Dáil Éireann debate -
Thursday, 31 Jan 2002

Vol. 547 No. 2

Gas (Interim) (Regulation) Bill 2001 [ Seanad ] : Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Minister of State at the Department of Public Enterprise (Mr. Jacob)

Deputies will be aware of the Corrib partner's plans to land gas from the Corrib field located off the Mayo coast. This gas is expected to come to market in the latter part of 2003 and further pipeline construction work is to be undertaken by BGE on a Mayo-Galway pipeline to allow for its delivery into the national gas grid. Corrib gas, as an alternative source of gas, will play an important role in increasing consumer choice.

Completion of all pipeline projects is subject to the relevant company meeting all necessary statutory requirements. The position with the three projects mentioned is that BGE has obtained ministerial consent for the construction of the second interconnector and the ringmain pipelines. The company's application for consent to construct the Mayo-Galway pipeline is currently under consideration within my Department and I expect to be in a position to make a final decision on this issue in the very near future.

In addition to the three projects I mentioned, I take this opportunity to update Deputies on the proposed extension of the gas network to the north-west and on the developments proposed for the Northern Ireland network. Deputies will be aware of the Government's decision last year that the natural gas network should be extended to the north-west. An initial analysis by BGE on the route options for this network extension concluded that none of the possible options would be commercial in its own right and that substantial grant aid would be necessary to bring the projects to fruition. In light of this the Government decided that detailed costing should be obtained for an extension of the gas transmission system to Sligo via Ballina from BGE's proposed Mayo-Galway pipeline and to Letterkenny from the proposed Belfast-Derry pipeline.

The provision of such grant aid raises issues relating to EU state said and procurement rules. My Department has been in touch with Commission officials on this matter. The next step in moving the projects forward involves carrying out detailed engineering and planning work to establish a firm estimate of the capital costs for the Government to be in a position to make a decision on grant aid.

I am anxious to get the necessary detailed information to enable a final decision to be taken by the Government on these projects. I understand the concerns expressed to me on many occasions by Deputies and local representatives in the areas in question that these projects be placed on a firm footing. However, given that there are competition and state aid issues involved, it is essential to ensure at the outset that the approach taken to the next stage of the pro ject does not create difficulties which might result in the project being delayed at a later stage. I have, therefore, sought the advice of the Attorney General on the best approach to be taken. Once there is clarity on the best approach to adopt, I will move swiftly to get the detailed planning of the project under way.

In regard to proposed developments in the Northern Ireland network, BGE and Questar, an American pipeline company, had applied to the Northern Ireland regulator, the OFREG, to build two pipelines, one linking Belfast to Derry that would supply the planned new Coolkeeragh power station and the city of Derry and the other comprising a South-North interconnector from Gormanston to Antrim to tie into the proposed Belfast to Derry line. While Questar decided at the end of last year to withdraw from the partnership for internal commercial reasons, BGE has confirmed its commitment to continue with the development of these projects. In recognition of the wider benefits of cross-Border links, the Government supports these pipeline proposals and has decided to make a €12.7 million grant available toward the development of the Northern Ireland gas network.

Taking these infrastructure projects together, it is estimated that the number of households with access to gas will rise from 500,000 to more than 750,000 by 2010. In addition, countless small businesses, shops, pubs and so forth not currently connected will have access to gas. Given the present infrastructure developments and my proposals for full competition in the market, it is now timely to provide for independent regulation of the gas sector.

The Bill is an interim measure that uses the existing regulatory frameworks set out in the Gas Act, 1976, the Gas (Amendment) Act, 1987 and the Electricity Regulation Act, 1999, to create a coherent framework for the independent regulation of the electricity and gas sectors. Using these existing frameworks, approved by the Oireachtas, has certainly facilitated the creation of the over arching framework. As Deputies will appreciate from reading the Bill, ensuring this coherence as an end result has, however, been a complex task.

I will now give Deputies an overview of the structure and main provisions of the Bill. The Commission for Electricity Regulation was established by way of the Electricity Regulation Act, 1999. The main provisions that link into the 1999 Act comprise section 6, which sets out the duties of the commission, section 13, which deals with licensing, section 15 regarding authorised officers and section 18 on the funding of the commission. There are also links with section 16 dealing with gas capacity statements and section 19, which provides for a number of miscellaneous amendments.

The Bill proposes extending the remit of the commission so that it encompasses responsibility for the regulation of the natural gas sector. This adaptation will include changing its name to the Commission for Energy Regulation. There are a number of reasons for choosing the commission. First, there are similarities between the electricity and natural gas sectors. The two industries are in direct competition with each other in the domestic market through the supply of alternative means for cooking and heating and in the UK, for example, many of the regional electricity companies are now involved in the gas market with their own gas supply arms.

There are also commonalties between these sectors in regard to regulatory activities such as price setting and monitoring quality of service. Furthermore, there is an increasing dependency on natural gas by electricity generators. Regulation of both markets by the commission will mean there is one body with an oversight role in ensuring that there is sufficient gas capacity to meet the demand of the electricity market. The fact that the CER is already functioning effectively as regulator will assist in the speedy implementation of independent regulation in the natural gas sector.

The use of the Electricity Regulation Act, 1999, also means that other more important issues, such as the accountability of the regulator, have been dealt with in a manner already approved of by the Oireachtas. The commission has obligations to the Comptroller and Auditor General and the Minister in regard to its accounts. It is also required to account for the performance of its functions to the appropriate joint committee of the Oireachtas whenever so requested by the committee. These obligations ensure accountability and they will continue to apply to the commission in its extended role.

The Gas Act, 1976, established Bord Gáis Éireann as the State owned monopoly operator of the natural gas transmission system. The 1976 Act has undergone a number of amendments in relation to the provision of pipelines and third party access rights. The Bill updates these provisions in the light of the proposed transfer of functions to the commission and as a result of the proposed increase in the level of market opening. The relevant provisions in the Bill linked to the 1976 Act comprise section 8, in regard to the functions of the board, section 9, in regard to consents for the construction of pipelines, section 11, on third party access arrangements, and section 12, dealing with ministerial shareholder functions. As in the case of the 1999 Act, there are also a number of consequential amendments to the 1976 Act set out in section 19 of the Bill.

The Gas (Amendment) Act, 1987, was enacted as a consequence of the demise of the old town gas companies and gave the power to the Minister to confer town gas functions on Bord Gáis Éireann by order under section 2 of the Act. This allowed BGE, which had formerly been only engaged in gas transmission activities, to take over the town gas operations in areas such as Clonmel, Cork and Dublin and to avoid any disruption for the thousands of town gas customers that may otherwise have arisen. As a result of amendments tabled by me and accepted by the Seanad, the Bill now provides, in section 19, for the transfer of the Minister's powers under section 2 of the 1987 Act to the commission and for the possibility of having other undertakings, in addition to BGE, operating as town gas companies.

My decision to provide for competition in the area of town gas distribution is based on a number of reasons. First, the extension of the natural gas network being undertaken by BGE will bring gas to many areas of population not previously supplied. This development presents an important opportunity for the introduction of competition into this area of the market and, by presenting opportunities to new market entrants, will act as a spur for the growth of competition throughout the gas market. Second, my decision to reduce the third party access eligibility threshold to zero by 2005 to allow for full competition requires that a mechanism be put in place for the commission to effectively regulate the domestic supply market. The framework established under the Gas (Amendment) Act, 1987, provides an effective solution for this.

Combining the existing frameworks contained in the 1976, 1987 and 1999 Acts through the proposals in this Bill has been a complex and painstaking task but one that will result in the provision of a coherent and effective framework within which the commission can carry out its duties for both the gas and electricity sectors. In preparing the Bill, my officials have consulted the main players and interest groups in the gas industry as well as with other relevant Departments and agencies. Where possible, the concerns expressed by the relevant parties have been taken on board during the drafting process.

