Electricity (Supply) (Amendment) Bill 2004 [Seanad]: Second Stage (Resumed).

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

Mr. Ring

I wish to take up on three of the issues I raised yesterday. The purpose of this Bill is to give the ESB the power to raise further funding for infrastructure. I urge the Minister to ensure that infrastructure in isolated areas, where people are entitled to the same quality of power as everybody else, is covered. I compliment the ESB, particularly in north Mayo, Achill and similar places, on its investment in areas where there was a power cut every time there was a storm. It has spent money and put much needed infrastructure in place, on which I compliment it.

I raised the matter of the closure of Bellacorick power station in north Mayo. I urge the Minister to ask the ESB and Bord na Móna to stop destroying the bogs until the feasibility study on the project private individuals want to put in place there is completed. That project would create jobs and save the power station. A plan is in place and I urge the Minister and his Department to examine it before making any decision. Bord na Móna and the ESB employ many people in the power station, yet they are talking about closing it this year or early next year. The ESB is working out a redundancy package for its staff but the people would prefer to have jobs and be working. I hope the Department will examine the proposed project. I urge the Minister for Communications, Marine and Natural Resources, Deputy Dermot Ahern, and the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, to examine it and provide an opportunity for it to proceed before the bogs are destroyed. The project should be examined by the State agencies, the ESB and the Department. The State and Europe already subsidise jobs in the midlands so why can they not do the same in the west?

Each county council has now been given directions on wind farms. People want to invest and become involved in this new modern industry. The major problem facing them is the planning process. There is no doubt that due to the size of the structures required for wind farms, something must be done with the planning process. Every county development plan should be clear and each council should have a policy as to where wind farms will be acceptable and will not destroy local amenities or the beauty of an area. They should certainly be located away from people's homes. People must be protected because they were living in areas before it was proposed to locate wind farms there. However, if those farms can provide alternative and cleaner energy and can improve electricity supply, they should be considered. We must put proper planning in place so that we do not end up, as has happened in my county, with eyesores all over the place. In some areas the farms are fine, but in other places they are not. County councils must have a clear policy on the issue.

I was disappointed that after making substantial profits in the past two years, the ESB could not see fit to retain its shops in many places, especially in my town and county.

It could not see fit to keep people employed in these towns. They could not see fit, when many people were using their hire purchase schemes for electrical goods, to keep these shops open. The ESB currently employs contract workers brought in from England while getting rid of its own staff particularly in rural and isolated areas. I am opposed to this policy. I ask the Minister to ensure the ESB has the necessary staff in place, particularly in isolated and rural areas, so they are on hand in the case of a breakdown. To be fair to the ESB when emergencies occur in winter during bad weather, it has responded well and restored power promptly, for which I compliment it on a good job.

I wish to inform the Government that small businesses are sick and tired of stealth taxes. They are sick and tired of all the new charges and sick and tired of organisations like the ESB increasing charges when it wishes to raise some collateral. Such bodies go to the regulator and are given approval for a price increase. Both small and big businesses are finding it very difficult at present. They find it difficult to compete with the rest of the world and particularly with the rest of Europe. An increase of 5% or 7% might mean the difference between keeping people employed in small industries. Many small businesses do not receive any grant aid or support from the State yet any increase in charges takes away from the profits and denies the opportunity for investment in the business.

I know small business people who work not 38 hours a week but 38 hours a weekend and who are making a very poor living. They are the easy target and the easy touch. I welcome the big international companies who set up in this country. They employ people and that is good for the country. They are given grant aid from IDA Ireland and the Government and they receive tax breaks and are charged corporation tax at 12%. They have no difficulty being competitive. It is the small guy in the small area who is not able to handle these increases any longer. Last year the ESB applied for and was granted price increases on three occasions. The regulator had a job to do to make the market competitive. The market needs competition. The taxpayers helped set up the ESB and provided the resources and the money.

The ESB should have a social conscience particularly in respect of rural, isolated areas and for businesses in those areas. It has an obligation to provide a service for the people who need it most. If that was the attitude of Iarnród Éireann, there would be no rail service in the west of Ireland. The taxpayer has rescued all the semi-State companies from trouble in the past. The ESB must now provide the services for rural areas that may not have the same capacity as cities. Everyone is entitled to have the same quality of service whether they live in cities or in a rural area.

I have no problem with the ESB raising funding for infrastructure. I hope in the future it will not run back to the regulator. The person paying the interest on the borrowings will be the ordinary consumer with a small ESB bill. Those people will pick up the tab for the foreign investments.

The ESB bought a generator which was stored for years in a European country and was then sold at a loss. I ask the Minister to deal with that matter in his response. I will be happy to supply the Department with any further information it requires on that matter.

