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Dáil Éireann debate -
Wednesday, 19 Dec 2007

Vol. 644 No. 4

Other Questions.

Research Funding.

Deirdre Clune

Question:

60 Deputy Deirdre Clune asked the Minister for Communications, Energy and Natural Resources the reason only €960,000 was spent on the energy RTDI programme in 2007; the procedures that will be in place to report on the outcomes of projects funded out of the increased funding announced for this area in 2008; if he will provide a detailed breakdown of the allocation to ocean energy, including the amounts of funding to be allocated to wave energy and tidal energy; and if he will make a statement on the matter. [35425/07]

The main focus of expenditure to date in the energy RTDI programme has been the Charles Parsons awards. At the end of 2006, €7.9 million was paid out under the awards to the recipient projects for 2007, 2008 and 2009. The next tranche of funds under the Charles Parsons awards falls due in 2010. Payment will be dependent on the fulfilment of all conditions in the respective contracts with the third level institutions concerned. These include satisfactory progress reports each year on outputs and outcomes. I expect the Energy Research Council to submit the energy research strategy to me in early 2008, which will advise on priority research areas up to 2013.

The decision was taken in the autumn to redeploy 2007 energy RTDI funding to meet exponential demand under Sustainable Energy Ireland's programmes this year. This reflected in particular the success of SEI grant-aided schemes for renewable energy in homes and represented optimal use of the funds available under the research subhead. In the event, expenditure under the energy RTDI subhead is estimated at €515,000 to year end.

As announced on budget day, just over €13 million has been provided for energy RTDI in 2008, which includes significant new funding of €5.3 million for ocean energy research. The Government is committed to a significant investment programme to make Ireland a world leader in ocean energy. From 2008, targeted funding for research and development in ocean energy will help us to reach our ambitious target of 75 megawatts by 2012 and at least 500 megawatts by 2020. A fully integrated approach to ocean energy development will be underpinned by the establishment of the national ocean energy unit next year.

My understanding from the last time we discussed the RTDI programme was that it was being wound down. When €6.2 million was reallocated from the energy RTDI programme to the greener homes scheme, with which I did not have a major problem due to the explanation given at the time, I understood this was because most of the research funding in the energy area was to come through Science Foundation Ireland in the future. Less than €1 million was spent last year on the energy RTDI programme, which is why I am surprised to see an allocation this year of €13.2 million.

The Minister was very critical when in Opposition of the Government spending significant amounts of money on research and development without having the necessary structures in place to measure the performance and results of that research. Given that he is clearly planning to channel new funds through the RTDI programme, what structure has he put in place to measure progress and results in terms of research? We all accept research and development is necessary, particularly in the energy area, so we can try to bring ocean energy, whether wave or tidal, to a commercial stage as soon as possible. What measurement criteria are in place to ensure taxpayers' money is being efficiently and well spent?

The Deputy is correct in that there was a significant change in the programme for Government so that Science Foundation Ireland is due to take a much larger role and to build capability in the basic energy research area. There are additional new areas where I want to see research, perhaps not at a commercial level, as that would be more a matter for Enterprise Ireland, but at a level above basic level research. A key area in this regard is that of ocean energy research.

This is a multi-annual programme and therefore it is not necessarily for investment in 2008 or with a view to achieving immediate results. It is part of a four-phase programme which began in 2005 and will deal with the development of ocean energy from 2008 to 2010. This is moving to pre-commercial grid connectivity, which is where our spending will be concentrated with a view to moving ever closer to commercial application. The return we will see on this may not be delivered in terms of actual electricity produced until 2012 or later.

We are overseeing a multi-annual programme whereby we must invest now for the future. There are a number of additional programmes which I am looking to support and launch in the new year, many of which will come under the auspices of SEI and which may involve research in the construction or electricity networking and metering areas. These do not necessarily have immediate commercial application but involve research which seeks to push out new technologies in innovative ways. It is this range of different programmes that I want to help introduce with this budget.

