Dáil Éireann debate -
Thursday, 5 Apr 2001

Vol. 534 No. 2

Order of Business (Resumed). - Electricity (Supply) (Amendment) Bill, 2001: Committee and Remaining Stages.

Sections 1 to 3, inclusive, agreed to.

SECTION 4.

Question proposed: "That section 4 stand part of the Bill."

Mr. Naughten

The Bill provides that the shares will be converted at a future date when the ESB becomes a public limited company. There is a need to look at the feasibility of giving shares to employees in semi-State companies, whether they be privatised or State owned. Numerous industrial disputes have arisen in many semi-State companies. The Government is promoting profit share and share options in the private sector and there is a need to consider a mechanism to do that in the semi-State sector.

The company will shed approximately 2,000 staff when privatisation occurs. Will the Minister reconsider this given that prior to the outbreak of foot and mouth disease, it took up to three months to get the ESB to connect a young couple to the power grid? That is unacceptable. Representations are being made to us as public representatives to contact the ESB to get electricity connected to houses. It is similar to what happened in the past with telephones. I caution the Minister about the ESB shedding that number of staff when backlogs exist, which have been compounded by the foot and mouth problem.

Mr. Farrelly

I concur with Deputy Naughten's views on shares. Staff should be given them. This approach has worked with other companies and it will also work in this case.

Field staff are under-resourced because of the economic boom. The timeframe for connections to houses can be between three and five months. Yesterday I pointed out to the Minister of State, Deputy Jacob, that in the case of many applications on building sites where there are one or more houses, ESB officials have indicated that price quotations will be provided for the work to be undertaken, yet four or five months can elapse before anything is done. If staff are let go delays will increase.

No Minister can ensure that an ESB connection can be made from the boot of a car. In the time when telephone installations were subject to lengthy delays connections were made in this way.

Acting Chairman (Mr. Kirk)

The Deputy should not stray too far from the Bill.

Mr. Farrelly

I ask the Minister to consider the serious staffing problems in the ESB. If staff are let go the delays, which occur on a daily basis in my constituency, will lengthen.

Mr. Daly

Is it the case that if new legislation is required to deal with the restructuring of the board these legislative provisions will apply? Most employees in the ESB, or at least those in my constituency, want to know how this will affect them in terms of cash on the table. According to the board's figures, the assets of the company are valued at approximately £2 billion. If these arrangements are put in place this valuation may be reduced by half and if that was to be divided among the 9,000 employees each employee would get approximately £10,000. The latest figures from the board indicate that turnover and profits amounted to approximately £200 million but that has been substantially reduced in the past year because of increased oil costs. The company is concerned about this, as was evident from its recent evidence to the Joint Committee on Public Enterprise and Transport.

Will the Minister indicate the value in cash terms to employees? Are my calculations correct and will it be worth approximately £9,000 or £10,000 to each employee?

Mr. Stagg

The first word of section 4 is "If". That is most unusual. It seems to anticipate something that might happen in the future. The section provides that the board may be constituted as a company "if that occurs". I have not come across such vagueness in legislation. If it occurs we will cross the bridge when we come to it. Whey does the Minister consider the words to be necessary?

Deputy Daly referred to the value of the shares. If we knew the full value of the company it would be possible to calculate a 5% proportion and the likely distribution among the employees.

Minister for Public Enterprise (Mrs. O'Rourke)

The Government has adopted the policy of providing share options in the semi-State sector. It was in our general election manifesto and it is the right way to proceed. Aer Lingus, An Post – postal legislation will be introduced in the autumn – the ESB and the former Telecom Éireann, now Eircom, have provided options. Bord na Móna is discussing the issue.

Deputies Naughten and Farrelly asked me to consider the number of employees to be let go. Under the arrangement agreed a year ago the number was set at 2,096, or 2,000 now. The voluntary severance scheme has been approved. A condition of that VSS is that network people would be retained. The three sides signed up to it. The network people were to be retained and staff leaving would be mainly involved in generation because of the new stations coming on stream. I want to reassure people because constituents come to me about their problems in the same way they go to other Deputies.

There is a great delay in getting hooked up. Increasingly I find that people who are building houses do not seem to know that they must plan a long time in advance to make contact with their local ESB office to get connected. I am glad that we will reinforce it, that the network people will be in place.