The Minister of State, Deputy de Valera, is in the House. I hope the Minister, Deputy Ó Cuív, will examine the project in Bellacorrick power station. Jobs can be created there. I ask the Government and the State agencies to give it a chance and to at least investigate whether it is a viable project. I ask that it be independently verified. We must stop breaking up the bogs until that decision is made. The peat is there. The information supplied by the ESB to Bord na Móna is not correct. There is enough peat there to keep Bellacorrick power station open for the next 25 years. What is needed now is the political will and the political commitment to keep jobs, infrastructure and power in the west of Ireland. Bellacorick has served its purpose in the past and I estimate there are another ten or 15 years left in it. The commitment was given to close down a number of power stations and to substitute them with two in the midlands in Deputy Cowen's constituency, and also to get subsidies from Europe and the Irish taxpayer. These subsidies and the infrastructure should be spread around. Bellacorrick should be kept open if at all possible. If the ESB is determined to close it, the alternative proposals made by private enterprise should be considered. If a project is viable, it should be supported by the State agencies. If it is not viable, I do not have a problem with that. However, it must be given a chance.

Mr. Crowe

I echo those Deputies who have indicated their support for this Bill. An increase in the borrowing limit available to the ESB is obviously necessary at this point and my Sinn Féin colleagues will be voting in support of the legislation. Along with other Deputies, however, I have a number of other major concerns regarding the current state of the company to which I will briefly refer.

The first of these has to do with the fact that while the ESB has had increased levels of profits over the past number of years, it has also imposed quite substantial increases on household consumers. While it is obviously good that a State enterprise is able to generate such profits and thereby disprove the theory that State companies are by definition always inefficient, this ought not to be at the expense of the consumer. As a State company, the ESB's domestic customers are in effect shareholders. Unlike the shareholders in private companies, however, they do not receive dividends although I am aware that the company has paid a dividend to the State which benefits us all if channelled into necessary public expenditure.

However, it should also be the case that the customers of the ESB should benefit more directly through not having to pay increased electricity bills. This is particularly important for the many people on low incomes who find it increasingly difficult to meet their bills.

This leads me to another issue in my constituency which the company and the Minister ought to investigate. A supermarket has a meter machine where consumers purchase tokens for their electricity meters. The machine is situated in an off-licence. I have contacted the ESB which informed me there are no guidelines for the location of these machines. I have written to the manager of the store and to the store's head office asking them to relocate the machine. Given that those who have a meter are people most likely to have had a difficulty paying bills in the past, this can often present a significant temptation for customers with alcohol-related problems. It is understandable that some find it impossible to resist. Instead of buying units of electricity, many are buying units of alcohol.

Members of Alcoholics Anonymous have asked me to help. Many of the customers are attending rehabilitation. I appeal to the Minister to use his influence with the ESB to ensure that meter machines are not placed in such obviously unsuitable locations. It appears that the machine is deliberately located at that counter. I may be hard on the management of the store but it seems that no thought was put into the location of the machine. Guidelines for the location of these machines are clearly required when they are placed in such obviously unsuitable locations.

Another issue which has arisen regarding meters is that the vast majority of the 20,000 meters have not been adjusted to take into account recent increases in charges. This means people who pay for electricity through a meter are accumulating debts. The reason for setting up the meter system was to facilitate people who were having difficulty paying their electricity bills. Now that the ESB has woken up to the fact that it has not adjusted meters, it will leave people owing money. I know of one case of a person who owes approximately €400, which is unacceptable. There have been many cases of people discovering they owe money. This can have a disturbing effect on those who have been struggling for years to pay bills and believed the meter system had overcome the problem, only to find themselves in debt again. People are asking what is the point.

The ESB should ensure meters are updated as a matter of urgency. A case can also be made that those whose meters have not been adjusted to register the increases should not be required to pay debts accrued through no fault of their own. The fault lies with the company and if it has awoken to the fact that it failed to pass on increased charges, vulnerable people should not be made to pay, particularly in light of its substantial profits. If the Minister has any influence, he should use it in this case. As I stated, the reason most of the 20,000 people affected use the meter system is that they experienced difficulties with payment in the past.

I was glad to note the Minister indicated opposition to the privatisation of the ESB. There should be no question of privatising the company. It is unfortunate that the Minister's defence of a successful State company is not shared by some of his Cabinet colleagues who appear to be intent on supporting vested interests in privatising other parts of the State sector.

On the issue of the ESB's finances, I draw attention to the fact that workers in the company are currently seeking wage increases. In common with other State employees, they believe they have been inadequately rewarded in recent years and that the current financial health of the company provides scope for reasonable increases.