Ocean energy is an area where we must further scale up from the level of investment we are considering here. This is just a first stage and it will take time to get the contracts and materials in place to spend some of the money available here. It will be a multi-annual programme which will require greater resources in following years as the level of investments that will be made will be very significant.

Electricity Grid.

Willie Penrose

Question:

61 Deputy Willie Penrose asked the Minister for Communications, Energy and Natural Resources the position regarding potential power outages in winter 2007 due to underperformance of aging ESB plants; if his attention has been drawn to the outages to date in winter 2007; if so, the details of same; if he is confident that there will be sufficient power supply this winter; the peak usage in winter 2006; the predicted usage in winter 2007; if he will compare the capacity in the system in winter 2006 and winter 2007; and if he will make a statement on the matter. [35629/07]

A critical task for EirGrid, as the independent transmission system operator, is the provision of an annual winter outlook report. The report provides each year an analysis and prognosis of national electricity generation capacity to meet expected demand over the peak winter months. The 2007 winter outlook report was published by EirGrid last August. Based on its analysis and on detailed engagement with all of the power generators, EirGrid forecasts that electricity generating capacity will be sufficient to meet demand this winter. This is in line with EirGrid's previous medium-term generation adequacy forecasts.

The report assumes a peak generating demand this winter of some 5,250 MW and this compares to the peak generating demand last winter of 5,035 MW. I have been advised by EirGrid that a new customer demand peak of 4,871 MW of generated electricity was reached on Monday, 10 December. The demand was met satisfactorily.

EirGrid also closely monitors the availability of generation capacity on an ongoing basis and provides monthly reports on generation availability levels. EirGrid has advised that some of the units at the ESB plants at Great Island, Poolbeg, Aghada and Turlough Hill have gone on forced outages and in all likelihood most will not now be available over the winter period.

Part of the Tarbert plant, recently on forced outage, has now returned to service and all of that plant is now expected to be available for the winter period. This scenario will result in reduced capacity margins compared with those forecast in the winter outlook report. Generation availability is undoubtedly of continued concern and EirGrid has highlighted the imperative for improved performance. However, the EirGrid analysis remains that the forced outages are broadly in line with probability assessments and, barring further unforeseen significant forced outages, generation capacity will be adequate to meet demand.

As regards outages to date this winter, I am advised that these localised occurrences were not due to a lack of generation adequacy or problems with the transmission system. They were caused by local faults on the low voltage distribution network system, which were repaired as a matter of urgency by ESB networks.

EirGrid advises that the total installed capacity is 6,245 MW, of which EirGrid expects approximately 5,700 MW of capacity will be available over this winter. This includes the new 401 MW plant at Huntstown which has been in operation since October. In addition, available generating capacity of up to 300 MW was imported in 2006 across the interconnector with Northern Ireland.

Additional information not given on the floor of the House.

The capacity to import from Northern Ireland remains available this winter. The contribution of renewable energy to electricity continues to grow. Connected wind capacity is expected to reach over 900 by year end. This represents a very significant increase of over 25% of installed wind capacity since the start of 2007. By 2009 the generation capacity from wind is forecast to reach 1,216.

EirGrid is working closely with generation providers to ensure available capacity is maximised and that the projected capacity margin between demand and supply for the peak period is ensured. EirGrid also operates a range of demand control measures to assist in managing demand at peak times, including working with large commercial users to reduce their demand. This is in the interests of ensuring that domestic consumer supply is maintained.

Security and reliability of electricity supply over the coming years is of paramount importance. The Generation Adequacy Report, recently published by EirGrid, assesses electricity supply and demand between 2008 and 2014. Improved availability of generating capacity and delivery of additional capacity will be key priorities over the period. Two new generation plants at Aghada and Whitegate are scheduled for end 2009, which will deliver capacity of over 800 MW.

The delivery to schedule of the 500 MW east-west interconnector, due by 2012, and the second electricity transmission link with Northern Ireland, due by 2011, will also significantly improve generation adequacy margins. There is also considerable investor interest in providing further generating capacity, both conventional and wind powered. EirGrid's assessment is that, as this investor interest is realised, in conjunction with improved generation availability and the infrastructure developments under way, supply will meet demand.

