Dáil Éireann debate -
Wednesday, 15 Nov 2006

Vol. 627 No. 4

Energy (Miscellaneous Provisions) Bill 2006: Report Stage (Resumed).

Debate resumed on amendment No. 49:

In page 18, to delete lines 3 to 10 and substitute the following:

10A.—(1) (a) In the interests of the proper and effective regulation of the electricity and natural gas markets and the formulation of policy applicable to such proper and effective regulation, the Minister may give such general policy directions to the Commission, as he or she considers appropriate, to be followed by the Commission in the exercise of its functions.

(b) Notwithstanding the generality of paragraph (a), such general policy directions may have regard to the following issues—

(i) security of energy supply,

(ii) sustainability of energy supply,

(iii) competitiveness of energy supply, or

(iv) such other matter which the Minister considers appropriate.".

—(Minister of State at the Department of Justice, Equality and Law Reform, Mr. Fahey).

Mr. Durkan

It is so long since we were here that I cannot remember the last sentence I put on the record. This amendment deals with policy directions to the commission. Amendments Nos. 49 to 56, inclusive, are being discussed together.

Amendment No. 50 proposes in page 18, line 10, after "functions" to insert "or arising from specific circumstances". My reason for tabling that amendment was to provide for the unexpected in so far as is possible. The Minister's amendment provides for policy directions to the commission. It states:

(b) Notwithstanding the generality of paragraph (a), such general policy directions may have regard to the following issues—

(i) security of energy supply,

(ii) sustainability of energy supply,

(iii) competitiveness of energy supply, or

(iv) such other matter which the Minister considers appropriate.".

My suggestion is to include the phrase, "or arising from specific circumstances". Specific circumstances can arise, such as those we experienced during recent weeks. When we last discussed the issue in the House, we were not aware of them. Gas and electricity prices were not an issue then but they are now. We as Members of the Oireachtas have little function. Due to the alleged independence of the regulator, the Minister has little function. This Bill will introduce a commission with similar powers and we will not know to what extent we can initiate a policy direction.

I fully appreciate the commission must have independence in its day-to-day activities and one cannot get involved in everything. However, a particular issue may arise about which we have little or no warning and which may have a wide impact across the board. In those circumstances it is necessary and should be possible to bring into focus an extra trigger mechanism, along with that provided by the Minister, to ensure it is possible to act in a situation where, based on what we have seen and heard to date, it appears we have no function. If nobody has any function and everything is handed over to a commission, the presumption is that the Oireachtas must wait until the commission decides to act on a specific request from the Minister. However, the Minister may not decide to take the necessary action at a particular time. He may decide to do nothing, which is his right, or it may be in line with Government policy not to do anything. It may not necessarily be in the best interests of the consumer, the economy or the wider public, however, so I ask the Minister to examine that amendment.

Mr. Broughan

We are taking amendments Nos. 49 to 56, inclusive, together, which deal with policy directions to the commission. I welcome a number of the amendments which the Minister has tabled. In amendment No. 49 he has gone a good bit of the road with the Labour Party as regards my amendment No. 51. The Minister's amendment states that

. . . policy directions may have regard to the following issues——

(i) security of energy supply,

(ii) sustainability of energy supply,

(iii) competitiveness of energy supply, or

(iv) such other matter which the Minister considers appropriate.

My amendment No. 51 specifies that "these general policy directions shall include targets for energy security, energy sustainability, energy and fuel poverty and retail and wholesale pricing". The areas that are still not specified are energy and fuel pricing. One of the big issues this winter, and in the run-in to the general election, will be the difficulty many households face with gas, electricity and heating bills generally. It is an overriding issue for the Labour Party, which must be addressed directly by legislation. It should not be left to the Minister for Social and Family Affairs and the Minister for Health and Children to devise policies to alleviate fuel poverty. Issues such as fuel and energy poverty should be at the heart of policy making. The Deloitte & Touche report noted that 20% of citizens suffer from significant fuel poverty, but such people should not be left to bear the brunt of fuel price increases.

Last week, I tried to raise in the House the issue of standing charges for gas. I asked the Minister why such charges had increased by 50% in the past year alongside gas price increases, despite the fact that the standing charge is not related to international fuel costs. This morning, I learned from the Irish Examiner, which included a fine investigative analysis of the matter, that An Bord Gáis has raised 5% of its revenue from this incredible standing charge increase. In addition, the Minister has imposed a 13.5% tax on top of that, so we have ended up with a €1,500 to €3,000 heating charge.