Deputy Daly asked what would it mean to each employee. KPMG have put an approximate value on the shares. KPMG has told us that the full 5% shareholding would be worth approximately £10,700 to each of the 9,300 employees in the ESB at that date.

On the question about the word "if", my officials tell me that that is out of deference to all of us. The next Bill related to ESB will be to create a plc. One must use the word "if" because one cannot say that it will be enacted because that will depend on whether the Dáil agrees to enact it. The word "if" is used in deference to the workings of the Dáil and Seanad.

Mr. Stagg

I want to raise two other points. In response to Deputy Naughten's question about shares in State companies, the Minister seemed to give the impression that she invented the wheel.

Mrs. O'Rourke

No.

Mr. Stagg

Whether or not it was contained in her party's manifesto, the long-standing policy has been to provide workers in State companies with shares.

Mrs. O'Rourke

I did not mean to present it like that.

Mr. Stagg

I wanted to say that in case the wrong impression had been given. That has been the long-standing policy of my party and others, and probably of Fianna Fáil also.

The record of the Government in that regard is very bad. It has introduced systems which denied workers the right to be worker directors and where they could have had worker directors, it excluded them on a number of occasions. Therefore the record of the Government would not live up to the manifesto in that regard.

Mr. Daly

There are worker directors.

Mr. Stagg

I have not quoted from the manifesto because I do not know it by heart. I am familiar with it but I do not know it by heart. Perhaps that is a political point which is not directly related to this section.

The other point I want to make is that if the shares are worth £10,700, how soon can the workers sell them? To whom can they sell them? Are they held in trust for the workers? Are they not allowed to sell them? Are they useless? Is it that they will just get a dividend from them? What will they get? Will the Minister give some detail about what the employees will get from this 5%?

Mrs. O'Rourke

The employees will now decide on a representative and a share trust which will look after their business regarding the shares.

Mr. Stagg

Must they do that?

Mrs. O'Rourke

Yes. They will set up an employee share trust and one of the worker directors on the board of the ESB will become the employee trust representative on the board. It will be up to the employees to decide who should be that person.

I understand that under tax legislation one must hold the shares for a certain period because one gets remission from tax for doing so. They are the details which will be worked out now by the employee share ownership trust.

Mr. Stagg

Can individuals sell?

Mrs. O'Rourke

Their representatives will work out when they can do that. I think one must sell them through the trust. That was the case in the previous legislation. One arranges all of the details through the employee share trust, then that trust has a person on the board who handles all of those issues.

I do not know what board does not have worker directors. I am looking through the list here.

Mr. Stagg

Eircom has no worker directors now because she sold it.

Mrs. O'Rourke

That was gone through – the Deputy would have mentioned them himself – but all the rest of them have. Mr. Bill Attley—

Mr. Stagg

That is because she has not sold them yet. When she sells the companies there will be no worker directors.

Mrs. O'Rourke

The workers arranged for Deputy Spring to be their nominee—

Mr. Stagg

That was in the trust. That had to do with the money part of it only.

Mrs. O'Rourke

—and I gave one of the directorships to Mr. Bill Attley.

Acting Chairman

We must not allow the debate to drift too far from the section.

Mr. Naughten

I will not allow it drift anyway. To return to the point I was making about share options and profit sharing for employees of semi-State companies, I am only reading myself into this brief and therefore perhaps I am duplicating what is already in place. According to my reading of the Bill, these ESB employees will not be able to cash in their shares or get a dividend from their shares unless the ESB becomes a plc. The point I am trying to make is that irrespective of whether a semi-State becomes a plc or remains a semi-State company, the employees should receive a share of the profits or a dividend in respect of those shares in the semi-State company prior to it becoming a plc. The employees should get something out of the semi-State company. Irrespective of what happens in the future and whether it becomes a plc or not, which is up to us in this House to decide. Is there provision at present where the employees of companies like Bord na Móna and the ESB can receive a dividend or share in the profits in the context of their remuneration? That is fundamentally important in the context of the ongoing industrial disputes within these sectors.

Mrs. O'Rourke

Discussions are only taking place now about the one in Bord na Móna.

With regard to the generality of semi-State companies, the employees who have shares form a trust called the employee share ownership trust. That trust operates for the employees and that is what they wish to do. That is their business. I will not impose my will on that.