It is clear however, that energy efficiency and demand side management, including smart metering, will be increasingly critical to ensuring generation adequacy. Energy efficiency is a fundamental part of the Government's strategy to address security of supply as well as energy costs and environmental impact.

I thank the Minister for his reply. I certainly hope that EirGrid has got it right. There is some concern, however, that we have problems with old plant that have not been invested in. In addition, we have a phenomenon of forced outages that should not be occurring if we had the full, up-to-date modernised infrastructure that we need. It might help if the Minister advised his ministerial colleague, Deputy Ó Cuív, and made him aware of the situation. It would be no harm to do so. The Minister should also advise his other Cabinet colleagues about the importance of ensuring that the North-South interconnector is delivered. We cannot afford to have such infrastructure being unduly delayed at a time when we have clear knowledge that when money was not put into infrastructure and plant difficulties, including failures, arise. There is ongoing concern that we might not be able to meet the need at any point. I am sure the Minister shares that concern and therefore speedy investment is required in infrastructure, whether it is for the interconnector or power stations. I know the Minister is committed to the interconnector but, to put it bluntly, we need to hear from the Fianna Fáil Ministers in this respect.

I can update the House on some further information which I only received late this afternoon concerning winter demand. The demand peaked yesterday at 5,077 MW, which is expected to be the demand peak. They can be fairly accurate on measuring this because as the holiday season comes in there is a natural reduction.

It is all those lights.

The figure is an interesting one in that the earlier projection was that this year's peak would be 5,250 MW, so it is quite significantly below that. It represents a demand growth of less than 1%, which is encouraging. I agree with the Deputy's comments on the problems of forced outages we have had with older generation plant. One of the ways in which we can manage through a tight situation is by energy efficient demand management — that is, getting the same services for using less. This is the first time I have seen where the winter peak was significantly below what was being forecast. A 250 MW increase was expected but less than a quarter of that has appeared to be delivered, which is an encouraging sign.

I support the Deputy's comments on the North-South interconnector. As regards the importance of this grid development for the economy is that increasingly companies seeking investment opportunities——

The Minister should talk to them first.

——and locations will require a good network connection to ensure that they have electricity in any given system. There are difficulties for industries locating in the north-west because we do not have a very strong grid. Much of the reason for the development of this grid is to develop renewables North-South as well as providing a better balanced and more robust system, so that if there are outages it can withstand it. It will also support economic developments in areas where that is an issue at present.

Is the Minister concerned by private sector plans to build two 350-MW east-west interconnectors between Wales and Ireland? If the plans go ahead as scheduled, one interconnector will be delivered by January 2010 and the other by January 2011. Is he concerned, however, that that would make redundant plans for EirGrid's interconnector which is in the process of going out to tender? In that case, the latter interconnector may not be needed due to sufficient capacity from two such connectors plus an additional 500 MW one planned by the Government. Does the Minister have a preference for a privately or publicly-owned interconnector?

We have been examining the issue of an east-west interconnector for a long time, but it has been stuck in the planning process. We are now moving away from that process into the contracting process. I am confident that EirGrid will deliver that interconnector on time, under budget, and in a manner that is of long-term benefit to the State. Many of the complicated issues surrounding it are already being managed. There are difficulties not only on this side, including a foreshore licence and grid connection, but also on the far side in terms of grid connection.

That is not the question though.

My concentration is firmly set on delivering that east-west interconnector with EirGrid. Further interconnections may well be developed down the line but my job is to help deliver that one and I am confident we can do so. It will be kept within State ownership and will be run on a flexible system that allows us to export and import as is appropriate for the market. That is the key development I am looking forward to delivering.

Alternative Energy Projects.