I am disappointed the ESB does not have a substantial plan or proposals to invest as part of its funding package in eradicating the heavy duty masts associated with health concerns. The sterile lands in which the masts are located would be of considerable benefit to communities and should be developed for their use. Like me, most Deputies will be aware of such masts in their local areas. In my case, the lands on which masts are located in Kilnamanagh would be of significant benefit if developed for the local community.

On a more positive note, my party supports the ongoing involvement of the ESB in the development of an all-Ireland energy policy. To approach the provision of electricity and gas on that basis clearly makes political and economic sense. There are bound to be economies of scale involved which should lower the costs of providing these services to the benefit of consumers throughout the country.

Mr. Perry

From this debate and media reports, we are all keenly aware of the magnitude of the challenges facing the ESB. The company's current infrastructure investment programme is immense by any standards. I welcome this Bill which raises the ESB's borrowing limits to €6 billion, an increase that reflects the practical work the country's largest semi-State company must undertake to maintain and progress the modern economy.

One of the ESB's primary concerns is the development of the national network infrastructure on which it is spending in excess of €3 billion. We must have the capacity to develop industry in the west and I welcome the fact that the company is addressing the infrastructure deficit clearly evident in the west. It is long overdue and should be accelerated.

Although this is a small country, the level of work facing the ESB in renewing its network is vast. For example, the transmission system covers 2,500 km., the high voltage system runs to over 10,000 km., the medium voltage system covers 76,000 km., and the low voltage system is 60,000 km long. The scale of investment in infrastructure, some of which has been in place for 70 years, will be substantial. Given the growth of the economy, the increase in private housing and the peripherality of the regions, the ESB must have the cash and capacity needed to provide equality of service across the country.

The ESB serves 1.7 million customers and its new business is increasing at a staggering rate. I understand it installed 77,000 new customer connections last year alone, with approximately 80,000 new connections likely in 2004. This clearly indicates the scale of economic growth in the small business sector, about which I have considerable knowledge, and in connections to new houses, of which I noted a large number while canvassing in recent weeks.

Electricity is a multi-billion industry which is opening up to competition. With deregulation imminent, the necessary investment in infrastructure must proceed. This is particularly important in light of the circumstances surrounding the privatisation of Eircom, which is now unwilling to invest in the regions because it does not believe it is justified on the basis of return on investment. The ESB must, therefore, give a solid commitment on investment before deregulation proceeds and new entrants join the electricity sector. Investment is as important as competition.

The fact that the ESB will acquire a further 80,000 customers this year is an indication of the scale of its business and the profitability of the sector. It is important, however, given the remoteness of some connections, that parity applies as regards charges.

I am informed that the networks division of the ESB erects 500 poles each day at a daily cost of €3.5 million. While people may comment on the charging policy of the company, to which I will return, it is important to note the scale of development this semi-State body is undertaking.

In addition to responsibility for developing the network system, the company is responsible for the electricity generation business and for developing and modernising its portfolio of power plants. Six of its old peat-fired power stations have closed or are in the process of closing and will be replaced by two top of the range peat-fired power plants in Lanesboro and Shannonbridge, respectively. The new plants will burn the same amount of peat as the old stations but much more efficiently. While all closures are contentious and can be politically charged, businesses must operate in a competitive market. The benefits of these changes should be reflected in the company's efficiency and charges.

We live in a competitive economy in an enlarged Europe and new companies will enter the electricity market. As the Minister will be aware, job creation is a factor of companies' stacked up costs. If we are to attract investment, our charges must be among the lowest in the world. Modernisation and investment should ensure we have low electricity charges, a key driver of economy growth.

Our wage costs are high compared with the ten new EU member states. Ireland should have the capacity to attract new industry and it is equally important that the ESB's investment of €3.5 million daily to address the infrastructure deficit will pay dividends. Power stations should be efficiently run resulting in reduced charges. The ESB wants to close a number of power stations and open two new peat stations. The onus is on the company to state why this is happening. Who will benefit? For example, will this move only benefit the ESB's bottom line and increase its profitability? The consumer must also benefit as should businesses which create jobs.

The ESB faces immense challenges, including the opening up fully of the electricity market next February. From that date all customers will be able to choose their own supplier and a number of companies have entered the market in competition with the ESB, including Viridian, Bord Gáis and Airtricity. The ESB should have a business plan and it should outline what it contemplates doing to address the infrastructural deficit. The company should give an assurance it will not back-track on the plan and it will meet its commitment. It has stated the high voltage system should cover more than 10,000 km, the medium voltage system should cover 76,000 km and the low voltage system should cover 60,000 km. Parts of the current system are of a low standard.