Mr. Naughten

Is it correct to say that those shares are not of value to the employees until the company becomes a plc?

Mrs. O'Rourke

They are of value. If one holds shares to the tune of £10,700, they have a considerable value which is tradable in any language. There is no point in saying "It is not of value." It is not of value in the sense of money in a person's hand but one is the owner of the script of the share.

Mr. Stagg

However, they could not sell them to Mr. Denis O'Brien.

Mr. Naughten

The point I am trying to make is that one cannot dispose of those shares until the company becomes a plc. The tax implications can be considered at that stage. Those employees will not get a dividend from it until the company becomes a plc. Therefore there is no net financial benefit to the employees should the company not become a plc. The point I am trying to make is that there should be an option available at this juncture by which employees would get some dividend from their semi-State company. That is important.

Mrs. O'Rourke

By law, the employees could not sell the shares outside in the market but they could sell them in an internal market within the ESB and get a dividend. If an employee of the ESB wished to purchase more shares and another employee wished to sell, they can sell to each other or to a group.

However, it is a matter for the employee share ownership trust. I certainly would not tell them that they should or should not sell. This is the way the workers want it. We must give them some leeway if they want to do their business that way.

They set up an employee share ownership trust among themselves and they appoint somebody to the board. One of the worker directors on the board becomes their representative to deal with this matter.

There is a mechanism where they can trade internally within the company and they would get a dividend from that trading.

Section 4 agreed to.

Sections 5 and 6, inclusive, agreed to.

SECTION 7.

Question proposed: "That section 7 stand part of the Bill."

Mr. Daly

Can the Minister indicate, in real terms, what the value of the 5% would be to the 9,000 plus employees of the ESB? I presume the balance would go to the Exchequer. The Minister would have got advice on that from the consultants. If benefit accrues from this transaction, the Exchequer will get that. Will the Minister indicate how this provision will work? I would not like moneys that might be used for investment to be put to some other use by the Minister for Finance.

Mrs. O'Rourke

The section provides that the Exchequer would get 95%. The Minister for Finance would not be seeking to get money from it. In practical terms, 5% would be given to the employees and 95% to the Exchequer. A better way of putting it is that the Minister for Finance held 100% of the capital stock and he will now hold 95%.

Mr. Daly

What about the Minister for Finance?

Mrs. O'Rourke

The Department of Finance is the boss.

Mr. Stagg

I wished to raise the same question. It is a matter of great minds thinking alike.

Question put and agreed to.

NEW SECTIONS.

Acting Chairman

Amendment No. 4 is consequential to amendment No. 1 and they may be taken together by agreement.

Mrs. O'Rourke

I move amendment No. 1:

In page 4, before section 8, to insert the following new section:

8.–Schedule 12 to the Taxes Consolidation Act, 1997, is amended by the substitution for paragraph 11(3)(c) of the following:

‘(c) (i) in a case where the founding company is the Electricity Supply Board and as respects securities acquired by the trustees of the trust on or before 31 December 2001, the person was an employee or a director, as the case may be, of a company within the founding company's group on 1 January 1998, and

(ii) in any other case, at the relevant time a period of not more than 18 months has elapsed since the person so ceased or the company so ceased, as the case may be.'.".

This amendment provides for the 18 month rule. Heretofore, it was thought that when this Bill, or a measure equal to it, was introduced it would contain a provision providing for an 18 month period. Then the issue of the people who signed up on 31 March 1996 evolved. They signed up in the anticipation that they would be able to be participants in a scheme that would be introduced. It would be wrong if we did not place faith in that. It was thought for a while that such a provision would be included in a Finance Bill and the Minister for Finance, Deputy McCreevy, said that was the correct legislation to provide for its introduction. Then the worry was as to when there would be another Finance Bill that would provide for it. That is how this provision ended up in this Bill. It will provide for all those employees who signed the CCR.

Mr. Sargent

In saying there is no sign of a Finance Bill in the future, I am not sure if the Minister is the harbinger of an election.

Mrs. O'Rourke

It is a long way off.

Acting Chairman

The Deputies are beginning to drift from the content of the section.

Mr. Sargent

It is hardly for us to know, if the Minister does not know.

If I am reading it correctly, the amendment refers specifically to arrangements that pertain to combined heat and power. I seek clarification on that.