Today, I noticed the announcement of Irish entries for the annual Eurovision song contest, which is somewhat related to our portfolio. Deputy Durkan could almost compose a song about the reply I received to my parliamentary question, which stated:

I can advise the Deputy that, as the setting of charges falls within the statutory responsibility of the Commission for Energy Regulation, under the Electricity Regulation Act 1999 and the Gas (Interim)(Regulation) Act 2002, I have no function in the matter.

That is what the Minister told me in his reply which I finally received yesterday. Clearly, therefore, under the current legislation, he has no interest concerning these iniquitous standing charges which are being lumped on top of the other charges. As far as I recall, when the Joint Committee on Communications, Marine and Natural Resources interviewed the regulator he had no comment to make on these matters either. It is important for us to deal directly with a Minister when such directives are issued. I commend the Minister on having come a good part of the way with us in this regard but I do not see why fuel and energy poverty cannot be referred to in the text of the Bill. The regulator and his staff, the commissioners, the Minister's civil servants and everyone in the energy industry should be told that this issue affects 20% of the population and must be addressed. For that reason, I will be pressing amendment No. 51.

I welcome the steps the Minister is taking in tabling amendment No. 52 as regards placing the directive before the joint committee. My amendment No. 54 seeks to lay the draft direction before the Joint Committee on Communications, Marine and Natural Resources or the committee on energy and natural resources as it will probably be in the next Dáil. That would be an accountable and transparent way of allowing us to discuss the content of the Minister's concerns at that time.

I agree with Deputy Eamon Ryan's amendment No. 53 which seeks to extend the period from 21 to 31 days. I understand, however, that the Minister has extended the period, introducing a 30-day rule on submissions before he brings it to the commission. That is commendable.

On amendment No. 54, I am happy that the Minister has included our committee, which has done good work. It will be meeting again this afternoon. In amendment No. 55, I note the Minister has added an explicit provision whereby, under subsection (1) "... the Minister shall consult with that Minister of the Government prior to the carrying out of any obligation imposed on him or her under subsection (3).". This will be critical on issues such as climate change and global warming. We must have annual discussions on all such issues. In that context, amendment No. 56 seeks to establish national targets for renewable electricity and renewable energy in the coming decades. The aim of the amendment has appeared in some form or another over a period. It appeared, for example, in the Green Paper in which the Minister set targets for 2010 and 2030, which is a reasonable timeframe for energy matters. The Labour Party's policy also deals with renewable energy. Targets are always aspirational, however, and one cannot direct the market.

The recent report from CER dealt with Gate 2, which raised some interesting issues in the area of renewables. I have tabled a parliamentary question to the Minister for reply next week, concerning where overall renewables will be left when Gate 2 comes on stream. We have all agreed to a 2010 target in this area and it seems reasonable to have a 2020 target also. The Minister aimed at a 2030 target in the Green Paper. One may say that we should not be as prescriptive as this — in other words, putting particular dates into legislation. My amendment No. 56 includes the years 2010, 2020, 2030, 2040 and 2050. As was stated last week in our debate on the National Oil Reserves Agency Bill, long timeframes are involved in developing energy generation. Energy is a slow-moving vehicle resembling a large tanker or passenger ship which requires a lot of time to change direction. From the perspective of public policy, therefore, it is good to have some outline targets.

We have all noticed the current discussions on renewables. I know the Minister was not able to attend the conference on renewables in Ennistymon, although both Deputy Durkan and I attended it and spoke on behalf of our parties. Many people representing the wind energy sector were there. They were anxious to develop that industry, including interconnectors and anything else that would help its development and counter intermittency of supply. We also discussed other issues with the companies present, including wave power. In warm countries such as Spain and Israel solar generation stations are being developed to make the most of their long hours of intense sunshine. The Israeli energy Minister seems to be the expert in this regard. Passive solar, photovoltaic, PV, and many other technologies exist and we have all come to realise, none more than the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, that much of this represents work for the future. The energy research area is critical.

It is hard to say exactly what we will be doing in 2030, though the committee is planning a debate on nuclear power. Regardless, as I said to the committee and in previous debates, I felt we could set targets and review them every three years.