I have maintained an open door policy in regard to consultation on the Bill and I have received some useful suggestions for amendments to the text. As a consequence, I will put forward a number of amendments on Committee Stage that have resulted from this process. One of the most notable of these will be a proposal to insert a new section to deal with third party access to upstream pipelines, which link production platforms in gas fields to onshore terminals and are the responsibility of my colleague, the Minister for the Marine and Natural Resources. The amendment, which is being put forward at the request of the Minister, ensures that Ireland's EU obligations in this area are fully complied with.

I remind the House that the Bill is an interim measure. While it establishes the basic principles and methodologies governing the regulation of the gas sector, further work will remain to be done in this area, work that could not have been carried out at this stage given the short timeframe within which the Bill is required. I advise Members, therefore, that I propose to initiate a comprehensive review of gas sector regulation immediately upon enactment of this Bill.

The aim of the review is the development of a modern regulatory regime appropriate to a multi- operator environment in which full competition is the order of the day. As part of the review, I will undertake a wide consultation process with interested parties. While it is too early to identify the specific issues to be addressed in the review, I can confirm that it will include an examination of issues resulting from the ongoing work in the EU on the revision of the current gas directive. It is also my intention that a thorough consolidation and repeal of the Victorian and early 20th century gas legislation that remains on our Statute Book will be undertaken as part of this work. This will provide much needed clarity for market players and customers alike.

I wish to outline some of the more important provisions in the Bill. Sections 6 and 7 and the Schedule provide for the transfer of functions from the Minister to the CER, as well as expanding the current duties of the CER in light of its role in regard to the natural gas sector. These duties include advising the Minister on the gas industry, promoting competition in gas supply and protecting the interests of final customers. The Schedule identifies a number of the functions to be transferred to the CER from the Minister in the Gas Act, 1976, in relation to the construction of gas pipelines and in the Gas (Amendment) Act, 1987, in relation to town gas distribution.

Sections 3 and 9 amend the existing provisions in the Gas Act, 1976, dealing with pipeline consents. A new section is to be inserted in the 1976 Act so that BGE and all other prospective builders of pipelines will in future make their applications for consent to build pipelines under this one section. There is also a separate provision dealing with consents for construction of upstream pipelines, which are the responsibility of the Minister for the Marine and Natural Resources. In addition, the section gives a new power to the commission, where it considers necessary, or where directed by the Minister, to conduct a competitive process for granting consent for the building of a particular pipeline in a specific area.

Section 11 deals with third party access rights and provides for increased market opening by reducing the threshold above which consumers can source their own gas. It is my intention that full market opening be introduced by 2005, and this provision allows for this to be done by way of statutory instrument. Section 13 provides for a licensing framework covering operators engaged in the supply of natural gas, the operation of distribution or transmission pipelines and the storage of natural gas. No such framework has existed until now.

Section 14 requires gas undertakings to keep separate accounts for their different gas activities such as supply and transmission and, where appropriate, consolidated accounts for other non-gas activities. This is to avoid discrimination, cross-subsidisation and distortion of competition and is based on the provisions of the current EU gas directive. Section 17 provides that the Minister may impose public service obligations or PSOs on natural gas undertakings, for instance, in regard to security of supply, technical safety or environmental protection. This section specifically excludes using PSOs for non-commercial extensions of the natural gas network.

Section 19 provides for a number of miscellaneous amendments, mainly to the Gas Act, 1976. The section also includes an amendment to the Gas (Amendment) Act, 1987, designed to allow persons, in addition to BGE, to become town gas distribution system operators.

The Bill's provisions provide a sound mechanism for establishing, within the shortest timeframe, independent regulation of the natural gas market. Additional legislation will be needed to provide a regulatory regime compatible with the fully competitive multi-operator gas market envisaged after 2005. For the present, however, this Bill is a significant step forward in achieving this goal. I look forward to hearing the views of colleagues on this important legislation. I commend the Bill to the House.

Mr. Higgins

(Mayo): I welcome the Bill and hope it will have a speedy passage through the House. The principle of independent regulation of the telecommunications, electricity, gas and aviation markets is a good one. The incompatibility of the role of the Minister for Public Enterprise as the main shareholder in Eircom, before its privatisation, the ESB, Bord Gáis and Aer Rianta and the Department's role as the market regulator is obvious. Despite the best intentions in the world, there must be a conflict, but the good work done by the relevant section in the Department up to now must be acknowledged. One could be forgiven for believing that there is a perceived conflict when it comes to the deregulation and opening up of markets and awarding of licences in the various sectors.

Apart from the need for an independent agency to oversee the opening of the markets and to set fair market prices, the expectation was that the new regulators, in their respective roles, would drive the various markets for the overall benefit of the country and the consumer, but, alas, this has not happened and at best one can only concede that deregulation in both the telecommunications and electricity sectors has been a limited success.

Deregulation is limping along in the telecommunications sector. Instead of creating the necessary competition that would expand the market and reduce access costs, our charges are among the highest in Europe. I am an Internet user and I pay exorbitant fees for a service that is available throughout most of the developed world and the semi-developed world for a fraction of the cost in Ireland. The problem is that we pay by the minute – 5 cent a minute approximately during the day and 1 cent a minute during evenings and weekends – whereas in most other countries one pays a fee per month regardless of the connection time. This is known as flat rate access.

When one examines the figures, there is a stark comparison. For example, in Finland the monthly flat rate is €45 while the average cost in America is €35. The monthly flat rate in the UK is €33 while it is €35 in Poland whereas if I were to pay for continuous access for one month to the Internet it would cost me €1,328. These figures demonstrate clearly that Ireland's competitiveness is being undermined by high Internet charges. Every Department and office uses the Internet and they are becoming more reliant on it for information and e-mail access. This is an obvious area where the telecommunications regulator should be able to apply pressure on the organisations which control these costs and supply these services to introduce a regime similar to that which applies in other countries, but this has not happened.

In the mobile phone sector, there are three main providers: Eircell, Esat Digifone and Meteor. The charges are prohibitive in comparison with other countries. While each company vigorously advertises its various rates for weekends and off-peak periods, giving the impression there is real competition in the marketplace, despite the varying rates and charges there is little difference and little benefit accrues to the consumer.

An area crying out for regulation and for co-ordination between the various member states is roaming charges for the use of mobile phones outside the country. Holidaymakers and business people are repeatedly ripped off. A person who calls another person from a phone in Ireland pays the cost of the Irish bill, while the holidaymaker or businessperson abroad receiving the call is charged for availing of the facility of receiving the call through the network of a host country. If there is no charge for fixed line arrangements, why should there be a difference for the mobile phone sector? Surely this is a glaring issue which could and should have been tackled by mutual co-operation between the telecommunications regulators and companies in the different member states. It would be to the obvious advantage of consumers, yet it has not happened. Why not?

The unbundling of the local loop, the opening to competing companies of the last mile of copper wire owned and controlled by Eircom, is necessary before competitors can arrange or offer meaningful voice and Internet alternatives. It should have happened last January. A year later, there is not a single unbundled local loop. The net result is that several telecommunications companies who were to provide competition and services have withdrawn from the market.

I do not want to be too critical of the regulator. She has a difficult job. Tackling monopolies which have had it all their own way can be a formidable challenge. Monopolies will fight back and one must recognise that right to do so to preserve products and monopolies. They will do everything to protect their dominant position. This has been the experience in the telecommunications, electricity and aviation sectors. Although the Bill is welcome, the fear is that exactly the same experience will be replicated in the gas sector.

We saw what happened when the Office of the Director of Telecommunications Regulation produced the schedule of interim prices for the unbundled local loop sector. It proposed line rental of €13.53 a month in addition to a once-off connection fee of €119.73. These were reasonable charges pitched in the middle range of charges throughout the EU. However, they were less than the figures sought by Eircom, which immediately slapped a lawsuit on the regulator questioning her powers to impose such charges. Eircom has had a tendency in both public and private ownership to run to the courts as soon as an attempt is made to move into its territory.

