In deference to the Deputies, we had a serious look at these amendments since we discussed them on Committee Stage. In relation to all these amendments, it may be useful to recall that applications are ranked in order of precedence by reference to their respective commissioning dates. The text, as amended on Committee Stage, obliges the commission to have regard to a competition criterion, regardless of the time period separating the applicants' respective commissioning dates, subject always to the overriding consideration of the need to ensure the security and continuity of electricity supplies.
I am, of course, very aware of the concerns that were expressed in relation to this section in the Bill as published originally. I welcome the opportunity provided by these amendments to revisit this important section and reflect further on the issues involved. Having considered and reconsidered the matter, I believe the amendments made to this section on Committee Stage address the concerns raised in a straightforward manner and in a way that is compatible with the objective of the Bill and legal obligations under competition rules.
Deputies may recall that this provision was included in the Bill, in the first instance, because the allocation scheme dealt with the allocation of a scarce resource, that is, scarce gas capacity. The EU electricity and gas directives have entered into force and the electricity market has been opened to competition since last February. The Attorney General has advised me that, in allocating capacity to prospective power producers, the Commission for Electricity Regulation should have regard to competition criteria in selecting winners under the scheme. The competition directorate of the European Commission also expressed this view.
The effect of the Committee Stage amendment to this section is that, while subsection (b) in both sections 4 and 5 is retained, which I think is necessary to comply with competition rules, the overriding consideration is security of supply. Thus, if the commission is of the opinion that security and continuity of electricity supplies in the State would be jeopardised by altering the ranking of applications or excluding an application because of the adverse effect that application would have on the development of competition in the electricity market, then it may not alter the rankings.
Deputy Stagg proposes the deletion of the competition criterion from the selection process. The thrust of Deputy Yates' amendment is that the competition criterion should only be considered in the event there is a period of six months between two applicants' commissioning dates and where granting capacity to the former would mean that the next ranked person could not get capacity at the time of their commissioning date. In these circumstances, the amendments propose that the question of whether granting capacity to the first ranked person would have an adverse impact on competition in the electricity generating market should be considered in accordance with the Electricity Regulation Act, 1999. In addition, Deputy Yates proposes to give the commission discretion in deciding whether to alter the rankings of persons in these circumstances.
I should explain that in carrying out its functions under the 1999 Act, the commission is obliged to have regard to a wider variety of issues. Competition is simply one of those matters and it does not take precedence over other matters that the commission must take into account, for example, non-discrimination, the environment and the needs of rural customers. Introducing a reference to the 1999 Act in this regard would, we believe, complicate the selection process in a way that is both unnecessary and open to interpretation.
I reiterate it is absolutely essential that subsection (b) be retained as drafted at present because of competition rules. However, the Bill, as amended by the committee, ensures that the competition criterion cannot be the overriding concern. The commission will, first and foremost, have to ensure that the State will have enough electricity generating capacity to ensure that demand is met.
For the reasons I have already given in relation to the competition provisions, I cannot accept the introduction of a discretionary power, whereby the commission may decide not to alter the ranking of applicants on competition grounds in sections 4 and 5 as proposed. The commissioning date is decided by reference to technical criteria. It is objective and can be measured. The introduction of the proposed additional rule in relation to the ranking and selection process would, I believe, create ambiguity in a procedure that ought to be objective and transparent. I regret I cannot accept the amendments.