Significant changes are taking place in electricity generation, particularly in Europe. The EU triggered a programme of liberalisation in the industry and the ESB must work towards a totally competitive market. The ESB is ahead of itself in regard to its obligations under the EU directive on market liberalisation. I work in an industry where the customer is king and value for money is important. Transparency in the market is also important and a cartel should not develop among the new entrants to the electricity market. For example, people are still looking for competition in the telecommunications industry. There should be no ambiguity regarding how the industry will operate from next February.

The ESB is fully supportive of the development of an all-island market. There is a trend across Europe towards regionalisation of the electricity market and the company has positioned itself accordingly. It is developing a power plant in Northern Ireland and this cross-Border dimension to the company's business is important. The development of an open economy in the Republic is also essential when it comes to electricity charges.

I am glad Ireland is committed to the reduction of sulphur dioxide emissions from the current level by 2010. The ESB has presented a proposal to Government to develop emissions control technology at Moneypoint so that the plant can remain in operation in the long term. The plant is of major importance in terms of production. It produces more than 20% of the country's electricity. A decision on the Moneypoint proposal will be made shortly and I hope the outcome will be positive for Ireland both economically and environmentally. I welcome the agreement of a best practice arrangement with workers at the plant on this important issue.

All these changes cost money. The ESB raised $1 million through a private placement in the US earlier this year. The company's borrowing will increase to almost €4 billion by 2008. However, it was a vote of confidence in the company that it could raise such an amount in the US. Its portfolio is good, it has 1.7 million customers on its books, a figure which is increasing by 80,000 annually and it made a profit of €250 million last year. It is important that the company should be competitive but it was granted a significant price increase of 14% recently. This was extraordinary and I hope the Minister will be slow to grant a similar increase in future. The increase has a significant impact on consumers and small businesses.

The ESB's closure of one third of its shops was another blow to rural Ireland on the part of a semi-State company. However, small businesses have been successful in the cut-throat retail sector. Brown and white goods are sold at tight margins and people do not appreciate how fine is the profit margin in this market. It has reduced to5%. The ESB has deemed the market unprofitable but small retailers who get little or no support are still expected to supply these goods.

Banks and post offices have also closed in rural Ireland and it has been suggested recently that Garda stations should close. The ESB should consider a partnership arrangement with small investors in towns where it has closed its shops. The ESB could offer an opportunity to business people who may have a good site to take on a tenancy with the backing of the company instead of closing its shops. This issue has not been examined and I hope the Minister will consider it.

Businesses face increased costs. Manufacturing industries, in particular, must cope with increased insurance, telecommunications and labour costs. High utility charges in Ireland act as a major disincentive for many companies to their continued operation in the State. Electricity and other energy sources are a key cost component for many manufacturing operations. The Government is content to allow electricity costs to spiral upwards oblivious to the consequences of such increases for hard-pressed businesses.

Deregulation of the electricity market is supposed to reduce costs and enhance choice but instead we have witnessed annual increases in energy costs for businesses and few new electricity generators. We have been presented with a farcical scenario where we have been told energy costs must be increased to encourage more competition in the sector. I hope that is not the case. One would assume that more competition would reduce costs, but I hope a cartel does not develop, with more competition leading to increased costs.

It appears we are levelling the playing pitch before new entrants come into the market in February and it is important to put down a clear marker for a semi-State company which is receiving a massive investment. That investment is welcome but the customer should not end up paying for this. Our economy faces huge challenges in an enlarged Europe, including Poland and other countries, with people entering this country, while there are also stealth taxes on rent, rates, telephones and electricity. There is no control whatsoever and the Government has totally disregarded its responsibilities to the backbone of the economy, small businesses.

Mr. D. Ahern

The Deputy is hoodwinking the people.

Obviously they do not.

Mr. Perry

We certainly do. The Government has disowned responsibility for stealth taxes and has to blame someone else.

Mr. Durkan

The regulator.

Mr. J. Higgins

This Bill seeks to raise the statutory borrowing limit from IR£1.6 billion to €6 billion. It is being pressed by the Government as an urgent project and while I have no desire to curtail the necessary activities of An Bord Soláthar Leictreachais, I have a lot of reservations about the Bill because of the current situation and the way in which the ESB is obliged to get funding in the world's financial markets.

The history of the ESB is a magnificent story in many ways. Over the decades tens of thousands of ESB workers supplied our society with a modern energy system. I remember the huge extension of electricity during the 1950s into my native area of west Kerry. I remember clearly the tilly lamp and lantern, on which we were entirely dependent, and our amazement when electric light was invented. I remember the equivalent of the migrant workers who came to dig holes for ESB poles, all of which gave us the modern facility we still have today. It was of course a State initiative. Capitalism as it had developed in Ireland, in a largely Fianna Fáil-dominated State, was entirely incapable of providing this necessary infrastructure. It is instructive to remind ourselves, in this great rush towards privatisation of our public services and deregulation, that the State, on behalf of the taxpayers and the people, had to come into the field to provide us with a nationwide electricity grid.