The Minister for Public Enterprise stands indicted for her failure to bring forward the long-awaited communications (regulation) Bill to enhance the ODTR powers in order that real and substantial progress can be made rather than merely chipping away at the monopoly edifice. The Bill was on the list of proposed legislation circulated by the Government Chief Whip this week. It is urgently needed to revamp, re-organise and reconstitute the ODTR. With 38 pieces of legislation going through the House and bearing in mind the parliamentary calendar, the reality is that the Bill will not see the light of day during the term of office of the Government. If it sees its way to bringing forward the legislation, we will not have any problem in facilitating its passage through the House. It is urgently needed but, in terms of processing legislation in the House and given the wish list prepared the other day, I do not see it being dealt with. Deputy Flanagan and I met deputations from several different companies pleading for the front loading of this legislation to enhance the role of the regulator and give her the powers she does not have and to prevent her decisions being challenged in the courts.

The regulator's and Government's performances in the area of third generation or 3G mobile phone licences have been the subject of critical scrutiny. Other EU countries have had their 3G operations in place for several years.

An Leas-Cheann Comhairle

I do not mind Deputy Higgins referring to other areas of responsibility of the Minister but I understand the Bill deals exclusively with gas. I was not present for the speech of the Minister of State and do not know if he covered other areas.

Mr. Higgins

(Mayo): It deals with gas, electricity and the cross-over, but also the principle of regulation because—

An Leas-Cheann Comhairle

I do not mind the Deputy referring to that but it is inappropriate for him to go into detail on areas such as telecommunications in the debate on the Bill.

Mr. Higgins

(Mayo): The Leas-Cheann Comhairle will be glad to hear we will have great gas soon.

I wish to refer in passing to the area of 3G licences because it is very important and has come in for a great deal of criticism. Other EU countries have had their 3G operations up and running for several years, yet it is only in recent weeks agreement has finally been reached between the regulator and the Minister for Public Enterprise on the price of 3G licences. We are second from bottom in the European league of those who have introduced the new service, as a result of which we are forced to run fast to stay still. Everyone knows the telecommunications market is a fast-moving and competitive one. We are still in the process of awarding licences to 3G operators when other countries and companies are discussing 5G licences.

There was a great deal of talk, hope, aspiration and expectation that we would make ourselves the e-commerce capital of the world. Unless we move quickly to award licences and provide real competition, we will lose our position in the marketplace. I welcome the concept of the e-commerce hub, the digital hub and such developments, but unless the process can be speeded up, we will slip quickly down the league table. Regulation is not delivering what it is supposed to have delivered. I subscribe fully to the reservations of the alternative licensed telecommunications operators and their frustrations.

The Leas-Cheann Comhairle will be glad to hear I will now address the Bill. The legislation is designed to open up the gas sector, allow new entrants to the market, enable greater competition and provide cheaper prices to the consumer. The Commission for Electricity Regulation is being re-titled the Commission for Energy Regulation. Re-titling the office will not do the business. The regulator will have powers similar to those vested in him by the Electricity Regulation Act. Despite the intent of that legislation, matters have been far from satisfactory in that sector. The fair and competitive market promised has not been delivered. There was a queue of entrants to the market to avail of new commercial opportunities and provide real competition, yet they have walked away in sheer frustration. At least 15 have done so to date. Many of them had elaborate submissions and plans which cost millions of euro to prepare and which ended up being consigned to the dustbin.

E-power is one example. It ceased trading having incurred losses of €6 million during its 18 month existence. The chairman of the company gave the reason for pulling out as: "The regulator does not have sufficient powers to ensure proper competition." This is the same regulator we will have in the gas sector. Have we any reason to believe the same will not happen in the opening up and regulation of the gas industry, something which is the purpose of the Bill?

Have things changed since the electricity regulator, Mr. Tom Reeves, wrote to the Minister for Public Enterprise in July 2000 and stated, "The reality is that potential new entrants struggled to develop bankable projects while those independent suppliers already in the market find it very difficult to operate on a financially viable basis."

Despite the best will and powers of the regulator the ESB still rules OK. It dominates the generating sector. Viridian Power and Energy, for example, is using natural gas and has a power station on the brink of commissioning. Viridian has encountered huge obstacles, particularly with regard to regulation 31 of the Electricity Act, 1999, which provides that for a transitional period ending in 2005 the ESB need not purchase any electricity from independent suppliers, regardless of the price or environmental benefits, unless or until it has exhausted all its own capabilities to produce power. When put together with the fact that the ESB's final tariff prices, especially in the sector in which Viridian is free to compete, are significantly below cost, this presents a real obstacle and difficulty for Viridian. In effect, Viridian has nowhere to sell electricity, unless it is prepared to sustain substantial losses. This is the reality which has deterred all others from entering the generation market. While this situation may come to an end after 2005 the economy cannot withstand a protracted lack of investment in this all-important sector for any length of time. This is the only independent IPP generation project currently under construction in Ireland and it is encountering obstacle after obstacle. A company which would bring to the market an urgently needed 346 megawatts of electricity is encountering cost obstacles and frustrations.

I do not mind the ESB protecting its market monopoly and dominant position. However, it is the duty of the regulator to try to level the playing field to induce competitors to come into the market. As well as having a huge monopoly in the generating sector the ESB also owns the network but EirGrid controls the flow of power through it, to ensure fair competition to independent producers of electricity. Now the electricity regulator, Mr. Reeves, has taken High Court action to enforce a direction on EirGrid. EirGrid directors maintain that they cannot fulfil their statutory remit without control over detailed planning and the problem for Mr. Reeves is that EirGrid's stance has been supported by the Competition Authority.

Based, therefore, on the experience of the regulators for the telecoms and electricity sectors one is forced to ask if we can expect the same degree of resistance and challenge when this Bill is enacted? Will the gas regulator, Mr. Reeves, be hauled before the courts time and again? Is the Bill strong enough to enable him to deliver on his remit?

The confirmation that testing by Enterprise Oil of its Corrib gas find off County Mayo was greeted with considerable jubilation. The Minister of State has referred to it today. From a national perspective the timing could not have been better, in view of the imminent expiration of the gas field off the Old Head of Kinsale. The Kinsale field has produced 1.5 trillion cubic feet of gas and has accounted for 20% of the country's energy needs. This amounted to cumulative savings of more than £3 billion. In the west of Ireland – and particularly in job-starved County Mayo – there was tremendous excitement and anticipation. The expectation is that gas will be in the pipeline by 2003, that is, if we can deal with the objectors. The objectors are concentrated in my constituency but I do not subscribe to their objections or support them. They are a small coterie and are not representative of the general population.

Despite the excitement and anticipation there has not been a syllable of commitment from the Government regarding the use of the gas for the economic benefit of the western region, which has been bled white for generations by emigration, is currently being bled white by internal migration and is totally neglected with regard to Government channelled industrial jobs. There are no plans for industrial parks or estates, no attempt to develop a cohesive blueprint to address the imbalance and job deficit which has always prevailed and has been the scourge of the region and no proposal to build a Government encouraged gas fired power station to compensate for the forced closure of Belacorrig peat station with the loss of 400 related jobs in Bord na Móna and the ESB. The pipeline passes within a stone's throw of Belacorrig. There is no design to work with the Western Development Commission in order to maximise the benefit of the gas find for the region. The gas will simply be brought ashore, put into the pipeline and fed to Dublin and around the country. The only jobs accruing will be in the laying of the pipeline to Galway. There is no promise of further jobs on the horizon or even a pretence of creating jobs. The pipeline is not being seen as a dynamic for the industrial development of the west. There will be a small number of jobs at the gas head where it comes ashore in county Mayo but that is all.