The leader of the Conservative Party in the UK has developed an image as a green leader and I suppose elements of the green philosophy are quite conservative. He has suggested an annual review of climate change and if he becomes Prime Minister he will have fixed annual targets for climate change and emissions. This is a serious debate in the UK. I am suggesting long-range targets on the renewables side and a review every three years. This would be helpful because it would give the Oireachtas and our successors in decades to come an opportunity to review this important question.

In the past I supported the Green Party Bill seeking annual reviews in the area of climate change and I feel this is a modest proposal. I welcome the Minister's attitude to amendment No. 49 and also to the Labour Party's amendment No. 54. I ask him to consider going the final mile on fuel poverty by putting it in legislation. I also ask him to consider setting targets, though they can be hard to meet.

Dr. Whitaker spoke of indicative planning targets when he started the first programme in the 1950s. One can seek 4.5% growth, 5% growth or even, as we have seen recently, 10% growth and more, but it may not be achieved. Similarly, while we are on the frontier of exciting, new renewable technologies, difficulties can arise. Nonetheless, I will press amendment No. 56 and feel it should be adopted.

Minister for Communications, Marine and Natural Resources (Mr. N. Dempsey)

As the Deputy said, the amendments before us deal with the direction to be taken by the Minister. This was well debated on Committee Stage and I indicated I would consider the points raised by Deputies. I have tried to incorporate those proposals and amendments as much as possible. I propose, therefore, to comment on my amendments Nos. 49, 52 and 55.

Amendment No. 49 addresses issues raised by Deputy Broughan during the select committee discussion. It identifies issues found under three headings in the Department's Green Paper on energy policy which the Minister may have regard to in any general policy direction given to the Commission for Energy Regulation, CER. It is not intended to be an exhaustive list as any Minister will require the necessary flexibility to meet a variety of competing regulatory and market issues and contingencies. Some, as the Deputy stated, might not be easily predicted at this stage. The issues mentioned, I believe, are sufficiently broad to meet most, if not all, contingencies. The issues raised by the Deputy — prices, fuel poverty and wholesale prices — are dealt with under the general heading of competitiveness. A competitive market means prices are kept to a minimum.

Amendments Nos. 52 and 55 follow from an amendment originally proposed by Deputy Eamon Ryan and from discussions that took place on Committee Stage. It is proposed to increase the minimum number of days within which representations may be made relating to proposed policy directions from the Minister to CER from 21 to 30. This requires the Minister to submit a copy of the proposed policy direction to the Joint Committee on Communications, Marine and Natural Resources for consideration. The changes to subsection (5) are consequential to those made on subsection (3) and simply make reference to the Minister's obligation under the amended subsection. The points raised by the Deputies in the majority of their amendments are incorporated in these and, if approved, the text of amendments Nos. 50, 51, 53 and 54 will fall as a necessary consequence.

Regarding Deputy Broughan's amendment No. 56, the issue of targets for renewable energy with an appropriate timeframe is addressed in detail in the Green Paper on energy policy. The Green Paper, or White Paper when it is published, sets out that reviews will take place every three to five years. The amendment as proposed by the Deputy would not work well, a fact he adverted to. Technology, energy sources, national and international issues and so on are constantly changing and evolving and can affect targets. It is better this not be included in legislation, particularly as 2030, 2040 and 2050 approach, because things change so much.

I assure the Deputy the Green Paper indicates energy policy will be reviewed every three to five years which has not happened in the last 30 years.

Acting Chairman (Dr. Cowley)

This stage has run over by two minutes. If nobody else wishes to contribute this will be the Minister's final point.

Mr. Durkan

I will come back in for the fun of it.

Mr. N. Dempsey

I will wind up at this point. CER's gas capacity statement and EirGrid's generation adequacy report project seven and five years into the future respectively. These are more realistic timeframes for us to deal with. There is no basis in reality for business plans that stretch 34 and 44 years into the future.

I have been as fair as possible in accepting the spirit of the amendments put forward by the Deputies and I ask them to accept the amendments I have proposed.

Mr. Durkan

I agree the Minister has gone some way to meeting the concerns of the Opposition and the section he has introduced is beneficial.

We must provide for the unforeseen and I am not sure that has been achieved in section 10A. As unforeseen events are likely to occur from time to time, my proposal in amendment No. 50 to insert the words "or arising from specific circumstances" would strengthen the section. With the best will in the world, the points on which the Minister may issue policy directions to the commission may not encompass all issues that could impact on the guarantee of supply or other matters associated with the energy industry. It would, therefore, be beneficial to include a reference to "specific circumstances".