We see clearly how democratic socialism would work and will work in the future when it comes to the mobilisation of existing resources for the benefit of society. The Minister is part and parcel of the privatisation agenda and he can smirk and deride the idea now, but he should reflect on the history of the State. A series of critical services, not just electricity supply, had to be developed by public funding because such capitalists who existed were entirely incapable of doing so. They had neither the resources nor the know-how.

Taking that lesson forward into the future, many Third World countries cannot find electricity or clean water to drink at present. Mobilising their resources in a planned, public way would quickly resolve many of those problems. However, the whole thrust of Governments, including the Irish Government, is towards allowing the cartels of multinational corporations etc. to have a stranglehold on the provision of these services for super profits.

My reservation with regard to providing this large borrowing capacity is that the history of the semi-State sector over the past 30 years is that it has been used as a cash cow for major banks and financial institutions which have made massive fortunes from the levels of interest on borrowings which they have taken from the semi-State sector. A few years ago I had occasion to highlight in this House the example of the absolutely scandalous case of Nitrigin Éireann Teoranta whose borrowings in the 1980s and 1990s gave rise to a situation where, if I remember correctly, the interest paid hugely exceeded the principal borrowed at a certain stage in the late 1970s or in the early 1980s.

I notice from looking at the annual accounts of the ESB for recent years that there is a situation which should have been commented on by the Minister when he made his introductory remarks. For example, in 2000, the total interest payable by the ESB on borrowings was €49.9 million; in 2001, it was €45.1 million; in 2002, it was €46.8 million; and in 2003, it was €62.1. In four short years, a total of €204 million was paid in interest alone by an entity which is owned by the taxpayer. The Minister should have dwelt on why we have a situation where a semi-State company such as the ESB is allowed to be dependent to such a degree on private financial institutions when the result of that is a huge bleeding of resources out of the company which could otherwise be utilised in further investment, particularly looking forward, in investment in alternative energy and in alternative means of generating energy which will be critical for the future.

The Minister did not refer to the interest payment implications if the ESB finds it necessary to go up to its €6 billion limit which he proposes. It is completely unacceptable that a publicly owned entity, owned by the taxpayer, is held to ransom by the major financial institutions, whether nationally or internationally owned, as the case may be. The massive amount of interest paid every year, both in the national debt and in the more hidden repayments by our semi-State and publicly owned companies, makes a powerful case that the banks and financial institutions should be in public ownership so that we do not have this massive bleeding of our funds to further bloat the profits of international financial institutions.

The €204 million used to pay interest over the past four years alone could have been invaluable in the further investment and research and development possible in the generation of electricity. It is clear that the agenda of the Government is to move in the direction of privatisation of our electricity supply company further down the line.

Mr. D. Ahern

I have been clear on that.

Mr. J. Higgins

I have seen the Minister's statements in that regard, but it is scarcely 48 hours since the Tánaiste lectured us in general terms that the Government was not moving fast enough on the implementation of radical policies. I have no doubt that the speeding up of the privatisation of our public services is one of the policies——

Mr. D. Ahern

Not this one, while I am around.

Mr. J. Higgins

I am sure that at a certain stage, whether the Minister is incumbent, just as our telecommunications sector was privatised and is now the plaything of multinational and international financiers scamming, profiteering and speculating on what is a crucial national resource for our people, a Government of the philosophy of this Fianna Fáil-Progressive Democrats one will move in the same direction as far as our electricity generating industry is concerned.

Admittedly, the Government, after the shock delivered to it on 11 June, is somewhat like a beached whale. While we all would have sympathy with a beached whale, we would not have such sympathy with the Fianna Fáil-Progressive Democrats Government, especially when the Progressive Democrats tail has been thrashing around vigorously in the past 48 hours. I accept that Ministers from the Fianna Fáil element of the Government will perhaps be a little more cautious, although it remains to be seen. The little humble pie the Taoiseach has eaten and seems to have digested and the fact that he is moving on to business as usual should not give us great confidence that the neo-liberal agenda being pursued by the Government will be slowed down considerably. In any case, privatisation is one of the options but one which should be resisted.

In regard to electricity generation for the future, it is an area on which we should have a much more urgent discussion. Undoubtedly, with the population of this State having risen to close to 4 million and with continuing and extensive demands on electricity, there will be an increased demand for electricity generation. The means and methods of that generation raise many serious questions such as the amount of investment needed and the environmental implications. We have been moving in the direction of closing down generators which were damaging environmentally. Everyone wants to put in place a generating capacity which will have the minimal possible impact on the environment. Obviously, the generation of electricity by wind and wave is a controversial matter that must be discussed.