There was an expectation that spur lines from the main Mayo and Galway pipelines would supply such towns as Claremorris, Castlebar, Westport, Athenry and Tuam. However, despite the assurances given a number of weeks ago by the Minister for the Marine and Natural Resources, the only definitive statement on the issue has come from the public relations manager of Bord Gáis, Miriam Farrelly. The Minister of State repeated today what he said in the Seanad, that the pipeline will go to Sligo via Ballina – presumably Ballina will benefit – and from there to Letterkenny. However, the only definitive statement relating to the status of the promise made to the towns I have mentioned comes from Miriam Farrelly. She is quite emphatic that no commitment has been given, merely that an evaluation of these towns is being carried out. Apart from an indication that the pipeline would be extended to Sligo, Ballina and Letterkenny, no definitive political commitment has been given. Is the Mini ster of State prepared to state clearly that the five towns I have mentioned, as well as some other towns in the immediate vicinity of the pipeline, will be connected to the supply. The Minister of State has already spoken about the public service obligation. If a public service obligation is contained in the Bill, why not bring it into being in order to facilitate the provision of spur lines to supply these towns. Is it the Government's intention to have these towns included? Is there a firm commitment on the part of the Government to deliver gas to these towns? There is a great degree of expectation in the west and this Bill will be a contentious political issue in the next few weeks.

Section 6 assigns to the commission responsibility for the promotion of safety and efficiency on the part of electricity and natural gas undertakings. How far does this responsibility or power extend? The electricity industry is extremely loose and unregulated. One must give credit to RECI for the manner in which it and its sister organisation have policed their own 2,000 members. The problem, however, is that the whole issue of regulation of electrical contractors is entirely voluntary and in urgent need of proper regulation. Between 1998 and 1999, 76 people were killed in Ireland as a result of accidents attributed to electricity. In 1998 almost 5% of all fires were attributed to electrical causes, that is more than 1,265 fires in Irish homes and businesses. For too long this whole issue has been passed from the Health and Safety Authority, which says it is not its business because its job is accidents in the workplace, to the Department of Public Enterprise and the Department of Enterprise, Trade and Employment. Will the Minister of State clarify how far the safety remit of the Commission for Energy Regulation will extend under the particular section of the legislation?

Section 6(c)(ii)(h) obliges the commission to secure the continuity, security and quality of supplies of natural gas. Will the Minister of State clarify the issue of continuity of supply? For example, does this extend to the area of exploration, including the granting of exploration licences and the terms under which such licences can be granted? I am extremely disappointed – I believe my view will be shared by many people – at the terms negotiated with the oil and gas companies in 1992 whereby the State ended up with the worst possible tax deal, that is, a 25% tax rate which can be written off against costs, abolition of all royalties and other protection levies and the freedom not to avail of Irish labour, goods, supplies and services.

Section 7 deals with the transfer of functions from the Minister to the commission. Subsection (4) reads: "Where, immediately before the appointed day, any legal proceedings are pending to which the Minister is the plaintiff or the prosecutor and the proceedings have reference to functions transferred by this section to the Commission, the name of the Commission shall, in so far as the proceedings relate to any functions transferred by this section, be substituted in those proceedings for that of the Minister, or added in those proceedings as may be appropriate, and those proceedings shall not abate by reason of such substitution." Under the section the role of the Minister is transferred to the commission where it reads, "Where, immediately before the appointed day, any legal proceedings are pending to which the Minister is the plaintiff or the prosecutor". In other words, that particular role will now be assigned to the commission. Subsection (5) reads: "Where, immediately before the appointed day, any legal proceedings are pending to which the Minister is a defendant and the proceedings have reference to any functions transferred to the Commission by this section, the Commission shall not be substituted for the Minister in those proceedings notwithstanding the transfer of functions under this Act." In other words, the commission shall not be substituted. Does that mean the liability remains with the Minister?

I welcome this very comprehensive and detailed Bill and my party will certainly assist its passage through the House. We have not even touched on many of the issues such as natural gas, licensing, funding of accounts and so on. However, I look forward to a constructive debate on Committee Stage. My party will table amendments with a view to improving what is essentially a good Bill.

Mr. Stagg

I do not welcome the Bill. It is a temporary measure which is unnecessary. I am not sure why after a five year period in Government this temporary measure is being introduced in the dying days of this Dáil. I will outline my reasons for not welcoming the Bill.

Essentially we are talking about the old chestnut of whether it is better for the State to have regulation or ownership in the commercial semi-State sector. I argued that regulation is more important from the strategic and public interest point of view than the actual ownership of companies, but that did not find favour in my party – perhaps I did not explain it well enough. What we are now doing is removing regulation from the democratically controlled sector and following that up in most cases with the dispersal of ownership from the public area. Therefore, we will have the worst of both worlds. If we were to deal with the ownership question first, the regulation could be retained within the State without let or hindrance. The only reason the regulation is being removed from the Minister of State's remit is that he is technically the owner and, therefore, a player in the market, and he should not regulate his own company in competition with others. If the Government and the thinkers in the Department were really honest they would tell us what is their agenda. By first hiving off the regulation they are removing both the regulation and the ownership from the public area, which is a very serious matter for the people.

I am also concerned about our representative democracy and the accountability of the people we will appoint. I am concerned that we are going headlong after this type of structure, arising from a decision made at one time which gave rise to the Maastricht Treaty and which set up the market as the god. At that time 15 of the 18 countries in Europe had right wing Governments, led mainly by Margaret Thatcher, who drew up an anti-public enterprise treaty. Since then the Government structures in Europe have changed dramatically but they seem to be stuck with this decision. I have spoken to people on the Government side who are unhappy about this transfer of power and responsibility from the democratically accountable sector, namely, this House which represents the people, to the private sector and very regularly outside the country altogether.

We are talking about control of our destiny and we now have some experience of the effect of that. We appointed a regulator for Telecom and then sold the Telecom company to anyone who would buy it. A carpetbagger who got one lump of it pretended he was a tax exile in Spain for a period so that he would not have to pay his due taxes in Ireland amounting to £50 million. He then had the cheek to turn around and make a public statement saying he would raise some money for charity in Ireland. If that particular carpetbagger paid his taxes he would not have to raise money for charity because the State would have the money to do the job. These people, including those in boardrooms in Sweden, Germany, Japan and London, own and control our total telecommunications sector. The Minister and the Minister of State have no say in the sector. The result is the picture painted by Deputy Higgins whereby the regulator cannot get any of the companies to do the job the Government wants done in this country, which is to provide infrastructure outside the highly populated areas.

The Minister is now the regulator of this sector. As the junior Minister in that sector, when I introduced the first area of competition in the 1995 Bill I retained very deliberately the regulation in the Minister's office. I recall having a great debate with officials whose agenda was somewhat upset by the retention at that time. I believe that the senior officials in our Departments are a form of permanent government with their own agenda, and it takes really strong political action to thwart that agenda. Although I have the highest respect for the people concerned, as well as for their diligence and everything else about them that is positive, they have their own agenda. As public representatives we should be aware of that reality and should take it into account.

The Minister is also the owner of Bord Gáis and, hence, the argument for the need for what is called an independent regulator, but of whom is this regulator supposed to be independent? I presume he or she will be independent of the representative of the people, who is the Minister. I also presume the reason for that is that techni cally the Minister, on behalf of the people, holds shares in the State company. If the regulator is independent of the Minister, he or she is not accountable either to the Minister or to the House. I will demonstrate why that is the case in more detail later.

The Minister also said that he is further opening up the area to competition and I have no difficulty with that. He has set an objective date for the full opening of the market and I have no difficulty with that either, but there will be problems. Commercial problems will arise for existing companies from the full opening of the market and, therefore, much thought needs to go into this matter. The Government and the Department will have the benefit of the experience of what happened in other countries when full opening occurred.

It is important to note that Europe is not forcing us to open up the gas market and, thus, we are ahead of the EU in this regard. Due to the lack of examination of the experience we now have from our own regulators in other areas, the possible after effects have not been examined in this case. It is premature to go ahead with this measure, given that the Minister has told us that immediately this temporary measure is passed he will undertake a major review of the regulation area. I urge the Minister, however, not to confine his review to the gas sector. He should ensure that the whole spectrum of regulation, right across the areas within his Department's ambit, is included in the review. A single sector review will not do the job because what needs to be examined are the principle and desirability of this form of regulation.