Pat Rabbitte

Question:

62 Deputy Pat Rabbitte asked the Minister for Communications, Energy and Natural Resources the position regarding Ireland’s standing on each one of the targets on energy commitments (details supplied); the targets set for the year 2008; and if he will make a statement on the matter. [35606/07]

The energy policy framework and the Programme for Government have set renewable energy targets for the electricity, heat and transport sectors. In addition to contributing to fuel diversity and sustainability, these targets are critical to national, EU and Kyoto greenhouse gas emissions reduction targets.

We have set a target of 15% of electricity consumption to be generated from renewable energy sources by 2010, rising to 33% by 2020. The contribution in 2006 was 8.6%, up from 6.8% in 2005 and 5.2% in 2004. It is estimated that the 2007 contribution will be of the order of 10% with further incremental delivery in 2008. We now have over 1,000 MW of renewable generating capacity connected and over 500 MW with signed connection offers in place, which will ensure that we meet our target in 2010. I will be publishing the report of the all-island grid study jointly with my Northern colleague, Minister Dodds, early in 2008. The report will inform the investment and infrastructure decisions necessary to deliver on the 2020 target.

We have set a target of 5.75% market penetration by bio-fuels to 2010 and 10% by 2020. The introduction of the bio-fuels obligation in 2009 will require all fuel suppliers to ensure that bio-fuels represent a certain percentage of their annual fuel sales. Implementation of the obligation will require consultation and appropriate legislation. Fuel suppliers will also require time to make the necessary adjustments to meet their bio-fuels targets.

The obligation will build on the results of the 2005 and 2006 mineral oil tax relief schemes for bio-fuels, which saw a total of 18 projects being awarded excise relief between 2005 and 2010. The schemes were designed as interim measures to accelerate the level of bio-fuels in the fuel mix, in advance of the introduction of the bio-fuels obligation in 2009. They will underpin achievement of the 2% target next year.

In line with the European Union, we have set a national target of 20% increase in energy efficiency by 2020 with a more ambitious target of 33% energy savings in the public sector. We have just completed the public consultation process on the national energy efficiency action plan, which proposes over 60 actions to meet our energy efficiency targets. The action plan will be launched in early 2008.

The Government has also set a national target of 5% penetration by 2010 and 12% by 2020 for renewable energy heating. The greener homes scheme together with accelerated delivery of Sustainable Energy Ireland's renewable heat and combined heat and power programmes will directly contribute to achieving our target for the heating sector.

As I am conscious of the time constraints, I will focus on the 30% reduction in the public sector. Has the Minister examined the costs involved in bringing that about? He is talking about major efficiency in a sector where many buildings are probably not even up to basic standards. For example, many prefabricated buildings are used in the education sector. Is the Government providing a fund in the Departments of Education and Science and Health and Children, for example, to bring about that transformation? How much will it cost?

I must leave to attend a funeral following the Minister's reply. I wish everyone a happy Christmas.

I wish the Deputy a happy Christmas and a happy new year.

With regard to energy efficiency gains in the buildings area, it is the most beneficial, according to cost benefit analyses. It provides the clearest gain, particularly in the context of heating, because demand is consistent and it can be quantified on a building by building basis and reductions achieved. Although capital costs are incurred, the State can deliver efficiencies, gains and cuts in budgets and emissions in this area.

The national efficiency action plan was published on the Internet and was subject to public consultation during October and November. We are moving into the action phase. It will require Government action across all Departments and agencies to make sure we retrofit buildings and we lead the way in the public sector. On a building by building basis, we should ascertain the payback within a set number of years. If, for example, the payback occurs within five years, that will represent a good investment by the State and that would be the economic model to use to deliver efficiency gains.

All Departments are engaged in this process. For instance, the Department of Education and Science is examining every school. All public sector bodies are building a statistical picture to establish current energy use. That exercise will lead to an examination of how to reduce energy use in buildings with high energy use. It is a demanding target but it represents a significant opportunity rather than a cost.