Most of the other amendments in the group speak for themselves. On amendment No. 56, it is crucial to have a short, medium and long-term plan for the energy industry. This is precisely what Deputy Broughan's amendment would introduce and his proposal has merit. The Minister indicated it is impossible to have a 30-year plan. While I agree it is difficult to predict exactly what will happen over such a period, a long-term plan can be achieved by having a series of short-term plans and correcting them on an annual basis. This approach would deliver a streamlined, seamless plan which one could roll over every year. Most of our European colleagues have adopted this highly effective approach, which is similar to taking a lease.

Contracts for leases make provision for revisions, whether annually or every two or five years. Unless one has this type of continuity, it will not be possible to have the seamless process required to achieve the level of import substitution needed in the energy industry. Achieving this will be critical to whether Ireland complies with the Kyoto Protocol and makes progress towards self-sufficiency in energy generation. Not all the matters I have outlined are covered by the Minister's proposal.

Mr. Broughan

On amendment No. 56, when will the White Paper be published? Will it be available before the general election? I am trying to establish in legislation a requirement to continually produce energy reviews. As I noted, with the exception of the document on renewable energy produced during the term of office of the Minister's predecessor, energy moved off the radar for much of the past ten years and consumers paid the penalty.

Amendment No. 49 in the Minister's name proposes to include security of energy supply, sustainability and competitiveness as issues on which he may make policy directions to the commission. It also includes provision for directions to be made on any "such other matter" as he considers appropriate. I fail to understand the reason policy directions should not include setting targets in the area of energy and fuel poverty, as proposed in amendment No. 51.

In a recent report, the Economic and Social Research Institute appeared reluctant to build consideration of fuel poverty into pricing, although it referred to the matter. The Ministers for Finance and Social and Family Affairs must address this issue. In light of the bills and standing charges being imposed on unfortunate consumers — householders, particular vulnerable citizens and businesses — the Minister for Finance should increase the fuel allowance to €45 per week in the next budget. Many vulnerable families need at least this amount to keep their houses warm. One of the Government's most miserable achievements has been its refusal to increase the fuel allowance in most of its budgets.

Energy and fuel poverty is an important issue for our most vulnerable citizens, for whom public representatives have most responsibility and on whom deliberations in the House should be primarily focused. It should be included in some shape or form as one of the areas on which the Minister can issue directives to the commission.

Amendment put.

The Dáil divided: Tá, 69; Níl, 59.

Tá

• Ahern, Dermot.
• Ahern, Michael.
• Andrews, Barry.
• Ardagh, Seán.
• Blaney, Niall.
• Brady, Johnny.
• Brady, Martin.
• Brennan, Seamus.
• Callanan, Joe.
• Carey, Pat.
• Cassidy, Donie.
• Collins, Michael.
• Cooper-Flynn, Beverley.
• Coughlan, Mary.
• Cowen, Brian.
• Cregan, John.
• Cullen, Martin.
• Curran, John.
• Davern, Noel.
• Dempsey, Noel.
• Dempsey, Tony.
• Dennehy, John.
• Devins, Jimmy.
• Ellis, John.
• Finneran, Michael.
• Fitzpatrick, Dermot.
• Fleming, Seán.
• Fox, Mildred.
• Gallagher, Pat The Cope.
• Grealish, Noel.
• Haughey, Seán.
• Hoctor, Máire.
• Jacob, Joe.
• Keaveney, Cecilia.
• Kelleher, Billy.
• Kelly, Peter.
• Killeen, Tony.
• Kirk, Seamus.
• Kitt, Tom.
• Lenihan, Conor.
• McDowell, Michael.
• McEllistrim, Thomas.
• McGuinness, John.
• Martin, Micheál.
• Moloney, John.
• Moynihan, Donal.
• Moynihan, Michael.
• Mulcahy, Michael.
• Nolan, M. J.
• Ó Cuív, Éamon.
• Ó Fearghaíl, Seán.
• O’Connor, Charlie.
• O’Dea, Willie.
• O’Donnell, Liz.
• O’Donoghue, John.
• O’Donovan, Denis.
• O’Flynn, Noel.
• O’Keeffe, Ned.
• O’Malley, Fiona.
• O’Malley, Tim.
• Parlon, Tom.
• Power, Peter.
• Sexton, Mae.
• Smith, Brendan.
• Smith, Michael.
• Treacy, Noel.
• Wallace, Mary.
• Wilkinson, Ollie.
• Wright, G. V.