While gas is not in competition with other players in the gas market, it is in direct competition with other fuels. The competition that is now being promised will not necessarily provide lower prices for customers. The only previous example of competition affecting prices in the energy sector was the case of the ESB, where prices increased dramatically to make it profitable for the private sector to move in and make a killing. That is the only effect we have seen on prices arising from competition in the energy sector. The regulator was handed the power to do that, without any further reference to this House. In addition, because he had a brief to encourage competition he increased the prices payable by every household in the country and by industrial users as well. Amazingly, to encourage competition the Minister appointed an independent regulator who increased prices. Nobody has ever given me an explanation as to why that was positive or desirable.

In his speech, the Minister dealt with gas infrastructure and business, to which I want to refer briefly. The Government deserves criticism about the interconnector which is going ahead now. I am not criticising the Minister of State, Deputy Jacob, who, I know, tried to reach agreement on this matter for a long time before it came forward. The delays on the part of the Government, and within the EU, on the final decision on the interconnector means that we are now short of gas. Because of this, power stations that might otherwise have been built have been shelved. There is a real danger that not alone will we be short of gas for direct use, but we will also be short of electricity arising from the long and unnecessary delay.

The Minister referred to security of supply which we need to bear in mind. One of the methods the State has always employed to ensure a secure supply of energy was to make available various types of energy, including oil, coal, turf and gas. There is a real danger now, however, that we will have all our eggs in the gas basket, the vast majority of which will be imported. We will be hugely dependent on imported gas, through two interconnectors, for our energy supplies. As far as the electricity interconnector is concerned, the supply might even come from Sellafield. We do not know yet. When it is up and running, however, we will certainly be more dependent on supplies from external sources. That will not provide us with security of supply and we will be vulnerable to other Governments which, in times of crisis, may break supply agreements with us because they need the energy for themselves. We could also be vulnerable to terrorist attacks on the supply lines. More thought needs to be given to the issue of security of energy supplies here. In that regard, alternative indigenous energy sources should be developed.

I agree there is a limit to the amount of wind energy that can be put into the system because it is an occasional source of energy that is available for approximately 30% of the time. Therefore, the volume of such energy that can be put into a permanent supply system is limited. I am glad to see, however, that Mr. Eddie O'Connor has bounced back again and is doing the trick off the Minister's coastline. I cannot understand why the Minister for the Marine and Natural Resources, Deputy Fahey, who is known as the Minister for the west, announced this positive proposal off the Wicklow coast when the Minister of State was sitting, looking out the window of his own house at the area.

Mr. Sargent

Sin scéal eile.

Mr. Stagg

I am sure there was a scéal eile there somewhere. As a Mayo man, I welcome the Corrib well and I strongly support what Deputy Jim Higgins said about the objections to putting in place the required infrastructure. I do not support the objections which are baseless. If we did not have a 1992 exploration deal, which does not seem to give much to Ireland in the form of taxes or royalties, we would not have the Corrib well. Although I did not make the deal when I was a Minister of State in the Department, it was extremely difficult to achieve. I think either the current Minister of State, Deputy Molloy, or the former Deputy and Minister, Mr. Ray Burke, made it. I was convinced by the arguments that we needed a favourable deal to get the exploration companies to come into what, from their point of view, was extremely hostile territory, including difficult waters and short windows of opportunity for exploration. In addition, there was no great knowledge about the prospects and so it was extremely difficult to get them to come in at all. However, because the deal was favourable from their point of view, it attracted them and as a result we now have the Corrib well.

It would be unbelievable for any Government to bring a pipeline through Mayo and into Sligo without having spurs for the various towns there. I am sure the Opposition and Government representatives in Mayo will make that message clear to the Minister. I am sure also that the Government will be favourably disposed to it. It is time to decide. We should not dally on the decision on the Mayo-Galway line, which is an important part of the infrastructure. We should ensure it is structured in such a way that it can supply those along it.

The Dublin-Galway-Limerick line was an old hobby horse of mine. If one wanted to get a good example – I am sure it is not taped but it is probably recorded – of how officials would fight a Minister when he or she was about to do something with which they did not agree, that would probably be the best example. It took a long time, but eventually I got it to Government and I got a positive decision. However, another loophole was found when it was decided it might need State aid. It was then referred to Europe. It fell to the Minister of State, Deputy Jacob, to finalise it when Europe said it did not need any approval for State aid or, if it did, it was approved. I congratulate the Minister of State for finishing that job. The line from Dublin to Galway should be built as quickly as possible. There will be opposition from various people, including those who supply bottled gas along that route and those who supply central heating oil to houses as they will now be in competition with someone else for the first time. However, I am sure the Minister of State will overcome that by demonstrating to the public that it will have a choice of fuel sources and by putting the line in place to ensure that happens.

From an infrastructural point of view, it is important not to have gas lines running into a cul-de-sac. They should be in circular systems so that if there is a breakdown, the effect can be limited. If grant aid is required for the Ballina and Sligo line and the Letterkenny line, we should go after the State aid agreement as hard as possible.

As regards the accountability of the regulator, the Minister of State said he will have to come before the appropriate joint committee. I want the Minister of State to seriously consider that. The appropriate joint committee is the Committee on Public Enterprise and Transport which would be capable of talking to the regulator twice a year or once a year if it is busy. However, that is not accountability. We need a specialist com mittee of the House, which will be resourced with expertise, to deal with regulators to ensure they cannot dance rings around politicians and public representatives who will not have the resources to deal with them effectively. That is dealt with by the Department at present and we can question the Minister on a daily basis. We need a specialist committee with specialist back-up, research and direct advice to ensure that the regulators are accountable to the democratic assembly. The present system does not work because I and other members of the committee do not have the resources to make it work. It is important to do that.

Apart from the Taoiseach and the Minister for Finance, Mr. Tom Reeves, who is and will be the electricity regulator, will be the most powerful man in Ireland once the Bill is passed. He is a public servant of the highest renown. He has achieved a high level of public service and his integrity is beyond question. I know him well as I have worked with him. He saw himself as an essential public servant both before and after he was appointed regulator. He wants to serve the public. However, that does not take away from the reality that his office will be extremely powerful and totally independent. The system of making him accountable is not capable of doing that. We need to change that system.

The first step in privatisation is to hive off the regulation from the Minister's office. However, there is no need for privatisation as we could keep the regulation in the Minister's office. The problem of accountability would then not arise because the Minister would be the person accountable to the House. If we are to sell Bord Gáis and its assets, we should do so and keep the regulation. However, we should not get rid of both because we will lose the totality of the power the people have through the Chamber. There is a long standing agenda in the Department, which has the various steps and stages well laid out and choreographed, for the privatisation of all State companies. The Minister of State does not agree with that, but I saw it clearly. I do not see any change in the steps being taken in that regard. I will resist any such moves.

I am not just complaining or being negative about the matter, but there are other possibilities available to us in the House. Given our experience, we should look at other formats for doing this rather than following the example of Eircom. I am not talking about the price of the shares, but about the lack of control the House, the Parliament and the Government have over the telecommunications issue, which is now controlled from outside the country. We should set as a long-term objective the public ownership of these companies so that they have commercial freedom, they are not subject to being second-guessed by an assistant secretary in the Department, the Minister is no longer the shareholder and the regulation would be retained in the Department and with the Minister.

I will give the House an idea of how that might work. We could transfer the shares in the State companies to an independent agency, such as the National Treasury Management Agency, which used to be called the Debt Management Agency but its name was changed because we now have money. That agency could be an umbrella or holding company for all the companies. That would remove the shareholding from the Minister and the conflict of interest in terms of regulation. That would allow the companies to find the money they need to invest in their proposals. It would also give them the commercial freedom to act quickly and in the interests of their companies and customers. That is what the Labour Party is arguing for. It is a new format of public ownership and regulation without handing it over to the private sector, particularly the foreign private sector. These are strategic companies which are important to Ireland and to the life blood of the economy. We cannot afford to allow the cheque book invasion of these companies to be successful. They should compete with other companies in the market, but they will be the backbone of the economy for the foreseeable future. The example of Eircom is gone and this Government and future Governments will not have control of such companies in Ireland or have any serious input into how they operate because they will be subject to international agreements and treaties.