Martin Ferris

Question:

63 Deputy Martin Ferris asked the Minister for Communications, Energy and Natural Resources his views on whether public funding and involvement in research into tidal and wave energy is adequate in view of the targets set for renewable energy sources. [35172/07]

The Government is giving major priority to investment in research technology development and innovation in ocean energy. Realising our wave and tidal energy potential is of strategic importance in support of our renewable energy targets, security of supply and carbon emission reductions. It also has significant overall enterprise development potential, in terms of innovation and economic activity. Ireland's geographical position is considered virtually unparalleled in the world with regard to wave energy. In addition, the tidal stream conditions in the Irish Sea are considered to be of considerable potential.

In the context of achieving our 2020 renewable electricity target of 33% of electricity generated from renewable sources, it is vital that we develop all the renewable resources available to us. While wind energy will be the major contributor to renewable energy growth, the potential for solar, biomass and ocean energy technologies must also be rapidly progressed. I am firmly committed to accelerating delivery of the ocean energy strategy starting in 2008. We intend taking a range of measures which will include clear market signals in the form of a dedicated technology support price.

As announced on budget day, we are providing €5.3 million for ocean energy technology and development in the 2008 Estimates. The funding will be used to build on the existing work under way by Sustainable Energy Ireland, the Marine Institute and the hydraulics and maritime research centre in UCC. It will also support the scaling up by the private sector. Pioneering work to date has already seen the emergence of Irish ocean energy development companies. The existing ocean energy testing site, which is located off Galway Bay has witnessed the successful testing of prototypes.

We need to ensure a significant scaling up by companies of technologies and businesses. The next stage is to demonstrate full scale pre-commercial development of these technologies. Investment in the necessary facilities to support commercialisation is critical to achieving breakthrough. Ocean energy worldwide is still at the developmental stage with no commercially viable or reliable proven technologies as yet available. In terms of research activity in the sector, Ireland is among the four lead nations in Europe alongside the UK, Portugal and Denmark. We are also working within the International Energy Agency's ocean energy agreement to benefit from collaboration on a wide scale. The €5.3 million made available for 2008 will significantly upscale the national investment in ocean energy. I will be announcing full details of the ocean energy package early in the new year.

Given the potential in this area, current investment is somewhat small. In particular, I refer to the Shannon Estuary, which experiences an 8 knot tide. Such a tide could allow for the use of reversible turbines to generate electricity and it offers huge potential. Does the Minister agree research facilities in University College Cork and the University of Limerick could be expanded so that practical experiments in generating electricity from waves and tides could be carried out on a wider scale? Is he satisfied that the timetable set out in the Department's strategy for ocean energy is on target? Is he confident, for example, that the pre-commercial grid envisaged in the strategy will be in place by 2010? What direct role, if any, does he envisage the State having in operating wave and tidal generating capacity?

I agree with the Deputy there is undoubted potential in this area to develop resources. The tidal potential is more localised. Wave power comes in along the Atlantic coast and elsewhere but tidal resources are more site specific and include areas that experience high tide speeds. This raises issues regarding the technology used and whether a tidal barge, which traverses an estuary, should be deployed, as it can lead to complications and difficulties, or whether open tidal systems out at sea are used. We will have to examine which is the best way to go.

I also agree with the Deputy regarding the enhancement of skills in the universities in Cork and Limerick and the Marine Institute. Facilities must be developed in areas close to the energy sources. People have taken a lead in the locations mentioned by the Deputy.

I am satisfied that the ocean energy strategy set out in 2005 is on target. We are moving into the next phase, which involves pre-commercial grid connected devices. That will require a range of different supports relating to grid connection and pre-commercial support prices, which will have to be tested. I am satisfied with progress in this regard but I would not become complacent. This is complex and certain technologies may not evolve. Our options must be kept open so that we do not miss out on a technological development that may occur.

The State's role is to leverage investment and to set up the regulatory environment, grid connection and price support systems but not necessarily to be the technological developer. That is not where the Government's expertise lies. It is more likely to lie within innovative new Irish companies emerging in this area. The State will support them but it will not be the lead developer. However, the energy expertise in existing Irish companies such as Bord Gáis or the ESB could be deployed in this area. Their engineering and electricity generation skills could be used to establish what could be delivered.

