Vol. 542 No. 3
13 Mr. Barrett asked the Minister for Public Enterprise if she has received representations from a company (details supplied) regarding regulation 31 of the European Communities (Internal Market in Electricity) Regulations, 2000 - S.I. No. 445 of 2000; and if she will make a statement on the matter. [24095/01]
I received representations from the company referred to by the Deputy on a proposal that the public electricity supply arm of the ESB should purchase an amount of electricity from independent power producers at a price that includes a capacity element.
My Department sought the advice of the commission on measures it considers may be necessary to address the current competitive difficulties. The commission said it is currently carrying out reviews across a broad range of areas. I have published on the Department's website the text of the correspondence from the commission in this regard. It said it would write further regarding the proposal that ESB public electricity supply should purchase a percentage of electricity from independent producers. This correspondence is on the website.
(Mayo): Is the Minister aware that, in the letter she received from the power company in question, Viridian, and the chief executive, Mr. David de Casseres, he referred to the fact that recent press articles have described him and his Huntstown project as the last man standing in the process of market liberalisation? It is the only independent company still in the game. Is the Minister aware that one of the primary obstacles appears to be regulation 31 under the Electricity Act, 1999, which provides for a transitional period ending in 2005? This means the ESB does not need to purchase any electricity from independent suppliers, regardless of price and environmental benefits, unless or until it has exhausted all its own capabilities to produce power. Does the Minister agree this is a major deterrent and obstacle to companies coming into the market and staying in it given that they are entitled to have a profit motive?
I met Viridian at the time and we said we would seek the advice of the commission. This was done and the Commission for Electricity Regulation did not recommend the Viridian proposal. It pointed out that while it might bring short-term benefits, it would be negative in the longer term. I admire the work being done by Viridian and the huge financial investment it is making to ensure competition in the electricity market. However, the commission did not recommend its idea, pointing out that while it would bring short-term benefits, it would be negative in the longer term.
Does the Minister agree that companies which wish to enter the market in Ireland should build their own power stations, as Viridian is in the process of doing, and then get their own customers? Does the Minister agree the company with which they are competing, the ESB, should not be obliged to take either their surplus or all their electricity unless it wants it? Does she agree that the commission is right to tell Viridian to get its own customers? The marketplace has been created for it to do so and I hope the Minister agrees nothing else should be done for it.
It is better to let competitors come to the surface, do their work, get customers and get their businesses going. I had some sympathy for the Viridian people when they discussed the matter with me, but I do not have sufficient knowledge regarding the extent of its proposals. In any event, the commission said it was not a good idea and I am glad the Deputy approves of what the commissioner said.
However, I hope Viridian will become a strong competitor because every trading company needs good competition. It is often difficult when a monopoly is moving into a competitive arena to mix the two elements. However, in general, it is better that competitors in all markets set up their own stalls and proceed to sell.
(Mayo): I will not argue with Deputy Stagg's point but the real problem is that the ESB's final tariff prices are significantly below cost. This means that companies such as Viridian are effectively in a position where they must sell electricity at a loss to enter the market. It is fine saying that companies should get their own customers but when one is competing with a monopoly, a tariff price that is below the cost of production is a major problem.
The commission said it would continue to monitor the situation. It often meets representatives of Viridian and other companies to explain the position. There are always ups and downs in any arrangement where a service that was a monopoly becomes liberalised and enters a market. Most of us appreciate that the entry of Viridian is good for the market. I hope that, in time, its diligence and efforts will bring it the rewards for which it has invested large sums of money.
