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Dáil Éireann debate -
Wednesday, 30 Sep 1998

Vol. 494 No. 2

Priority Questions. - Independent Electricity Regulator.

Austin Currie


70 Mr. Currie asked the Minister for Public Enterprise the plans, if any, she has to introduce interim legislation to establish an independent electricity regulator; if so, the reasons for this decision; the consultations, if any, which have taken place with interested parties; and if she will make a statement on the matter. [17748/98]

I recently announced that the Government had approved the drafting of a Bill to establish an independent regulatory commission to oversee the electricity sector. I intend that this commission will be in place by early next year.

The current legal situation is that the ESB requires my approval under the Electricity Supply Acts for capital expenditure on any new plant. Private sector companies, on the other hand, wishing to enter the market in competition with the ESB, require a permit from the ESB under section 37 of the Electricity Supply Act, 1927. The ESB is currently in a position of operating in the market and at the same time regulating the entry of competitors.

In those circumstances, I have been advised by the Attorney General that it is essential and urgent to arrange for the immediate establishment of an independent regulatory commission to oversee the electricity sector. This commission will operate a licensing regime for operators wishing to generate and supply electricity. It will also issue authorisations for the construction of generating stations. Any proposals to construct a generating station by any party, including the ESB, will be subject to an authorisation from the commission.

The Department has undertaken an extensive consultation process to date regarding implementation of the EU electricity directive in Ireland which is due by February 2000. Proposals were published by Deputy Dukes in May 1997, a discussion forum was held in January 1998 and a further consultation document was published in May 1998. The comments received relating to the regulatory Bill were considered when preparing the heads of the currently proposed Bill and will be further considered when preparing the next two Bills.

I have had a number of meetings with interested parties regarding the proposals. These included meetings with the ESB board in April, IBEC in June, the ESB group of unions in July and August and the Small Firms Association in August. Earlier this month I met separately with representatives of both Marathon and Viridian, two potential new entrants in the electricity market. I will continue to meet anyone who wants to meet me. In addition, I have recently appointed Mr. Phil Flynn, chairman of ICC Bank, to act in a special advisory capacity to me and to report on all the steps necessary with regard to the introduction of competition in the electricity market.

I thank the Minister for her full reply and for confirming that I was on the ball when I tabled this question before any announcement was made. This issue only appeared in the Government's programme a few days ago.

Every time the issue of the appointment of a regulator is raised in the House there are mixed views on the responsibilities of the Minister and those of someone outside the House who is largely independent of it. Will the Minister agree that this matter has surfaced again today in terms of the telecommunications regulator and that there will be a major debate on it in the House?

Does the Minister believe she had sufficient consultations with the ESB unions because my information is that they are concerned that insufficient consultations took place, particularly in relation to agreements already in place with the ESB? Will she take on board those concerns and ensure that further consultations take place to alleviate them?

I share the Deputy's concerns about regulation. One of the difficulties with the 1996 Bill was that the regulator was not answerable to anyone. However, she made her case some months ago at a meeting of the Joint Committee on Public Enterprise and Transport. We are preparing an amendment to that Bill so that the regulator will be answerable to someone.

The Attorney General told me I would have to appoint a regulator because the ESB could not authorise the building of a station in the run up to competition. I admire the Deputy's perspicacity in tabling this question. I wrote to Deputy Yates and Deputy Stagg four weeks ago setting out the Government's decision. I am sorry I did not write to Deputy Currie, but it was not that no one knew about it as it was in the newspapers.

I have met the unions five or six times in recent weeks and I will meet them again on Friday. I will meet them as often as is necessary. I have also asked Mr. Phil Flynn to meet them and to report back to me before I meet them again. I understand their concerns.

The ESB has supplied electricity since 1927. The EU electricity directive must be implemented by 17 February 2000. We must prepare for it by ensuring that everyone is involved and that there is a competitive environment. I will send the Deputy any information he requires. Is he the spokesman on electricity?

I am the spokesman for energy. However, it is often difficult to know for what areas the Minister and the Minister of State are responsible.

My esteemed colleague has exactly the same duties as the Deputy's esteemed colleague had in Government.

The Minister gave the Minister of State a few lame ducks, such as Sellafield and buses.