Níl

• Boyle, Dan.
• Breen, James.
• Breen, Pat.
• Broughan, Thomas P.
• Connaughton, Paul.
• Connolly, Paudge.
• Costello, Joe.
• Cowley, Jerry.
• Crawford, Seymour.
• Crowe, Seán.
• Cuffe, Ciarán.
• Deasy, John.
• Deenihan, Jimmy.
• Durkan, Bernard J.
• English, Damien.
• Enright, Olwyn.
• Ferris, Martin.
• Gilmore, Eamon.
• Gogarty, Paul.
• Gormley, John.
• Gregory, Tony.
• Hayes, Tom.
• Healy, Seamus.
• Hogan, Phil.
• Howlin, Brendan.
• Kehoe, Paul.
• Kenny, Enda.
• McCormack, Pádraic.
• McGinley, Dinny.
• McGrath, Finian.
• McHugh, Paddy.
• McManus, Liz.
• Mitchell, Olivia.
• Morgan, Arthur.
• Murphy, Catherine.
• Murphy, Gerard.
• Naughten, Denis.
• Neville, Dan.
• Ó Caoláin, Caoimhghín.
• Ó Snodaigh, Aengus.
• O’Dowd, Fergus.
• O’Keeffe, Jim.
• O’Shea, Brian.
• O’Sullivan, Jan.
• Pattison, Seamus.
• Penrose, Willie.
• Perry, John.
• Quinn, Ruairí.
• Rabbitte, Pat.
• Ring, Michael.
• Ryan, Eamon.
• Ryan, Seán.
• Sargent, Trevor.
• Sherlock, Joe.
• Shortall, Róisín.
• Stagg, Emmet.
• Stanton, David.
• Timmins, Billy.
• Upton, Mary.

Tellers: Tá, Deputies Kitt and Kelleher; Níl, Deputies Kehoe and Stagg.

Amendment declared carried.

Amendments Nos. 50 and 51 not moved.

Mr. N. Dempsey

I move amendment No. 52:

In page 18, to delete lines 18 to 28 and substitute the following:

"(3) Before giving a direction under subsection (1), the Minister shall—

(a) provide a draft of the proposed direction to—

(i) the Commission,

(ii) the Joint Committee referred to in paragraph 26 of Schedule 1 of this Act, and

(iii) any other person the Minister deems appropriate,

inviting them, in writing, to make representations on the proposal and specifying the period (being not less than 30 days from the giving of the draft to the Commission or such publication, whichever is the later) within which representations relating to the proposal may be made by them, and

(b) publish a draft of the proposed policy direction to the Commission, which shall—

(i) include details of the proposed policy direction, including the reasons

for giving the direction, and

(ii) specifying the period (being not less than 30 days from the giving of the draft to the Commission or such publication, whichever is the later) within which representations relating to the proposal may be made by interested parties.".

Amendment agreed to.

Amendments Nos. 53 and 54 not moved.

Mr. N. Dempsey

I move amendment No. 55:

In page 18, to delete lines 33 to 40 and substitute the following:

"(5) Where, in the opinion of the Minister, a direction which the Minister proposes to give to the Commission under subsection (1) relates or may relate to the functions of another Minister of the Government, the Minister shall consult with that Minister of the Government prior to the carrying out of any obligation imposed on him or her under subsection (3).".

Amendment agreed to.

Mr. Broughan

I move amendment No. 56:

In page 19, between lines 4 and 5, to insert the following:

"(2) That the Minister shall establish national targets for renewable electricity and renewable energy for the years 2010, 2020, 2030, 2040 and 2050 and set out these targets as policy directions to the Commission. The target will be also laid before Dáil and Seanad Éireann. These targets shall be reviewed by the Houses of the Oireachtas not more than every three years following the establishment of the targets.".

Amendment put and declared lost.

Mr. Eamon Ryan

I move amendment No. 57:

In page 19, line 7, after "electricity"" to insert the following:

"and to introduce a new definition: ‘Eirgrid' which means the transmission system operator".