Undoubtedly there are difficult questions concerning striking a proper balance between what is necessary and the environmental and visual impact of electricity generation systems in scenic areas, their noise impact on local communities where that arises, etc. These are not easy questions. The use of gas in the generation of electricity needs to be studied. That brings into sharp relief the incredible scandal of the Government giving the entire Corrib gas field off the west coast lock, stock and barrel to a multinational gas and oil corporation on incredibly favourable tax terms with no royalties being claimed.

The putting in place of the electricity generating capacity in this State done by way of the mobilisation of public resources stands in stark contrast to how our gas resources have been given lock, stock and barrel by a Fianna Fáil-dominated Government, which continues to be the case, to a multinational oil company. The short-sightedness and crassness of that decision beggars belief when we will need the mobilisation of these resources into the future. They properly belong to the people and should have been maintained in their ownership.

Some 8,000 plus workers in the ESB have a tremendous record of dedication to the production of a crucial resource for us all. Their expertise and interest in this crucial public company must be utilised much more. The workers must be brought to the heart of the management of this semi-State company, as should the workers in other semi-State companies, to ensure that their commitment and expertise can be utilised fully as this company goes on.

Those workers must also be properly rewarded. This company is very profitable and it is therefore outrageous that increases in electricity costs for ordinary householders — one of the many stealth taxes over which the Government has stood in recent years — are being implemented and will place an added burden on many low-income families. That is deplorable in light of the buoyancy of the profits of the ESB. That company is in public ownership and it should operate from a public and social perspective with regard to how its services are delivered and the impact of the prices it charges. Regrettably that was not done with regard to the ESB's shops, but it should have been done. Many of the same principles that apply to An Post also apply to this company. It is not acceptable that a publicly owned company can operate in the same way as some private banks which have treated rural communities with great disdain and cynicism by closing local branches when apparently they have not contributed enough to the substantial profits these banking organisations make.

There are many questions regarding the borrowing policy of our semi-State companies that the Government does not want to examine. There should have been a projection forward as to the amounts the take-up of borrowing would entail. As I outlined before the Minister of State came to the House, the semi-State companies have been a cash cow for many financial institutions over the past 30 years. It is not good enough for the Minister to present us with a one-paragraph Bill stating that the possibility of borrowing is to be increased to €6 billion without outlining to us the cost implications of that, especially in terms of interest paid, which is a major drain on the resources of this company, as I outlined.

Dá bhrí sin, maidir leis an mBille do leasú alt 4 den Acht Leictreachais (Soláthar) (Leasú) 1954 agus do dhéanamh socrú i dtaobh nithe comhghaolmhara, ba cheart don Rialtas agus don Aire go speisialta teacht chun cinn chun an t-eolas a chur ós comhair na Dála maidir leis an chostas a bhainfeadh leis an saghas seo airgid a bheadh á thógaint ar iasacht ag an Bhord Soláthair Leictreachais. I ndáirire, nílim féin sásta a rá go bhfuilim i bhfabhar an Bhille seo gan an saghas sin eolais bheith ós ár gcomhair.

Chomh maith leis sin, ba mhaith liom go mbeadh polasaithe nua i dtaobh conas is féidir leis na comhlachtaí poiblí airgead a chur ar fáil do infheistíocht. Níl sé ceart ná cóir go bhfuil orthu dul amach sa margadh airgid idirnáisiúnta chun an t-airgead a fháil ar chostas uafásach. Cuireann sé in iúl dom gur cinnte gur cheart go mbeadh córas poiblí agus banc againn sa tír seo sa dtreo is go bhféadfadh ár gcomhlachtaí Stáit airgead agus iasachtaí a fháil ar phraghas a bhéadh an-íseal ar fad agus nach dtógfadh €62 milliún mar ús ar an airgead atá ar iasacht, cosúil le mar a gearradh ar an mBord Soláthair Leictreachais an bhliain seo caite. Caithfear an polasaí seo a athrú agus, dá bhrí sin, nílim sásta leis an mBille seo.

Mr. Murphy

While this Bill is necessary to ensure the ESB has sufficient funds to carry out its functions, that it is now urgent shows to a large extent that our overall energy policy is being mismanaged by the Government in the same way as many other major infrastructural projects. Ireland's electricity industry had a sound historical record of providing the country with reliable and reasonably priced power. However, with no political leadership or vision, this has changed dramatically in the past five years. Ireland has no energy policy and this Bill confirms that. Ireland's political failure to modernise the electricity system in a fair, open and forward-thinking way is a recipe for disaster.