This is the most important issue the Minister and her Department will deal with during her period in office. Will the road the Minister is on, which is the same road I travelled with the last Government, lead to the Minister's authority, which is given to her by the people, being given to a quango outside this House and to the creation of a democratic deficit whereby the quango will have the power and the Minister will have no authority like a chairman of a county council? Is she satisfied that there is no other option? Has she looked at the possibility of changing the nature of her shareholding in the ESB so that she could retain this power and continue to be responsible and answerable to this House for the exercise of that power?

I have not considered changing the shareholding. The issue of a regulator or regulatory commission is coming into play because of the changing nature of semi-State companies. The previous Government, of which the Deputy's party was a member, established the telecommunications regulator. There was a mistake in the legislation and she is not answerable to anyone but that will be rectified.

I had extensive conversations with the Attorney General about this matter and he advised me that because the ESB operates in the market, it cannot regulate those who wish to enter the market in tandem. I hope the regulator or regulatory commission will be given responsibility for natural gas so that the entire energy market will be regulated by one individual or body. The Bill includes a stipulation that the person or persons appointed to regulate the market will be answerable and accountable to a Dáil committee.

There is a need to develop one, two or perhaps more power stations by a certain date and the ESB is anxious to proceed before time runs out. Possible new entrants to the market are also anxious to get their operations up and running. However, under the current legislation, we cannot grant authorisations. The Attorney General has a proper function and his advice to me was that it is imperative that this legislation proceed.

(Dublin West): Are the Minister and the Government, under cover of competition and the need to appoint regulators, in reality preparing the way for the privatisation of the electricity supply industry or substantial portions of it? Is it their intention to sell out another publicly owned national asset in the same way as they sold out TEAM Aer Lingus? Is the Minister aware that the privatisation of utilities such as water in

Britain has been disastrous and has resulted in rampant profiteering and massive price increases rather than a growth in competition and a better service for consumers?

I agree that the way the so-called privatisation in the UK was carried out was not correct. According to newspaper reports the privatisation process created fat cats, less service to consumers and a diminishing water supply. I understand a similar situation obtains with regard to the electricity supply industry in the UK. From my knowledge of the British experience — which is based on newspaper reports — the privatisation which occurred in the 1980s was carried out on purely ideological grounds because of a determination that everything in sight should be privatised overnight. I do not hold to that point of view and I do not intend to change my position.

It will take two nights to do it here.

Deputy Higgins inquired if I or the Government were seeking to privatise the ESB in a covert way. We have not given any consideration to that issue.

Deputy De Rossa rose.

I must inform Deputy De Rossa that he must wait until the Minister has concluded, at which point I will call on Members in the order in which they submitted their names.

There are three Bills — the regulatory Bill, the main Bill and the plc Bill — all of which must be dealt with by the House next year. I have not given consideration to the privatisation of the ESB.

Is the Minister aware of the primary indication of the management of the ESB in respect of this issue, that the question of stranded capacity and the public service obligations will lead to the imposition of a levy on new generators? Will the legislation include provisions to deal with such levies, thereby levelling the playing pitch in respect of all generators? The ESB is concerned that a piecemeal approach will leave it in an unfair position. The company wants to compete. Will the issue of a levy in lieu of milled peat, or stranded capacity be catered for in the legislation or will they be dealt with in an ad hoc, piecemeal way?

Nothing will be dealt with in an ad hoc way. There are three Bills to be introduced. The first of these deals with the regulatory commission and I will go through the heads of the Bill later. The main spokespersons of the Opposition parties and Deputy De Rossa should be provided with the indicative heads of the Bill and I will arrange for copies to be made available to them.

The Bill dealing with the regulatory commission must be swiftly enacted, particularly in view of the grave impact a delay could have on the ESB which cannot issue itself with an authorisation at present.

Is the Minister in a position to provide such an authorisation?

The Minister should not answer questions which come by way of interruption.

The main Bill, which will implement the directive, and the plc Bill must also be introduced. Perhaps they can be taken together. However, nothing will be dealt with in an ad hoc way.

In accordance with the Attorney General's advice, the main provisions of the regulatory commission Bill are to enable the Minister to appoint an industry-funded electricity regulator, grant, modify and revoke operating licences, authorise the construction of generating stations, approve charges for access to the transmission and distribution systems, approve the provision of information relating to both systems, determine disputes relating to access and authorise the construction of direct lines, define eligible customers and provide a right of access to the transmission and distribution of systems.

What about levies?

I will send the proposed heads of the Bill to the Deputy this evening and he can read them in detail.

Does the Bill include levies?

The matters to which I referred in my previous reply comprise the heads of the Bill.