Mrs. O'Rourke

That is the subject of a separate amendment.

Mr. Sargent

Is it?

Mrs. O'Rourke

Yes, it is.

Mr. Sargent

The list of amendments I have does not indicate there is a third amendment tabled to this section.

Mrs. O'Rourke

There are two amendments to this section; the other two amendments are textual.

Mr. Naughten

The matter the Deputy has raised relates to amendment No. 2.

Mr. Sargent

We are dealing with amendment No. 1.

Acting Chairman

Amendment No. 2 is also on this section.

Amendment agreed to.

Mrs. O'Rourke

I move amendment No. 2:

In page 4, before section 8, to insert the following new section:

9.–The Electricity Regulation Act, 1999, is amended–

(a) in section 14–

(i) by the deletion in paragraph (c) of subsection (1) of ‘subject to section 28,',

(ii) by the substitution for paragraph (d) of subsection (1) of the following:

‘(d) to supply electricity to final customers which in aggregate does not exceed the amount of electricity which is available to the supplier and which is produced using combined heat and power or electricity purchased, in place of such electricity, in accordance with the trading arrangements provided for in regulations to be made by the Commission under section 9(1)(d),',

(iii) by the deletion of subsection (10),

and

(b) by the deletion of section 28.”.

This amendment is the one Deputy Sargent and others wished to talk about. While we have time to discuss it, I wish we were discussing it in a fully fledged Committee Stage debate. I admire the honesty of Deputy Stagg when he said in June 1999 when dealing with a Bill and we were all worked up by various circumstances that were happening outside the committee room and it seemed to me, and I am sure to others, that external influences were bearing, to a great degree, upon amendments and decisions we were making. We drew in our horns quite a bit and at the time it was the right thing to do. Time has moved on and some of the people involved in those matters have moved on.

The amendment puts forward a provision for combined heat and power, CHP. The electricity regulation Bill provides for eligible customers and we want to ensure provision for customers, regardless of their eligibility. That is what this amendment is about. It requires the deletion of sections of that earlier Bill. I recommend this amendment to the House.

Mr. Sargent

I would like the Minister to clarify further the exact change in arrangements that will follow from the inclusion of this amendment. We need to consider how the provisions of the amendment will impinge on the provision of electricity supply and not only on the combined heat and power sector. I am conscious, as I am sure are other Deputies, of the competitive nature of the power generating business.

It is worth noting that the European Commission has adjudicated on the question of State support for renewable energy. It goes beyond the normal reading of State assistance and is more to do with the overall requirement to tackle the level of emission of greenhouse gases, which is critical, and to ensure we are able to have sufficient power without endangering future generations, as it is forecast will be the effect of climate change. I ask Minister how she can fit this amendment into that overall scenario and whether combined heat and power by being more attractive will become the preferred option rather than renewable energy? We do not have pricing of the AER contracts yet, the latest round, but given that there are predictions in that area, can the Minister say how this amendment will fit into the overall categorisation of power generation as among renewable, CHP and the more traditional fossil fuel based generation sector?

Mr. Naughten

I welcome the amendment, the inclusion of which would bring about deregulation in the CHP element. That needs to be encouraged and promoted, notwithstanding the point Deputy Sargent made, which is valid. We should go down the road of developing renewable energy. We should consider providing research funding for the renewable energy sector and developing it in relation to biomass, etc. We have thousands of acres of cutaway bog around the country, which could easily be used for that. Some research has been done on the use of rapeseed oil technology as a fuel for cars. I see no reason that technology could not be used to provide combined heat and power – CHP – or to provide fuel for other sources. I ask the Minister to look into this. It helps to protect our energy resources and is a crop that we can produce easily. It would be great to have such a cash crop available with the current state of the agriculture industry.

Combined heat and power is a welcome development. I welcome and support the fact that we are liberalising and deregulating the sector. I contend, however, that it will not have the same required impact throughout the country. It will not have the impact because the main source of fuel for CHP will be gas and gas is only available in certain parts of the country. While the gas pipeline will be developed as far as the west coast and up to Sligo and the north-west, the north midland region will still be left without gas. This is a blackspot area in relation to energy. All across north Roscommon, Longford, Leitrim, Cavan and Monaghan we have huge problems in relation to electricity supply. Deputies have raised the pylon issue and that is very controversial in north Roscommon, Leitrim and south Sligo. The construction of these pylons would be defunct if we had accessibility to CHP in that part of the country. It should be encouraged.