This amendment, as with a series of amendments to follow, forms part of a range of amendments I am introducing to this Bill with the intention of providing for a much greater separation. In some cases this is legal ownership separation, but it also relates to definitions etc. between EirGrid and the ESB. That is increasingly seen as an essential development to ensure a competitive and open electricity sector.

Although it may not be of major consequence by itself in terms of setting the definition, we should, wherever possible in this and other Bills, look to separate EirGrid from the ESB to help us bring down prices of electricity and provide a more open and competitive electricity market.

Mr. Durkan

I support the amendment. It is in accord with many of our statements, particularly my statements on the independence of EirGrid. It should be independent not only in spirit but also in the letter to the extent that State control must be solidified so as not to end up in a similar position to the telecommunications sector where a monopoly exists. This is not in any way disrespectful to the ESB. It would purely and simply strengthen the whole concept of deregulation, with consequential benefit to the consumer, be they industrial or domestic. We must go that one step further. As Deputy Eamon Ryan has suggested, the more independent EirGrid is, the better. The Minister will probably ask how much more independent the body could be. There should be no relationship and it should be absolutely independent. It should be an entity on its own, having no roots or relationship with its former parent body, for want of a better description.

There are benefits to encouraging new entrants to the market, which is most important. Even if EirGrid is independent in the oldest sense of the word, there will be a certain suspicion among those who want access to the grid that the playing field is perhaps not level. It must be not only level, but seen to be so. It must be of such a nature as to be quite clear.

The grid has a number of jobs to do. It must guarantee security of supply, which is becoming more intricate as time goes by, as we have seen from the events on mainland Europe in the past couple of weeks. I would be very interested to know the Minister's feelings on the role of deregulation, and how effective it is and was in Europe over the past couple of weeks. Did it work all that well and are improvements necessary? To my mind, particularly as legislation comes from Europe in the first instance, it is less than amusing to note what has happened in the past couple of weeks. It is not the first time such an occurrence has come about — there has been a major outage on the European mainland before. Two years ago in the middle of summer, as a result of excessive use of air conditioning, there were major outages across Spain and Italy. These countries have been subject to deregulation and use the European grid.

As we are an island nation, we must treat the matter much more seriously than others. The integrity and independence of the grid is important. We should include the amendment to encourage the maximum number of participants into the marketplace of providing electricity and to ensure the grid is totally independent and capable of making decisions in the interests of the State. It will not necessarily play to the gallery. The amendment is well formulated.

Acting Chairman

Amendments Nos. 57 to 61, inclusive, shall be grouped together.

Mr. Durkan

We were a bit slow getting off the mark there.

Mr. N. Dempsey

They are all related.

Mr. Broughan

With regard to the three amendments tabled by the Green Party, amendments Nos. 58, 60 and 61, I have reservations about the formula. Amendment No. 57 is reasonable enough to include the definition of EirGrid as the TSO. My basic belief with regard to interconnectors is that they should be considered as part of the transmission system. That is the reason amendment No. 59 seeks to delete subsection (2)(a) of the 1999 Act. It relates to the exclusion of an interconnector, presumably owned by a third party, from being part of the transmission system.

The ESB should be maintained as a vertically integrated utility. The network should continue to be with the ESB and the interconnector would be an integral part of that. I am not of the mind to support the idea, which is related to the interconnector, that the board will be extended to EirGrid. The Minister has made a decision on this and it is perhaps history.

I would resist the attempt to break up the electricity network in such a way that we might end up with a number of companies owning networks and generators. It might be argued that EirGrid would not develop along those lines. I understand where Deputy Eamon Ryan is coming from with regard to maintenance of the network. That could be the start of a new network, which may eventually expand EirGrid's role to control the whole transmission and distribution network. I would be wary of beginning a process of dismantling our electricity company.

This is particularly relevant in the context of recent events where there have been a number of amber alerts. The problem associated with the introduction of competition is also an issue with regard to microgeneration. We do not want a situation where the distribution and transmission network will become difficult to manage or where it is manipulated by vested interests who would put issues other than the security of people's electricity supply as their key modus operandi.

I am easy enough with regard to amendment No. 57 but I have reservations with regard to it and to amendments Nos. 58 to 61.

Mr. N. Dempsey

Amendment No. 57 is not accepted because it is not required. EirGrid is defined in Statutory Instrument 445 of 2000 and it does not require to be further clarified in this Bill. It is the transmission system operator. The Deputy's amendment, like the other amendments, may be designed to make EirGrid the owner of the transmission system.