There are three Deputies offering. I will call them in turn before calling the Minister to give a final reply.

Is the Minister in a position to guarantee that, regardless of the changes that take place in the delivery of energy in this State, the absolute necessity to ensure that every citizen — whether they live in rural, urban, remote or congested areas — will have access to electricity connection at affordable prices and that the power costs will be such that they can afford to pay? Will the Minister provide a further guarantee that, regardless of the changes which take place, the State — which remains an island in terms of the fact that as yet it has no connection to outside sources of electrical power — will maintain its diversity of energy sources to ensure that people are not held to ransom in the future as a result of scarcity, high prices, boycotts or sanctions against states that supply oil, etc. ?

On a point of order, the issue of lumping together supplementary questions from various Members was raised with the Chair on previous occasions. Such activity was found to be out of order as it is not in accordance with the rules of the House.

It is a matter for the House, but I will rule this question concluded when the Minister makes her final reply.

If there are further supplementary questions from Members——

The position is that Members have complained that we are not dealing with enough questions during Question Time. Five priority questions were tabled to be taken today and we have only dealt with four.

They were very good questions.

The least we should do before proceeding to the Order of Business is complete our deliberations on the five priority questions.

It is a matter for the House to decide whether questions should be lumped together. At the end of a discussion on a particular question — we have spent 15 minutes dealing with question No. 70 — in order to facilitate Deputies, I lump together the final supplementaries. Members are aware that four to five supplementaries have already been asked which were not lumped together. If Members wish the Minister to conclude, I will ask her to do so. However, if Deputies Enright and Stagg wish to ask supplementary questions I will allow them to do so.

I appreciate that the Minister took the Attorney General's advice and that she intends to continue to do so. The Minister stated earlier that the regulator will be accountable to a Dáil committee, a development with which I agree. However, what safeguards if any will be retained in the Minister's Department when the regulator is appointed? The Minister is responsible for the energy sector. Many people would be happier if the Government had the final say in the distribution of electricity in the event of difficulties arising in future. I presume this will extend to all aspects of the energy sector in the long term.

Upon the appointment of the regulator there will be tight restrictions on the Government's involvement with semi-State bodies. As the Minister is aware, the ESB is the principal purchaser of peat from Bord na Móna. When does she envisage the remaining £10 million will be paid to Bord na Móna to allow it to compete on a level playing field?

I accept the Minister's point that the ESB should not be the adjudicator of competitions in which it is involved. What changes would be necessary for her or her office to become the regulator or for the regulator to be accountable to them rather than to a committee of the House which would only meet the regulator annually? What changes would be necessary for the Minister to retain the power to have the regulator report to him or her so that he or she would subsequently be available at all times to answer questions in the House?

Deputy De Rossa asked whether I could guarantee that all electricity consumers would continue to receive power at competitive rates.

At affordable rates. Competitive does not always mean affordable.

The 28 per cent envisaged in the directive for the opening up of competition constitutes large industry and it will be years before ordinary consumers receive the benefit of liberalisation and competition. It is a very gradual opening up of competition.

I thought it was magic and that it would happen straight away.

Domestic customers could pay more in the short term.

Exactly, and I had to intervene during the summer. I am not able to give Deputy De Rossa a guarantee on that issue. He also asked whether I would be able to guarantee security of supply because Ireland is an island nation.

I referred to diversity of fuel sources.

There will be diversity of fuel sources. The views and rights of alternative energy promoters are accommodated in the Bill, which were agreed by the previous Government in 1996.

I cannot talk about what might happen in years to come regarding security of supply, but it is my aspiration that as an island nation Ireland will have such security. There is the gas issue and alternative energy suppliers are growing in diversity all the time. They will be accommodated under the legislation.

Deputy Enright asked about the power of the regulator. The Bill will provide that he or she will report to an Oireachtas committee. The money due to Bord na Móna is a separate matter. However, I would be glad to reply to the Deputy on that matter.

Deputy Stagg asked what legislative changes I would have to make to enable me to become the regulator or have the regulator report to me. However, he or she would not then be fully independent. It would be very difficult for me to be the main shareholder on behalf of the State and also be the regulator or have him or her report to me.

The French Minister regulates.

The French have a different way of doing everything.

Nuclear power is their way.

It would be very difficult to have an independent regular who would have to report to me and have his or her decisions questioned. That would be an untenable situation.

Written Answers follow Adjournment Debate.