We have an energy crisis and the Minister does not even realise the enormity of the problem facing this country. All that is happening in terms of this Bill is that the ESB is setting the Irish energy agenda and the Government is rubber-stamping that decision. The economy consumes an average of 180,000 barrels of oil every day. This is only 2% of the world's daily consumption of some 80 million barrels. However, our small share belies the fact that our economy is unusually dependent on oil compared with other developed countries.

In recent years, our consumption of oil has risen by 1.8% for every 1% GDP growth. This is three times the EU average of 0.6%. Ireland's annual oil consumption is set to rise from nine billion to 13 billion tonnes per annum by 2010. Oil dependent countries, such as ours, are more vulnerable to price increases than other EU countries. If we follow this pattern, a $10 per barrel oil price increase will reduce growth rates by 1% or more. That means that the increase in oil prices over the past 12 months could cost the economy €1 billion next year, and that is only if prices remain at their current levels.

Like the rest of the eurozone, Ireland is currently protected to a certain extent by the low value of the US dollar, so we do not feel the full effect of recent price rises. We have no protection from unforeseen events, such as another terrorist attack or another upheaval in the Middle East. The imminent peak in world oil production has serious implications for Ireland whose transportation and food production sectors, as well as power generation and industrial production, are almost entirely dependent on oil.

The Government should realise just how vulnerable our energy security and economic prosperity are. There is only one way oil prices will go at this point, and that is upwards. We have had numerous debates in the House about renewable energy, including Ireland's unique position to produce wind energy. The Minister has set targets which were ignored by the ESB. By now we should be producing up to 2,000 megawatts of wind energy, whereas we are only producing 200 megawatts. The ESB tells us, now and then, that in certain circumstances wind energy and other renewables will be too expensive, yet some of our European neighbours are producing up to 23% of their energy requirements from wind. Because of the lack of Government policy, the ESB will likely try to replace oil generation with gas generation, which will start our dependency cycle all over again.

The amount of natural gas is also limited. The countries that produce the most gas are those most capable of dramatically improving their economic performances in the coming decade — countries like China and Russia which will use their own gas resources to give impetus to their economic growth.

We need a comprehensive energy policy immediately, in addition to a portfolio of energy options carefully balanced to provide security of supply and some price stability. Energy security is fundamental to our economic growth, of which price stability is an essential element. As a matter or urgency we need to maximise our energy output from renewables, particularly wind energy. In the context of national security, the Minister must publish an energy policy and must prioritise renewables within that policy. He must realise that he and his Government colleagues have responsibility for overall policy. For far too long, however, the Minister has allowed the ESB to dictate such policy. There are various competing interests within the ESB, including those for and against privatisation. Whatever side we may come down on, the Minister's job is to ensure stable energy supplies at reasonable cost.

There is no doubt that the Minister has failed to liberalise the energy generation sector and to encourage competition with new players generating energy. On the other hand, the lack of a comprehensive policy, particularly for renewables, may mean that the current upgrading of the grid may not be the most appropriate or effective approach. The ESB's current market share of all generating assets is between 85% and 90%. The ESB continues to own and maintain the entire grid system, which should remain in public ownership. We do not want another Telecom fiasco whereby individuals make millions from infrastructure that was paid for by taxpayers and is then allowed to fall into disrepair. Public ownership of the grid is in the national interest but the more players involved in generation, the better value there will be for consumers.

Other issues need to be tackled, including planning, but the Minister does not seem to be in charge in this respect. He has assured the House that the introduction of SPAs would not prevent the building of wind turbines. Last week, however, An Bord Pleanála overturned a decision by Cork County Council, which had granted permission for 21 wind turbines. We are facing into an energy crisis but a body established by the Minister is ignoring the national interest and Government policy. An Bord Pleanála can point to the fact, however, that the Government does not have an energy policy and that a ministerial assurance to this House does not constitute such a policy. We are facing a national energy crisis and the best the Minister can do is introduce a Bill authorising the ESB to borrow and spend more money, with no policy guidelines to fulfil and no value for money audit. That is typical of the way the Government is mismanaging infrastructural projects in the economy.

Mr. Deenihan

I welcome the Bill, whose provisions will increase the borrowing capacity of the ESB. I join other speakers in referring to the cost of energy in this country. Last year, IBEC's small business association carried out a survey which revealed that one of the major problems facing Irish businesses is the cost of energy. The survey labelled the 12 major problems facing Irish business as "the dirty dozen". The cost of energy was ranked fifth on the list of major problems facing industry. Some 7.1% of respondents to the survey said it was the number one difficulty, while 72% of those surveyed said it was a major problem for the business sector. They pointed out also that in the preceding 18 months energy costs had risen by 21%, which is a crippling blow for many businesses, especially in the small firms sector.

