Dáil Éireann debate -
Wednesday, 3 Jun 1998

Vol. 491 No. 6

Written Answers. - EU Electricity Directive.

John Bruton

Question:

36 Mr. J. Bruton asked the Minister for Public Enterprise the way in which she proposes to fulfil her EU obligation to open 28 per cent of Ireland's electricity market to competition by February 2000; if domestic consumers will benefit in any way from this competition; and if the competition will be confined to big business users. [12876/98]

Minister for Public Enterprise (Mrs. O'Rourke)

On 2 of April last, in reply to a priority question from Deputy Stagg, I set out the background to the EU Electricity Directive which must be implemented here by February 2000. I would like to emphasise that my primary objective in implementing the new industry structure is to achieve lower prices while maintaining quality standards. Above all, I want to ensure fair competition for all participants in the industry, including ESB. The Directive requires that approximately 28 per cent of the Irish electricity market be opened to competition initially, increasing to about 32 per cent by 2003. This will allow independent electricity generators to contract directly with eligible customers for the supply of electricity. Eligible customers will be those who will be free to choose their electricity supplier in the competitive market, and remaining customers will continue to be supplied by ESB.

At a widely representative electricity forum held in January last, my Department indicated its view that the holding of open tendering competitions for future large scale electricity generation might not be the best way forward. The authorisation procedure is consistent with the approach being taken generally by member states in implementing the EU Directive. It is also considered to be more consistent with the operation of normal market conditions. No system is perfect and that is why we have engaged in such extensive public consultation on the subject. On 15 May last, I published a consultation paper containing the legislative proposals for comment as a final form of public consultation before seeking Government approval for drafting of the Bill.

These proposals are in the form of over 120 draft proposals, and it would not be practical to go into them in detail here. Briefly, the new arrangements proposed include the establishment of an independent regulatory authority; separating the operation and development of the transmission system from ESB and placing it in a public limited company in State ownership; licensing the distribution system operation within ESB; licensing for ESB's generating stations and independent power producers; licensing of independent power suppliers to supply customers who will be eligible to choose their supplier, and establishing a licensed public electricity supplier within ESB to serve all other electricity consumers.

Domestic consumers, while not eligible to "shop around" for their electricity, will benefit from the liberalisation of the market in two ways. First, the public electricity supplier will be under an obligation to purchase electricity in the most economical manner. In this way, the benefits of competitive pressure on prices which I expect will result from new players in the market will be passed on to domestic consumers.

Second, independent regulation of transmission and distribution charges, in addition to regulation of the final price for domestic consumers holds the prospect of increased efficiency in these sectors leading ultimately to lower prices. I have allowed until the end of this month for comment on the consultation paper and I expect to be in a position to seek Government approval for the drafting of a Bill in the autumn.