I ask the Minister of State to prolong the debate on the proposal. Although it took a long time to prepare and he has agreed it is a temporary measure, I ask him not to implement it. If it is implemented, it will be virtually impossible to take it back. The danger is there will be someone in the near future sitting where the Minister of State is sitting now who will take the next jump quickly and sell off the energy company. If it is sold off, it will be gone for good. As sure as God made little green apples, those, who will be here long enough, will see this turn back full circle with Governments forced to nationalise these companies again.

In the United States, the most ardent and successful capitalist country in the world, the states and cities are taking the energy companies into public ownership in a variety of forms because private sector competition fragmented the companies or resulted in monopolies which did not serve the interests of the public. The cities and states have been forced to "nationalise" them, not a word they use in the United States but the effect will be the same. We will see the same here. I suggest that we should learn from that by cutting out the middle stage and find a new form of public ownership and regulation for these companies in the interests of the public now.

Mr. Browne

(Wexford): I will not detain the House long but take the opportunity to speak about those areas which do not have a supply of gas. I welcome this detailed Bill but I also share the reservations of Deputies Jim Higgins and Stagg that once we privatise and put control outside of this House, it is difficult to get a response, as the National Roads Authority and other bodies illustrate. Politicians get short shrift when they make representations to those bodies. We all have expressed concern about this.

This Bill covers in detail, as did the Ministers speech, the road that gas will take, but I am concerned that natural gas is not being distributed fairly and equitably, particularly as I am from the south-east. Deputy Jim Higgins is lucky as the gas from the Corrib field is coming in on the west coast and probably all the towns in his constituency and along the west will benefit. That is what ought to happen. In the south-east, the gas pipeline runs through Waterford, Carlow, Kilkenny and Wicklow. Thanks to the Minster of State, Deputy Jacob, it is part and parcel of the latter's economy.

Yet, in County Wexford, where we are surrounded by the pipeline, we do not have any gas. I appreciate Deputy Jacob's meeting with us recently on our attempt to encourage Bord Gáis to extend the pipeline into Wexford. Arklow's economy benefits from gas but nearby Gorey, in Wexford, where there is no gas, has lost around 1,000 jobs in the past year. The economy of the county suffers because of such job losses. It is unfair that gas goes to surrounding counties but not to Wexford where it would benefit industry and the ordinary consumer.

The Minister must look into this. Bord Gáis has many well worn excuses, like that there is not enough industry or not enough economic development. However, industrialists will not set up in our county but prefer to go to counties where gas is available. The extra spur must be extended into the county because, although many counties benefited from the Celtic tiger, Wexford suffered badly. We lack a third level education institute, although one will come on stream soon. The broadband infrastructure – to mention another issue – is coming into County Wexford in Curracloe and Kilmore but not to the general community in the county. That is another reason industrialists will not come here. Only one town in each county in the south-east will benefit from broadband. That is unacceptable.

Gas is distributed unfairly by Bord Gáis. The population of Wexford is 104,000, making it the most densely populated county in the region. It is surrounded by other counties which the pipeline goes through. This is wrong and I am critical of previous Ministers and Bord Gáis executives for denying gas to the county. I ask the Minister to re-examine this.

The Minister referred in his speech to town gas operations which Bord Gáis took over. From the 19th century on, town gas was important to Wexford and Enniscorthy. Although, gas distributors went out of business in the 1960s because they could not compete, we have that history of gas which we want to revisit. Bord Gáis says it must be commercial, but it is important that gas is brought to the county, as it is being brought to Ballina, Sligo, Galway and Letterkenny by way of the Belfast-Derry pipeline. The Minister spoke also of grant aid to make it viable, detailed engineering and planning work, and possible problems arising from EU rules on procurement. If that is so for this new pipeline, then grant aid should be available to assist gas going into Wexford county because of the job losses and its lower manufacturing base.

I thank the Minister for bringing the Bill before the House and giving us the opportunity to air our views and problems. As I said to the Minister before Christmas when he met our high powered deputation led by the county manager, we will fight on behalf of the 104,000 people of Wexford to ensure that sooner rather than later that we get our share of the national cake and of the natural gas that is being distributed around the country. Before Deputy Jacob became a Minister of State he fought the cause of Wicklow when it came to natural gas but I hope the decisions being taken on which counties might or might not get gas is not based on whether those counties have Ministers. I saw recently that places such as Tullamore, Athlone and Ennis were being considered and the one common factor is that the towns mentioned all were in the constituencies of Ministers. If I were cynical I would say that is the reason, but I hope that is not the case and that the Minister for Public Enterprise, with the prompting of her Minister of State, will look seriously at the provision of natural gas for Wexford to benefit consumers and to attract more industrialists to the county.

Mr. Enright

I wish to share my time with Deputy Sargent.

This Bill provides for the regulation of the gas sector in the State by the Commission for Energy Regulation and, for that purpose, to transfer to it certain functions of the Minister for Public Enterprise. It is important that we have a commission for energy regulation to make sure there is some order regarding the distribution and price of gas as well as the provision of gas for industry and I hope to households also in the near future. That is very important.

It is all very well to set up a commission and to appoint a regulator. We have a regulator for the electricity sector who is discharging his functions in an exemplary manner and is top class but nevertheless the powers of the regulator need to be more closely scrutinised and examined to make sure electricity is properly regulated for the consumer. Regarding telecommunications, the regulator is also working to some extent but this needs to be properly organised. I go along with the comments about this Bill's provisions being temporary but this area needs to be closely examined in the long term.

The Bill is to deal with the whole area of gas supply but we must not just examine this area from an economic or monetary perspective. We must also look at the social aspects. Until now Bord Gáis has supplied gas to large industries, which is very commendable and has been of great benefit to the industries concerned. It is also hoped, over the next few years, to provide a gas supply for houses. I welcome this as it is essential. The social context is very important and should be taken into account by the regulator.

Approximately £1 billion is being spent on the connector and I am pleased we will now have the benefit of a pipe running from the west across the midlands to Dublin. Towns will be connected along the Dublin-Galway-Limerick line in the first phase, along with Enfield in Meath, Mullingar, Athlone, Ballinasloe, Galway and Ennis in Clare. I seek confirmation that the Department is also looking for tenders for the gas line which will come to the Offaly region from above Horseleap and which will take in Kilmucklin, Tullamore-Rhode and Clara before continuing to Tullamore via the N80, where at the roundabout it will veer on to the Clara road and the Kilbeggan road. That is important for Offaly and the midlands – towns like Tullamore, Edenderry, Birr and Ferbane. It is also important for Laois. This project is going ahead in Portlaoise anyway and Abbeyleix, Mountrath, Durrow and Portarlington should be included along these spurs.

We in the midlands have been involved in electricity production for many years but under the present Government we have seen the closure of Ferbane power station. When Deputy Dukes was Minister he offered a £17.5 million investment and more than £12 million of that was spent to re-open Ferbane. After that money was spent, the Minister, the Government and the ESB decided to close Ferbane power station. Rhode power station is about to be closed and every local newspaper has a screaming headline: "Rhode Power Station to Close." The damage that will be done to the village of Rhode by the closure of this station is very serious and I am deeply concerned by it. I call on the Minister of State to make every effort to keep the power station open. The ESB is believed to be considering selling off Ferbane power station so that it can be used for waste disposal but I do not want that. Will the Minister of State consider adapting the Ferbane and Rhode power stations to produce electricity from gas. With proper management and expertise these power stations could be used in some way for the distribution of gas.