If I was starting out to design an electricity or a grid system for the country at this stage on a plain sheet of paper, I certainly would not design the one we have where the major utility company, the semi-State company, ESB, owns the transmission and distribution lines and most of the power generation. This makes it very difficult to introduce competition to the market.

EirGrid is independent of the ESB in its role and function. It may not own the transmission system but it controls it and this is important. There was a perception in the past that it was the downtown branch of the ESB. This perception may persist until it moves to its new headquarters and is physically separated from ESB because currently it operates from the same building as ESB. I wish to make it clear that since 1 July 2006, EirGrid has been vested as a separate company. It is in control of the transmission system and it has responsibility for the use of the system and for keeping CER informed about adequacy of supply to the best of its ability.

In those circumstances, the type of ideological hang-up that some people have of not transferring the actual ownership of the transmission lines to EirGrid, is very difficult to understand. The only explanation I can give is that there are people in the ESB, both in management and in the trade unions, who think the company may be privatised at some stage in the future and they will receive a big lump of money out of it——

Mr. Broughan

Others are bitterly opposed to privatisation, as the Minister knows.

Mr. N. Dempsey

——through their ESOT or something else. If people do not have that in their mind, they should not have any difficulty whatsoever about seeing the transmission wires go to semi-State companies completely devoted to a transmission system operation. There is no reason they should have any objection. It is very difficult to understand the kind of fixation some people seem to have about refusing to allow the transmission system go to a semi-State company to ensure it remains in State hands and can be operated in the best interests——

Mr. Broughan

The Minister could have done it the other way around and put the generation into another company.

Mr. N. Dempsey

——of all of the people who are the consumers and in the interests of competitiveness. However, we have what we have. I am quite satisfied that EirGrid as an organisation will act and control the transmission system in an independent fashion. They will do this in the best interests of the public and consumers and in the best interests of the economy and competitiveness. It is important to state in this debate that the ideological hang-up or the anticipation that somebody will get a big wad of money as a result of the transmission system being privatised, are both equally silly ways of looking at this.

Deputy Broughan referred to the number of amber alerts. This has nothing to do with the transmission system operator but has to do with the vertically integrated utility and its plant to which he referred, the availability of that plant——

Mr. Broughan

They were not allowed to build other plants.

Mr. N. Dempsey

——and minding what they have.

For many years various Ministers with responsibility for ESB and for power, decided not to sanction any increases in electricity prices to the ESB. We are now paying the price for this policy and must spend €8 billion to €10 billion to renew the whole system.

The other amendments are not accepted. They appear to have the objective of allowing EirGrid to own an interconnector which would be considered part of the transmission system. This text would not be consistent with the Electricity Regulation Act 1999 or Statutory Instrument 445 of 2000, as amended, which define the transmission system as being owned by the board of the ESB. The current text already allows for any person, including EirGrid, to own the interconnector which is not part of the transmission system. I made this announcement recently. They were progressing the development of the 500 MW east-west interconnector which on completion will be owned by EirGrid and this is facilitated by the text of the Bill as it now stands. EirGrid is independent and it controls the transmission system and it will continue to be independent in order to ensure the best possible service for consumers.

Mr. Eamon Ryan

I find the last part of the Minister's contribution very interesting. I accept the point that EirGrid may be defined in a separate statutory instrument. It is difficult when submitting amendments to take account of the full panoply of legislation. It seems the Minister is concurring with me when he states that if he were beginning with a blank sheet he would not devise the current arrangements whereby the assets of a supposedly independent transmission operator are owned by a generation and supply company. Perception is often an important factor in markets. Because EirGrid's assets are owned by the ESB, it cannot help but be influenced by the ESB and will therefore never be truly independent.

I understand a deal was done between the unions, Government and the company regarding the continued ownership of the ESB's assets. I agree with the Minister that this could only have been motivated by the developments in Eircom where a similar State-owned network was seen to generate a massive financial return for certain parties during privatisation. That this transmission network might bring a similar reward at a future point must have been the most significant reason for this agreement. There is no strategic or other business reason that the ESB needs to have such ownership.

Owing to the historical path, this is now something with which we have difficulty dealing. However, this is something new. It is a new interconnector that would allow us to operate in a different and open manner. I found the Minister's final comments to be of interest. Perhaps he will confirm that the interconnector we seek to construct between the east coast and Wales will be owned by EirGrid. Have I interpreted his comment correctly? Surely this legislation is contradictory. Section 8(2), which shall amend the 1999 Act, reads:

2A.—(1) An interconnector owned by the Board shall be part of the transmission system.

