the cost review has examined all relevant matters in an impartial and objective manner and that its conclusions are soundly based.
The ESB management and group of unions have agreed to examine all aspects of the ESB's operations including the utilisation of existing assets, a capital investment programme, operating expenditure, financial charges and social levies. The Government has been informed of the co-operative approach being taken in this review which should greatly facilitate the implementation of any improvements that are identified. This approach is in line with the recommendations of the committee on the review of relationships in the ESB chaired by Mr. Peter Cassells, General Secretary of the Irish Congress of Trade Unions. It is expected that the review will be completed by the middle of the year.
Will the Minister confirm that he has had on his desk for almost two years an application from the ESB for an increase in prices of about 3.5 per cent per annum? Is the cost effectiveness study which has commenced an excuse to postpone the increase in ESB prices until after the European election and an excuse on which to hang the dismantling of the ESB arising from the liberalisation of the market by the European Union?
Deputy Gilmore raises this question not for the first time today. The purpose of the cost and competitiveness review is to fulfil the mission statement agreed by everybody in the ESB. Perhaps Deputy Gilmore is disappointed that there is full recognition in all sections of the company to have the cost and competitiveness review to fulfil its mission statement and everybody is facilitating it. It is simply an exercise in social partnership with which I concur. The issue of selling part of the ESB does not arise——
Not yet, like Telecom Éireann.
In 1919, when Lenin said the dictatorship of the proletariat would arise he did not say when.
He never said that.
The Deputy could give me a lesson in that regard. I am trying to explain the principles which underpin the market economy to the uninitiated.
(Interruptions.)
It was Karl Marx who said that.
Why is it that everything the Minister touches falls down around him?
I am not as good on the theory as on the practice.
I do not know if the Cold War is over yet.
The Minister should stick with the essential services that he is dismantling; will we have any left?
Another Cold War veteran has come out of the hedge.
We will all be cold if the Minister has his way.
Until all the issues involved have been examined no decision on the question of a price increase will be taken by the Department——
Until after the election.
It is to the credit of the company that there has been no increase in the price of electricity since 1986. The Culliton report, the Moriarty report and the Programme for Competitiveness and Work highlight the need to minimise the cost of energy to create the maximum number of jobs in the economy. This has been acknowledged by everyone involved in the electricity generating industry, if not by the Deputy. We have to consider all the options. If the Deputy is proposing that there should be a price increase I will be happy to let all the people living in housing estates in Dún Laoghaire know this.
I wish to expand the question to the generation of electricity using environmentally friendly sources, such as wind power. Will the Minister confirm that tests are being carried out — there is a major project at Bellacorick, County Mayo — with a view to determining the feasibility of electricity generation using wind power, particularly in the west which is exposed to high winds?
That project was successful and outstripped the targets set for it. As stated in the Programme for Government, we are committed to using renewable sources of energy. Shortly we will commence the tendering process for a contract to supply 75 megawatts of electricity using renewable energy sources. As the Deputy said, these are environmentally friendly. While they will never take over from traditional sources they will have a role in electricity generation. This matter is of interest to the European Commission.