The people of Ferbane were outraged by the closure of the power station, as were the people of Rhode. It is wrong. The Government lacks the commitment to keep power stations open. Fair play to the people of Ferbane, who are making an effort to fight back. Its development association is making major efforts in this regard but these closures are devastating bombshells. It is a priority that these pipelines be extended with spurs to ensure proper gas supplies in counties Laois and Offaly. We have seen Portarlington power station and Croghan briquette factory close. Electricity has been produced for years in counties Laois and Offaly and it is now imperative that an effort is made by the Department, the regulator, Bord Gáis and the new regulatory board to provide jobs there. We have suffered under the Government which should make it up to the people of counties Laois and Offaly who should have a proper gas supply which I now demand on their behalf.

Mr. Sargent

Ba mhaith liom mo bhuíochas a ghabháil leis an dTeachta Enright as a chuid ama a roinnt liom. This is not the first time we have handed powers over to a regulator. I know from previous experience that it is important to keep an eye on the interpretation of the regulations which is what I hope the Minister will do. With the development of wind energy we found it important to point out that this country's international obligations are real. Our obligations do not simply involve commercialising resources and selling them off in a competitive environment.

We need to look at this matter in a global context before looking at the local situation. Ninety per cent of world energy supplies are fossil fuel based, of which gas is an increasing part. The 1992 convention on climate change, signed by 157 countries, started us on a serious approach to the issue and the effects carbon and fossil fuels have on it. The United Nations international government panel on climate change, involving 300 scientists, made it clear that cuts of 60% are needed to stabilise climate change globally. That is the scenario in the background.

An OECD report shows us as inefficient in terms of energy use. Ireland comes 23rd out of 24 with Italy on top and Turkey at the bottom. The Government agreed to hold our CO² greenhouse gas emissions at 13% above 1990 levels. Obviously, that will not happen by 2008 or 2012. There is talk of our emissions being three times higher than this, as a consequence of which we are paying large fines internationally. The European Union has 5% of the world's population, but emits 15% of global greenhouse gases. There is a huge imbalance and injustice, of which we enjoy the benefits.

Gas has a short-term role to play, but will not get us out of the woods in terms of the climate change problem. It will take us in the right direction if combined heat and power is used. Coal-fired plants have a maximum efficiency rating of 40% while emitting large quantities of carbon dioxide, but with a combined heat and power natural gas plant we can achieve rates of 95%. There is a need to convert many of the older stations to gas, but that will not end the matter. The Bill does nothing to ensure long-term energy security as mentioned by Deputy Stagg. Currently, 75% of Irish energy supplies are derived from imports accounting for 25% of our greenhouse gas emissions. This figure is due to rise to 90% by the year 2010, of which only a fraction, 1% , will come from renewable energy resources such as wind. This problem must be grappled with. However, the Bill does little to address it.

I know from international experience that wind could account for a large part of our energy requirements. Because of its erratic nature it could not make up 100% unless the energy could be stored by batteries or converted to fuel like hydrogen. Gas has an important role to play because it is the source of energy for the transition to a hydrogen economy. I hope it can be used in this way over the next three decades which is about the time we have before a serious problem emerges and the people ask the reason the Government of 2002 did not see it coming. We need to be conscious of the long-term view.

On the local front, it is disgraceful how we have allowed our resources, our once-off gas reserves, to be taken out with little benefit to the economy or the people. The Enterprise Energy Ireland exploration of the Corrib gas field should really be seen as that of Norway's Statoil, the United Kingdom's Energy Enterprise Oil and US Marathon. It is not an indigenous Irish concern as some might think from the name. The exploration companies do not pay anything for the exploration licence. If they find commercial amounts, then under law the Minister will be obliged to give them a production licence. Essentially, Ireland is seen as a soft touch by international exploration companies. Up to 1992 we took a royalty, had the ability to take an equity share and could tax them from the first year. Now, we only have the third option available and even in that case the company concerned can write off its exploration costs against income.

Scotland and Norway insisted on spin-offs that would benefit their local economies. We know how well Aberdeen was set up. In Norway the Government took control by insisting there would be Norwegian workers on rigs in order that they could receive training and by insisting on shares. What happened? The companies left, yet it was not a disaster because Statoil was established. It is doing a very good trade. In Ireland there are no Irish workers on oil and gas rigs which are serviced from Ayr in Scotland and there is no spin-off to the State. That is a disgrace. The Government, supposedly, represents the interests of the people, yet the companies concerned pay no royalties on what is produced. Instead, they pay the normal 12.5% profits tax payable by any business and are allowed to offset as much of the profit as they like against exploration costs. Once an exploration company sets up in Ireland it can continue to produce gas or oil and plough back money into the exploration with no payback to the people.

These terms are the most favourable in the world for an oil and gas company. They were introduced at a time when there was little exploration off the west coast. Now, we realise their full significance. In County Mayo the word on the ground is that a great deal of fossil fuels has been found, but the companies are not telling the full story, which means they have gone against the terms of the licences which states they must fully report finds. If the Government could prove this, it would be a good opportunity for the Minister to revoke the licences and negotiate new terms. I challenge it to look into this and prove it. I hope the Minister shows the necessary backbone to do so and ensure the people have something to show for our reserves which are now being taken out of the country.

SIPTU organisers say that few Irish workers are involved. In Norway there is a Government representative on rigs. Here there is none. This needs to be investigated further as it presents a problem. It is possible, therefore, that the company concerned could supply false core samples to the Minister and purposely disguise interesting strata to give the impression that there is not as much there as there actually is.

We should examine what would be regarded as good terms and that might be a 50-50 share with the exploration companies. Once the gas is brought ashore it enters the European gas grid. It is no longer Irish gas. The gas grid will be a common carrier just like the electricity grid. The moment Corrib gas enters the grid there will be a common price with no advantages to Ireland apart from the possible employment opportunities and the tax levied on profits. Essentially the resource will be sold off for a pittance. There is a strong case for examining the Corrib gas field. By 2020, geologists and exploration experts believe that world gas will be costlier than at present because consumption will have peaked. Many experts, including economists, suggest that the gas in the Corrib field should be kept in the ground until a more advantageous time. The national grid is not dependent on gas from the Corrib field at present. I ask the Minister to consider the legislation regarding gas exploration. We must ensure that Ireland is not forced to depend on the goodwill of other countries through lack of a secure supply of gas.

The 1992 guidelines for oil and gas exploration were a turning point. They give impetus to fossil fuel development by private companies. The State cannot stop exploration of the Corrib field. The sole trigger for exploration rests with the company. The Government is cutting off the reserve which is ultimately our birthright and is a resource upon which future generations will depend. I ask the Minister to change the guidelines and return to the 1992 situation to use the reserves, just as Scotland and Norway have done.

Mr. Deenihan

The second interconnector will be in place next winter and I refer to the extension of the grid to the land bank in Ballylongford-Tarbert, County Kerry. I understand that Bord Gáis is proceeding with its proposal to construct the new transmission pipeline between Dublin, Galway and Limerick and that there will be a spur connecting Aughinish Island, one of the biggest employers in the whole mid-west region, employing 700 people. The provision of a gas pipeline to the site will help considerably in securing employment there. It will also help reduce the level of emissions into the environment.

The Tarbert-Ballylongford land bank was purchased by the State over 30 years ago. It has not been developed. It comprises 1,000 acres, mostly in public ownership. Some of the land has been planted over the years. The local people resisted a recent proposal to install a wind farm on the site. The land was bought originally because of the strategic nature of this site – it is contiguous to some of the deepest water in Europe. A ship of up to 400,000 tonnes can be docked just 20 metres offshore, equalling Rotterdam in that respect. Despite various promises, commitments, sod-turnings and pre-election hype, very little has happened. I expect that there will be an announcement relating to the Shannon estuary before election time. I ask the Minister to speak to Bord Gáis regarding the feasibility of extending the line to the land bank.

The area of north-east Kerry has suffered a lot from the downturn in the farming industry. It had been a very productive dairy farming area but it has suffered from people leaving the land. Up to 50% of people have left the land and are working instead in Limerick or Abbeyfeale. The decline in farming has eroded the economic vibrancy of the place over the years. An effort must be made to find a replacement for this loss of earnings and I regard the land bank as an obvious choice. The provision of a gas supply to the site would be a major selling point.