Last week we spoke on the fundamental issue of infrastructure. Without the basic infrastructure we are going nowhere. Within the BMW region we have a huge infrastructure deficit that needs to be filled. We need the mechanism to distribute gas or electricity. Combined heat and power could fill that void and it would reduce the controversy over pylons. We could have a CHP plant that would provide energy to the whole town of Roscommon, a reasonable sized town. There is one on the quays, in the Temple Bar area, which has been extremely successful. We cannot do that unless the gas and infrastructure are available to us. It would be a lot less controversial than the erection of pylons across the country. I urge the Minister to examine the situation as she is responsible for this area.

We can talk about bringing industry into the regions but unless we have power we cannot do it. The ideal mechanism for providing that power is CHP and I welcome it. It should be developed but it will not mean anything to the parts of the country that need power and energy supplies because they do not have the fuel to power the plants. It is important that the Minister re-examines the situation and the decisions taken by Bord Gáis Éireann in relation to not supplying gas because it is not commercially viable. It is not commercially viable in almost any part of the BMW region at the moment but it is a major investment that would pay off in the long-term. It was not commercially viable to bring it from Cork to Dublin at the time but it has paid off and the same courage is needed now to provide gas to facilitate CHP.

Mr. Stagg

This is a very important matter. Essentially we are talking about using the heat that normally escapes into the atmosphere from a generating station to increase the energy take from burning fossil fuels, usually gas. There is no magic involved. It is a matter of diverting the stack down through the system again to heat water and provide central heating or other heating needs in houses, factories or offices. It is a great idea. It is efficient and gains maximum benefit from the burning of fossil fuels which are scarce and create pollution. The pollution element is minimised by this method so it is important that we do this. It was decided in the Act last year to do it. Then one of the large players in the field wrote a letter explaining how he would abuse the system.

Mrs. O'Rourke

That is right.

Mr. Stagg

He wrote a letter to us, in case it would not be clear, explaining how he would abuse the system we had laid down in the Act. The Minister and the Opposition agreed then to restrict the use of CHP to prevent the abuse of it. Essentially, with the opening of the market – 28% was being opened at the time – this player abusing the CHP system would have 100% of the market open to him for his personal advantage so the Minister restricted it. We are not going back to where we were with this amendment but we are going some of the way, and that is right. We may have over-reacted and set down such strong restrictions that CHP was almost eliminated – there has been very little since. The providers of the base fuel, Bord Gáis Éireann and others, have been campaigning to have some liberalisation so they can go ahead and I welcome the liberalisation proposed by the Minister today.

Deputy Naughten made a very valid point about the areas that have not got the necessary raw material or fuel to provide CHP. During my tenure I made a decision, against the head of Department, to provide a gas line from north Dublin to Galway, taking in Mullingar, Athlone and Roscommon and all places along the route. The company would provide the gas line and the towns would be put out to tender. The Minister has expanded on that position and I welcome that. With the advent of the gas from north Mayo there would be a further north-south line. It is very important for the area that the base material should be there. Some industries could be set up now in those areas using CHP in the new formula under which it will be available. I welcome that but I wonder are we changing things too quickly now without the normal revision and examination of the old Bill and practice.

Mr. Daly

I agree with a lot of what Deputy Naughten said. Unfortunately the theory seems quite simple in a lot of these matters but the practice can be difficult. We had some experience of that in Moneypoint. In the context of the pressures which will be exerted on the board of the ESB from competitors, the provision of funding for research purposes, to which Deputy Naughten referred, may suffer. I am particularly interested in the provision of research funding to examine the feasibility of wave stations which could generate substantial electricity and where an amount of work has been done. The board of the ESB made an arrangement with a Scottish company for a wave station off west Clare, which would have been the first in Ireland and very widely welcomed. Unfortunately, the Commission withdrew funding of £1 million which made it unprofitable to undertake the project. Wave power should be a very attractive proposition for the generation of electricity.