When it was proposed recently that the ESB would increase its prices by 10%, the Minister said he would not accept it. The small industry association repeated its concern about such a proposed increase and stated that if the 10% rise was permitted it would represent an increase of 40% over the last four years. Energy costs should be kept at a competitive level. The current price of oil is giving rise to much concern and if it continues to escalate it will have major implications for energy costs here.

Added to the other hidden costs, it makes it difficult for small industries to survive and is making us less competitive. As other Deputies stated, deregulation and competition in the electricity market were supposed to help to reduce costs and enhance choice, but this has not been the case to date. I look forward to there being more operators in the market and greater competition in order for prices to stabilise.

I welcome the major investment by ESB Networks in Kerry North in the past three years which, by the end of this year, will represent a total of €17 million for the entire county. The capital investment has provided major employment for many people, including 65 ESB network staff and 165 contractors, and has also supported local suppliers. It is a welcome investment which has benefited County Kerry before other parts of the country. Given that the county is a peripheral one, it is important we have an up-to-date efficient network if we are to attract industry.

The work carried out in Kerry has considerably increased the efficiency of the network. For example, during recent high winds, I noticed that the same breakdown problems did not occur and elected representatives did not receive complaints because the network had been improved. The pre-existing network dated back to the 1950s and the time had come to renew it. The ESB must be supported financially if it is to re-invest in the network and, without this facilitating Bill, it would not be able to do so.

The efficient Oireachtas Library staff recently accessed for me a contribution I made in the Seanad on the Air Pollution Act 1987 about Moneypoint power station. I referred then to the need to invest in scrubbers at the plant but the ESB stated it could not make the investment because of the cost, indicating that the proper de-sulphurisation equipment for the plant would cost approximately £145 million. The figure was disputed by a German expert from one of the largest manufacturers of de-sulphurisation equipment in Europe who argued that it would cost approximately £40 million to install the equipment.

Unfortunately, since then Moneypoint has been a source of pollution, even though it had licences. Notwithstanding that, it must have had an effect on our environment and that of our neighbours because it increased by about 70,000 tonnes of sulphur dioxide the amount of pollution in the atmosphere. At that time it doubled the level which was being discharged into the atmosphere. However, since then the plant has been recognised as having high environmental standards and has enjoyed a strong environmental record.

The current integrated pollution control licence issued by the Environmental Protection Agency requires that emissions to the air of sulphur dioxide and monoxides of nitrogen be reduced from their current levels by 2008. For Moneypoint to achieve the required emission levels, air emissions control equipment will have to be installed in all three boilers, requiring a major investment by the ESB of the order of €250 million. The installation will enable the station to meet emission limits and operate beyond 2008.

I am glad to report that agreement was reached between staff and management at Moneypoint to begin the process to ensure that the Environmental Protection Agency licence can be granted. The ESB announced that a decision to accept the deal on cost restructuring and best international practice was reached on Monday. I welcome the decision and the fact that there is now a commitment to install the proper equipment to reduce the emissions and ensure the continuance of Moneypoint into the future because, not alone is it one of our biggest providers of energy, it is also a major employer in west Clare and north Kerry. If anything happened to Moneypoint, it would have a major effect on our energy output and on employment in the region.

In regard to a point made by Deputy Murphy, counties Clare and Kerry and the western seaboard have a great capacity to produce wind energy. Unfortunately, the policy being pursued by the Government is not encouraging for private operators, many of whom have planning permission but cannot compete with the more international players to get involved in the production of electricity. Although the Minister is not present, he should seriously examine the attractiveness of wind energy to co-operative groups such as farmers who could produce and sell electricity into the national grid. However, it is not working out at the moment.

We do not have the same planning problems in Kerry as have been experienced in Cork recently. Moreover, Kerry has a wind energy policy and a huge area in the north of the county has been designated as being suitable for turbines. However, there is no point in having an area designated and applying for planning permission unless it is attractive to people to become involved in erecting turbines and producing electricity. It is critical that the issue of wind energy is examined seriously. It should be reviewed and made more attractive to co-operative groups, not just companies. It is potentially a great source of income for the farming community and landowners along the western seaboard. I urge the officials to ask the Minister to address those issues when he replies to the Second Stage debate.

Debate adjourned.

Dáil Éireann debate - Wednesday, 16 Jun 2004

Electricity (Supply) (Amendment) Bill 2004 [Seanad]: Second Stage (Resumed).

Dáil Éireann debate -
Wednesday, 16 Jun 2004