Shannon Development and IDA Ireland maintain that one of the reasons development is not taking place is the lack of services on that site. The N69 from Limerick to Tarbert is a national secondary road and is not suitable for heavy vehicles such as trucks. They can get as far as Foynes port but the road from Foynes to the land bank is too narrow for such traffic. Services such as sewage and water treatment and the provision of gas are essential. The gas should be extended from the nearby pipeline to the land bank. If the services were provided IDA Ireland claims that it could then encourage foreign operators to set up a container port or a trans-shipment port at that location. The site is close to Foynes port and it might not therefore be feasible to set up a rival port on the site. It may be possible to provide a horticultural industry on the site. The land is of very high quality, probably the most productive in the region. Some 20 or 30 farmers were removed from that land when it was bought by the IDA and this removed some of the economic base of that region. At the time these families were well compensated for their land. They bought land in Limerick and elsewhere but the whole place was denuded of its population and we can now see houses that are boarded up including some which are quite new. This is a reflection of the bad planning of that time. Options could have been taken on the land with people being allowed to remain. However, this was not done and they were encouraged to leave quickly. Since then the land has been rented and in some instances has become run down. It was always regarded as one of the most productive parts of north Kerry and possibly of Munster. If gas were provided, this land could be ideal for horticultural industry.

If it is within his brief, the Minister should consider extending the gas grid to places like the land bank. From the point of view of strategic development and to balanced regional development in the mid west region, it would be important to provide gas for this part of Kerry. I heard Deputy Browne speak about the lack of gas provision in Wexford. Kerry is a peripheral county totally bereft of any gas provision and given that the pipeline will go from Limerick to Cork, it will isolate Kerry. Apart from the land bank, provision should be made to extend it further through Listowel, Tralee and Killarney to retain whatever competitiveness exists in the county now. Because of infrastructure, we are losing out to other locations and this could help to put us on a more level playing pitch with our competitors.

Mr. Stanton

As the Minister has said, this legislation is quite complicated. From perusing the Bill, I appreciate the amount of work the Minister and his officials have put into it. As the Minister stressed in his speech, I note it is an interim Bill with further legislation to be brought forward later. This will be important in bringing consolidation to this whole area. A number of Acts are mentioned here: the Gas (Amendment) Act, 1993; the Energy (Miscellaneous Provisions) Act, 1995; the Electricity Regulation Act, 1999; and the Gas (Amendment) Act, 2000. In trying to understand this Bill, it is necessary to move back and forth through these various Acts. Sections are being inserted and removed and the framework is quite complex. I know there may be other constraints, however this whole area should be consolidated as soon as possible so that we can have a clearer picture of the legislation that applies. I appreciate that much work will be involved in that.

This Bill provides for the regulation of the gas sector in the State by the Commission for Energy Regulation. It transfers it to certain functions of the Minister for Public Enterprise and provides for the change of name, etc. However, transferring functions from the Minister of Public Enterprise seems to happen very frequently. On a number of occasions, I have spoken in this House about various Acts in which the Minister has transferred functions out of the Department. One of the effects of that is to raise questions about the accountability of regulators. Many colleagues on all sides have expressed their concern about the accountability to this House of bodies and regulators. It is important to also have independence. This was mentioned in the document published by the Department of Public Enterprise "Governance and Accountability in the Regulatory Process". We need to examine how we can have accountability.

Ultimately the consumers' interest is paramount. The reason to have regulators is to try to bring competition into the marketplace, to try to break up monopolies and allow others into those sectors. Is there a mechanism to see if what we are doing is protecting and advancing the consumers' interest and thereby lowering prices by introducing competition? It will be interesting to see how that will come about.

On the other side of that coin is the public service requirement. As many colleagues have already mentioned, many areas of the country need infrastructure, gas, electricity, etc. The telecoms area is of particular concern. If it is not profitable for a telecom company to open up broadband technology in a certain area, then it does not happen. The State has given over the role of providing this infrastructure to private companies. The public service requirement is of concern and we should keep it to the fore. There are a number of competing issues that need to be investigated.

Putting gas and electricity regulation together is a good idea. We have built up expertise under the Commission for Electricity Regulation and it is right to regulate both sectors by the one commission. They are both energy sectors so the idea of calling it the Commission for Energy Regulation is to be applauded.

Recently we had the Second Stage debate on the Sustainable Energy Bill. Will the measures being discussed today in any way affect or advance the area of sustainable energy? Perhaps the Minister will tell us whether the measure we are proposing to adopt will affect or advance sustainable energy. This is something we all have to keep in mind. Deputy Sargent mentioned the Kyoto agreements and CO² emissions, and I know the Minister is concerned about that as well. I am anxious to know if this Bill will help or impinge on the new body, Sustainable Energy Ireland.

Should we have a national regulatory council? I know the Minister has spoken of a consultative process but we may need to go further than that. The role of the Minister is moving from ownership and regulation to policy. One concern is that the areas of electricity, gas and telecommunications are part of the vital infrastructure of the State. It is important that is kept in mind. There are parts of the country that need gas and other infrastructure to develop industry and tourism. I hope this Bill will help advance infrastructure in the peripheral areas of the State. Will the Minister let us know how these areas can be helped and advanced by the Bill? How will the consumer be helped by it? Will the Minister show how similar measures in other sectors tangibly assisted the consumer?

How does regulation in Ireland compare to that in other countries? Does our regime stand up to scrutiny and compare favourably with similar measures in other countries? Have studies taken place on this in Europe or North America where regulation seems to be the order of the day? Have we learned anything from what has happened there? What mechanisms are being put in place to scrutinise and report on the effectiveness of regulation in the various sectors? Will such a measure be included in this Bill? How often should reports on the cost effectiveness of regulation be sent to the Minister and this House? Is it worth it? There must be a balance between the cost effectiveness of regulation and its general effectiveness. What role has the regulator and how will it impinge on the Competition Authority? What is the relationship between regulators and the Competition Authority?

I welcome this measure. It is a good idea to have the two sectors regulated under the umbrella of energy. We have to consider the question of accountability. We must look at the relationship between this House and regulators. Until now the Minister was accountable to the House. Setting up regulators will mean they will be independent, with which I agree, but we will still need to have some form of accountability to this House, possibly through the Minister. The Minister should not be responsible for what they do but information should be available by way of parliamentary questions if it is required. The people are sovereign and we are here to represent them. If one were to survey 100 people how many would know what the electricity regulator does? How many citizens will know what this Bill is about and how it affects them? These are highly technical and complicated measures but there is a duty to educate the public about them. There should be an onus on the Minister and the Department to explain what the role of the regulators is and how they affect the public. That is not being done.

Members will not be able to get the information either because I am sure we will be told that the Minister will not be accountable to the Dáil on these matters. There is a distancing between these agents of the State and the citizens, and that is not good. Perhaps part of the reason the Nice treaty was not ratified was the distancing of certain arms of the State and the citizens. We should work to ensure that people know exactly what these offices do and present it to them in a straightforward and simple manner. A mechanism to inform and educate people about these offices should be established. It is not good enough that the offices are remote from the people even though they impinge on their lives. It is not fair on Deputies, who have to account to people, that these offices are not to be held accountable to them.

A number of bodies have been set up by the Government and the same thing could be said about them. We have tabled a number of amendments to Bills asking that such bodies be made accountable, for information purposes only, through parliamentary questions in the House, but the Government has consistently refused to allow that to happen. It has cited Dáil reform. We still await that and I look forward to reform which will enable us to get information on these bodies. I acknowledge that the Minster for Public Enterprise, Deputy O'Rourke, has been unusually generous at times in giving information when she was not required to do so. I hope this will continue when these commissions are established. If another Minister comes to office that might not happen. That is why we are so concerned that some change be made in the regime to enable us get the information we require.

I welcome the Bill. We have concerns about infrastructure around the country and areas that need development. We are also concerned about accountability and the consultative process. I look forward to addressing that on Committee Stage.

Debate adjourned.