I am not sure that using our natural gas as a means of generating electricity is very productive. We should get the best possible value for our gas. There is a huge amount of very valuable research being undertaken in Europe, particularly in Germany and France, into finding ways of developing a clean coal technology. There are huge reserves of coal available at relatively moderate prices which will not fluctuate because of troubles in the Middle East or elsewhere. It is a cheap way of generating electricity. The station at Moneypoint, which produces 24% of our electricity supply, is, probably, one of the most efficient stations in Ireland. It would cost between £400 million and £500 million to convert it to gas. It would be very unwise to use our valuable gas resources in this way and constitute very bad economics. Rather than the current proposal to stop the utilisation of coal at Moneypoint, it would be far better to adopt some of the technologies which are emerging to put in place clean coal technology which would substantially reduce emissions and ensure continuity of supply. It would also avoid the dilemma of many countries, such as Germany which, partly because the Greens are in government, does not know whether it is in favour of nuclear power.

Mr. Sargent

They are phasing it out.

Mr. Daly

They have a half and half approach, the kind of thing one gets from the Green Party in Ireland.

Mr. Sargent

Read the detail.

Mr. Daly

If the Green Party was in a position of power in Ireland, it would be going this way and that, as they are in Germany. The same happened in France when Green Party Ministers had to resign because of the ineptitude of the party on matters of pollution.

Mr. Sargent

It is called having principles, about which the Deputy would not know.

Mr. Daly

We have had enough lectures from the Green Party about our responsibilities in this area. Unfortunately, it does not like getting them from anybody else.

Mr. Sargent

I am listening carefully.

Mr. Daly

There are other things happening in countries all over Europe. In the coal industry there is significant research being undertaken into finding ways in which substantial reductions in emissions can be brought about, which would, in effect, ensure we could continue to utilise coal which is available in abundance throughout the world at very economical prices, thereby guaranteeing continuity of supply. This would ensure we would avoid some of the problems associated with pylons about which Deputy Naughten is so worried. Pylons could be replaced, but is the consumer prepared to pay the cost of putting the lines underground? They are not prepared to pay the enormous costs involved, the dilemma which we face. From an environmental and health point of view, we would all like to see the lines placed underground, but the cost would be astronomical and it would not be feasible, profitable or the correct thing to do. The board of the ESB and others can make an effort through new research into wave energy and clean coal technology which could copperfasten our power supplies.

Mrs. O'Rourke

Deputy Sargent inquired about CHP and the opinion of the European Union. EU policy is strongly supportive of CHP on the grounds of security of supply and environmental protection arising from its efficiency. CHP will have the same status as wave, wind, biomass and other forms of energy. Deputy Naughten spoke about the necessity for research funding and welcomed the CHP concept. The Department of Enterprise, Trade and Employment operates a research programme for such schemes. I received such a query some months ago which was dealt with by that Department. The availability of EU funding, mentioned by Deputy Daly, could also be examined. I agree that research into alternatives should be ongoing.

Deputy Naughten spoke about the BMW region which he said is not benefiting in this context. The region will benefit, however, from the gas coming ashore in north Mayo. Deputy Stagg is correct in saying that the matter was put through Cabinet prior to the change of Government. Bord Gais has a statutory mandate to be viable and not go into debt, but the matter has been discussed and it is clear that, because the Government decision indicated that the lines to the north west, midlands, etc., were to be put in place, arrangements will have to be made to allow this to happen. Having brought the matter to Cabinet I can state categorically that Bord Gais has been informed of the Cabinet decision from which the BMW region will benefit most.

Deputy Stagg said that this is an important section and his welcome is somewhat wary. We should have had much more time on Committee Stage to go through these issues, but it is now beneficial and we are doing things not quite in line with the direction towards which we were being guided—

Mr. Stagg

Encouraged.

Mrs. O'Rourke

—or encouraged when some of us got very worked up in terms of what we were letting ourselves in for all of a sudden.

Deputy Daly spoke about the emerging technologies which he hopes will enable an examination of Moneypoint and how processes there might be changed if the emerging technologies affecting coal allow us remain within the Kyoto guidelines and our other obligations in that regard.

Mr. Naughten

Regarding combined heat and power, will the Minister ask the ESB, in the light of the passing of the Bill, to review the construction of pylons?

