Like many other Members I welcome the Bill. The decision to allow the ESB overall borrowing limit to increase to €6 billion, for which the Bill provides, is a relatively minor one. If the ESB is to strategically carry out what it should do in the next ten years, it cannot be hamstrung by the amount of money it can borrow. Therefore, I do not have a difficulty with that decision.
I have not had an opportunity to speak on the ESB for a number of years. I remember the fiftieth anniversary of the date of the company's first supply of electricity some years ago. It has been a wonderful company. It has a great safety record in an industry where the activities engaged in are far from safe. It has also been a good employer. Up to a few years ago I genuinely thought it was one of the best companies we had. However, something strange happened five to eight years ago. The ESB management always made great play of being able to strategically measure into the future, in so far as that is possible, the level of capacity it requires. It is close to breaking point at this time in the sense that the capacity it has and the peak demand capacity are almost one and the same. There is no room for anything to go wrong in any of the generating stations at certain times of the day or the week.
Somebody made a big mistake in terms of the investment programme for electricity supply, given that we had to import three major generators last winter or the winter before that to boost output. That is not the way in which a dynamic growing economy should strategically provide for its power base. I heard a major manufacturer say only a few years ago that one of the reasons that company could not locate a major industry in the west was the lack of volume of electricity it could be guaranteed, although I am pleased that deficiency has been rectified. As mentioned by a number of Members, a number of substantial new lines are being built into the west, but the position should not have been allowed to deteriorate to that level.
The ESB has a good international image. Today it signed a contract in Kosovo worth €8.8 billion. I am pleased about that and it is important for the image of the company. However, if the company has not been able to get the delivery of its service right at home, it is difficult to understand how it will get it right anywhere else.
It is against that background that another issue has to be dealt with by ESB senior management. I refer to the small line work carried out on the ESB poles throughout rural Ireland. I am old enough to remember when the ESB poles were erected. I do not know their projected lifetime but most of them were erected 50 years ago. This problem should have been detected ten years ago, or perhaps it was and nothing was done about it, but that is another story. The company now has to carry out major work in that area.
From an industrial point of view, the ESB is not doing well in terms of comparative costs of supply. Some of the figures would lead one to believe its cost base is high compared with other countries. I have a statistic which clearly shows the comparative international industrial price for electricity expressed in US$ or part of a dollar per kilowatt hour. Of a list of approximately ten countries, Ireland ranks second highest at US$0.077, Germany ranks highest at US$0.079 with France ranking lowest at US$0.037. That cost has severe ramifications for our competitiveness.
This leads me to the deregulation of the electricity sector. I understand that full deregulation will occur in 2005 but I am not too sure what that means. Does it mean that some operators will supply power only to larger outfits? Will it mean downward pressure on electricity prices for domestic consumers? In other areas, competition has worked dramatically well and I sincerely hope the same will occur in the electricity sector. In the case of Eircom, however, while there are other competitors, it appears that whoever owns the line is in control. I am not sure what sort of deal will emerge but I understand that the ESB will control and operate the power structure throughout the country. I have no problem with that because somebody must do it, but how will that impact on competitors who will have to purchase electricity? Will such competitors be given an opportunity to generate electricity? I do not think that will be the case, so from where will the competition come?
The ESB must have competition, and quickly. Last year, the regulator granted the ESB a 14% increase in electricity charges and I understand that we are not far from having another increase. At a time when inflation is so low, I do not understand why the ESB cannot introduce lower price increases. I accept that the company must introduce price increases because it did not seek or receive any for years, but how is it that, according to the grapevine, we may be faced with a further increase of 7% or 10%? If that is the case, electricity costs will have become extraordinarily expensive within a two-year period. There is a sense of rip-off Ireland about this. Are these price increases happening because not enough money was invested in the ESB's infrastructure and, all of a sudden, demand is outstripping supply? If the ESB cannot boost electricity generation, there will be a major problem, especially in the industrial sector, but it has not been made clear why such an increase in the price of domestic electricity units is needed. Nobody has convinced me that the ESB is entitled to the sort of increases it has received lately.
The Minister of State, Deputy Parlon, has made decentralisation proposals but I wonder how deregulation will work in the regions. Will there be an element of cherry-picking? Everyone will want to boost the supply for Dublin, Cork and Galway, but what about Ballinasloe or Ballina? In the course of canvassing last week, I came across a young couple who were living just half a mile off the main road. They had been told by Eircom that they could not get a new telephone connection for at least 12 months because they were so far from the main road. Will the same happen in rural Ireland when the ESB is deregulated? If so, we will have to watch the situation closely. The same thing has happened with the postal services, but I do not have time to debate that now.