(2) Subject to subsection (3) an interconnector owned by a person other than the Board shall not be part of the transmission system.

How can EirGrid, which is statutorily defined as the operator of the transmission system, operate an interconnector which, under this legislation, is not part of that system?

The proposed amendments may require the Minister to make further amendments to the Electrical Regulation Act 1999 to bring them into effect. Judging by his comments, it can only be read that the Minister agrees with their intent. This is new infrastructure which does not have to have its ownership allocated under the terms of a deal done previously. Why are we not starting with a fresh sheet of paper? Why are we not bringing it in an independent direction that will assist competition and help reduce prices for customers? Why are we not taking this opportunity to copperfasten a certain amount of independence for EirGrid as the transmission operator? I contend that the Minister agrees with the sentiments of the amendments I am suggesting, but he is doing nothing about it, and I do not understand that.

Mr. Broughan

Deputy Ryan and the Minister are ideologically motivated and both are coming from a conservative philosophy. If one looks at the history of the ESB, it is probably the most historic and valuable State agency in the history of the State. One would have to say it has always been as much a transmission and distribution company as an electricity generation one. There was generating potential at Ardnacrusha and elsewhere, and water generated electricity was a huge component of our electricity supply when a good chunk of the country did not have electricity, and that was a recent as the mid-1950s.

The distribution and transmission elements and the workforce in the company could be seen as the heart of the ESB. At 5.20 p.m. yesterday, a time when none of us could respond, the Minister announced that the Cabinet had approved the Single Electricity Market Bill. As a single market takes effect, will the ESB's generation assets not be below 60%? Will the RSI index not get smaller and less influential as additional generation comes on stream? Will we not be left with the ESB as largely a transmission and distribution company?

A huge tranche of the Minister's party is Progressive Democrats-oriented and is happy in the embrace of the Tánaiste, Deputy McDowell.

Mr. Durkan

They are the devils within.

Mr. Broughan

We will call it "McDowellism", which happily will come to an end in the next four or five months. Those people have always wanted to privatise the ESB, lock, stock and barrel. Week after week one can read in journals like the Sunday Business Post constant demands that it be privatised. Northern Ireland has had that experience with Viridian. As I understand it, Viridian controls the network and generation. That has also been the case elsewhere. Therefore, one could turn it around and look at it in a different way from the Minister and Deputy Ryan.

Powerful forces within the Minister's party, not the Progressive Democrats wing but the Progressive Democrats heart of Fianna Fáil will hopefully submerge into oblivion in three or four months' time. Hopefully, the Fianna Fáil members who feel the same way will go the same way and we will have a different Government. One could say that EirGrid was set up in response to Brussels as a pretence that we are embarking on a particular road. Nevertheless, the Minister will still privatise the main company itself and smash it up. I am opposed to this. It will have negative consequences in the future. Other jurisdictions, such as California and other American states and European countries, have felt those consequences.

I do not know whether Deputy Ryan reads the British financial press, but there was a striking article in the Financial Times on Monday asking whether Scottish electricity will ever be British-owned again. Scottish electricity is now coming under non-British control. There are five or six major electricity players in Britain but they are being taken out of British ownership. This is the kind of vista we should be rightly fearful of in the future.

The Minister need not think that he is a cutting edge, hard decision-making liberal. He is not. He is representing some quite dark forces within his own party who have a harsh agenda. The Taoiseach had to get the former Minister for Finance, Charlie McCreevy, out of that office. He was told to leave the Department of Finance and if he did not go to Brussels he would have gone back to Kildare.

Mr. Durkan

Then I would have had to put up with him.

Mr. Broughan

That is exactly what he was told and the Minister knows it because he watched it happen.

I do not agree with the privatisation and breaking up of the ESB. The company has served the nation with distinction throughout its history. It will probably end up belonging to E.ON or Centrica. While this may not be the Minister's agenda, it is that of certain people in his party. It is a conservative and reactionary agenda and I am opposed to it. These amendments point us in that direction and are therefore dangerous.

One can look at the ESB as primarily being a transmission and distribution operator. The Minister could have followed that model but chose not to do so. I wonder why.

Debate adjourned.

Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.