The one closest to me runs from Flagford in north Roscommon to Shranagh in south Sligo. That pylon is a 220kv voltage and will benefit neither north Roscommon nor south Sligo. It is designed to supply power to the north-west, Sligo and Donegal. With combined heat and power and the fact—

An Leas-Cheann Comhairle

I am reluctant to intervene but there is a time limit on the debate and I think we might be moving away from discussing the amendments.

Mr. Naughten

If the Leas-Cheann Comhairle gives me an opportunity I will explain how it relates specifically to the amendment with which we are dealing. Now that the gas is going to service the north-west and that we have opened up combined heat and power, it would be an ideal vehicle to supply electricity to Sligo and the north-west. This power line would then be obsolete. Construction would not need to go ahead because we would have combined heat and power. I believe the same applies in Cork. I ask the Minister to discuss with the ESB the practicality of going ahead with the construction of such pylons because we now have the combined heat and power.

Mr. Sargent

I thank the Minister for her clarification on the implications of the amendment. With the shortcomings in the grid, there is a considerable amount of work to be done before renewable energy can benefit in the same way as CHP, and that is a disadvantage for a start. Unlike other countries, we do not operate a fossil fuel levy. Renewable energy has to operate when the costs of fossil fuel generation are not internalised. Some of us wonder how they will be paid when the Kyoto obligations kick in. They are not being levied where the problem is created.

We still have a 12.5% VAT rate on renewable energy technology, compared to 5% in the UK. There is a reluctance in the Department of Finance to change that. I do not think there is a level playing pitch. I fear CHP will move into primary position, but I hope I will be proved wrong. Our dependence on fossil fuel, whether it be CHP or any other type of clean coal technology, as Deputy Daly said, will still be a reliance on imported fossil fuel. Ultimately, this puts us in a vulnerable position. We need to plan for the long-term and ensure renewable energy is not jeopardised.

Mr. Stagg

We should distinguish between renewables and alternatives. We are talking about alternative forms of energy production, the category into which CHP falls. Wind energy and all other renewables fall into the same category. They are alternatives. The EU describes them as alternatives rather than renewables. We should not mix up that.

Mr. Sargent

I do not share that view.

Mr. Stagg

Irrespective of whether the Deputy shares it, it is a fact.

Mr. Sargent

It is an EU interpretation.

Mr. Stagg

It is a fact.

Mrs. O'Rourke

It is an alternative way of making or generating power.

Mr. Sargent

There are lots of alternatives.

Mrs. O'Rourke

It is an alternative way of doing it.

Deputy Naughten inquired if I have the power to tell the ESB to discontinue the use of lines and pylons. I do not have that power. That is the ESB's business. In case people believe CHP will take the place of everything else, may I tell the House that since 1999 CER has licensed 12 CHP plants. The largest of these are ten megawatts, run by Glanbia and Dairygold for their own use. The remainder are smaller, ranging from two megawatts to six megawatts. I do not think they could service the country.

A Deputy

Would it light Roscommon town?

Mr. Naughten

Does this legislation allow for greater capacity?

Mrs. O'Rourke

It does of course, all in good time. Ireland will not suddenly be run on CHP. It will not supplant or replace the ESB or any other competitor.

Amendment agreed to.

Sections 8 and 9 agreed to.

SECTION 10.

Mrs. O'Rourke

I move amendment No. 3:

In page 5, line 3, after "Act" to insert "(other than sections 8 and 9)”.

This amendment arises if other earlier amendments were accepted. It is a textual change, as is the next one.

Amendment agreed to

Section 10, as amended, agreed to.

TITLE.

Mrs. O'Rourke

I move amendment No. 4:

In page 3, line 9, after "BOARD," to insert "TO AMEND PARAGRAPH 11 OF SCHEDULE 12 TO THE TAXES CONSOLIDATION ACT, 1997,".

Amendment agreed to.

Title, as amended, agreed to.

Bill reported, with amendments and received for final consideration.

An Leas-Cheann Comhairle

We have now reached Report Stage and since there are no amendments on this Stage, we will proceed to Fifth Stage.

Question proposed: "That the Bill do now pass."

Mrs. O'Rourke

I thank the House for the goodwill expressed even in the short period of this Bill's passage through the House. I thank my Department officials, John Browne and Mary Farrell, who worked very hard on the preparation of the Bill. I thank all outside bodies, trades unions and management who contributed their views.

Question put and agreed to.