Either the ESB's planning division identified what should be done and the Government did not agree, or the ESB did not manage to identify what should be done. One way or another, demand for electricity is rising every year. This year, the gap between supply and demand is tighter than ever. If that situation continues unabated for the next few years, we could have a major problem.
It is important to consider the mixture of fuels used by the ESB in generating electricity. I note that in the breakdown, gas accounts for 35%, coal 29%, fuel oil 21.8%, peat 11%, and the rest is just 1%. Wind power does not make that much difference to the general mix. I am an advocate of wind power for a variety of reasons, but some people involved in alternative energy in the west have been bitterly disappointed by the way in which their proposals have been treated. The average investment for a modern wind turbine is approximately €1 million, so one can easily calculate the cost of a wind farm featuring ten or 15 such turbines.
In earlier years, some people got a return on their capital having received planning permission and gained access to the grid. More recently, however, the situation has become worse because while a person may obtain planning permission against all odds and have a contract with the ESB, he or she may be denied the vital step of gaining access to the grid. It is undesirable and unfair for any Government or semi-State organisation to allow people to take a very expensive route, especially individuals or small groups with no large company supporting them, and then stop dead.
If we are ever to have a wind energy policy that works, guarantees should be given by the ESB that once planning permission is granted and the turbines have been built, the ESB will take the power. I do not refer to someone building wind turbines in Letterkenny expecting to be linked to a grid in Sligo. I am realistic enough to know that they must be close to the target grid. However, there should be a binding guarantee on the ESB to take such power supplies, although that is not the case. I do not know who is to blame, but whether it is the ESB or the Government, something has gone wrong.
The ESB's fuel mix to which I referred indicates that there is a major opportunity for wind energy. Having said that, I do not want to see any winding down of peat for electricity generation. It makes sense to employ a mix of fuels because when there is a problem with an oil pipeline in Iraq, for instance, one must have access to natural gas. When there are problems with gas and oil supplies, it is important to have access to coal.
When there are problems with coal and other supplies, it is important we have our own home-grown energy resources. No matter how we do it, such reserves will only represent a small proportion of what is required for the national grid but it is our insurance policy.
There was a great deal of talk about wind energy which has recently died off. The Government and the ESB must make up their minds as to what they want. We know wind energy will not be the cheapest fuel compared with others and if I was the managing director of ESB, I would have to take it into account. However, one can rest assured that whatever fuel is cheapest this year, it will not be so in five years' time, which is why we need a mix of fuel sources. It is within that mix that wind energy should take its place but it is not happening. Many people are angry because they have been let down to the degree that banks have foreclosed on them. They spent a great deal of money building wind turbines because they thought they had access to the national grid but that was not the case and the confidence has now gone from the sector.
Environmentalists in this House and outside it argue that we should not burn peat. However, I firmly believe in proportion and appropriate scale and there is always a case to be made for burning peat efficiently. Some of the Finnish technology which we use here burns peat efficiently and the emissions into the environment are a million times lower than they were. There is room for this activity in the coming years. One hopes that when the bogs begin to deplete, biomass and other sources will replace peat. However, it would be most unfortunate if a decision was taken not to burn peat in the power stations because it forms part of the mix to which I have already referred. It makes great sense to use peat for the next 15 or 20 years, provided the technology is the best in the world and the process is as clean as it can be.
There is no generating station in east Galway but there are bogs to supply the peat in Ballyforan which is part of the Derryfada group of bogs. Peat production has been slow to get off the ground. It was to provide a backup for the power stations in Offaly and Longford and we were told 80 people would be employed in the past two years but it has not materialised. I do not know what sort of tug of war is going on.
Nonetheless, peat can and should be used in the fuel mix because new technology brings it well within the environmental norms. I do not want to pollute the environment and I am satisfied the new technology will prevent power stations from unduly doing so.
Unusually, I have recently encountered fairly long delays in the ESB connecting houses to the network. I assume this is because there were more than 77,000 new connections last year but I ask the ESB management to ensure no one has to wait too long. It is a serious problem for young couples who, having built a house, taken a huge loan and paid money for other items, have to wait months for an ESB connection.
The EBS's decision to close all its retail shops was a wrong move. The company's retreat from many of the towns which were so good to it over the years is lamentable. It seems to have run away in the face of competition, which made no sense when the company was making a profit. The ESB lost many old friends as a result and, whether or not that continues to be the case, it was a bad PR move for the company.