This is potentially an exciting area for Ireland. An allocation of €7 million has been set aside for ocean energy. A significant chunk of capital funding will be invested in advancing the wave energy prototype currently floating off the west coast. That is valuable and important work. How much capital investment does the Minister need to support tidal flow energy? My office has been contacted by one person who has done significant work on electricity generation from consistent tidal flow in an estuary. He knows a great deal about this because he provides statistics to the CSO regarding tidal flows but he has had a frustrating time trying to secure support from SEI for his work. Does the Minister have a preference for tidal over wave energy? The advantage of tidal energy is its predictability and consistency. Is one technology ahead of the other?

No.

We must keep our options open and monitor which technologies succeed. If we knew which technology would have the best commercial application, it would be an easy business, but no one knows that. We must support a wide variety of technologies, including wave, tidal and offshore wind, to ensure there is a connection with the ocean sector, through grid connections, and not to underestimate the significant potential that exists, which is probably closer to commercial application.

I cannot give details of what support schemes can be introduced until they are in place as to do so would pre-empt a process that must be engaged in on a proper basis. This is a start. Such provision will form part of a multi-annual programme and significant further incentives will be needed. It will be a part-funding or grant application to encourage or support other investment by the private sector in devices that are not quite commercial in that they must be tested. We will also examine investment by the State in testing facilities to help that process.

I will be brief. While I welcome the Minister's indication that funding will be made available, the amount of funding that will be required is ambiguous, to say the least, given the huge potential that exists and the knock-on effect such development will have for the State as well as for the security of resources. As this type of technology is only in its infancy, I would not like its development to be held hostage to the lack of funding. I would like to be assured of that. I thank the Minister in advance for his reply.

The Deputy has my assurance in that regard. Within wider Government circles, including in the Department of Finance and elsewhere, it is recognised that this is an area where potential exists. The scale of it is far from certain but we should not avoid the opportunity it presents. I said a number of times today that we will develop policies or schemes early in the new year and I hope to be able to launch one in this area then. It would give some certainty to the industry that it would represent a follow through, on a multi-annual basis, of further significant support to explore what we can develop.

Telecommunications Services.

Róisín Shortall

Question:

64 Deputy Róisín Shortall asked the Minister for Communications, Energy and Natural Resources his views on repeated calls for a functional separation of Eircom’s business rather than a full structural split of its network and its retail arms; his further views on how the consumer will benefit from the proposed split; and if he will make a statement on the matter. [35619/07]

John O'Mahony

Question:

72 Deputy John O’Mahony asked the Minister for Communications, Energy and Natural Resources the outcome of his examination of the discussion paper from Eircom on its proposals to separate into retail and wholesale arms announced by him on 11 October 2007; if he or his Department has engaged with Eircom on these issues; the outcome of such engagement; if engagement is planned in the near future; and if he will make a statement on the matter. [35482/07]

I propose to take Questions Nos. 64 and 72 together.

Since taking up office, I have met the chairman and chief executive of Eircom to discuss Eircom's plans for the future, including those for structural separation. Officials in my Department have also met representatives of Eircom to clarify some of the issues outlined in Eircom's discussion paper and I expect they will engage again with Eircom in due course. Eircom, as a private company, is entitled to implement the corporate structure that best meets its needs, provided that appropriate engagement takes place with ComReg on any regulatory issues that might arise in a separated company.

The roll-out of broadband infrastructure is a key priority of Government. Given the extensive network operated by Eircom in this regard, its investment and organisational plans are of major interest to me. It is, however, important to also emphasise the role of ComReg in terms of determination of the regulatory obligations arising from structural changes that Eircom may make.

Open access for service providers is critically important and ComReg's recent resolution of the outstanding issues around local loop unbundling is a welcome development in this regard. I am keen that we achieve the optimum level of an open access network.

The question as to whether customers will be best served by the functional opening up of the network or by a structural split between the retail and network divisions of the business requires detailed policy analysis. The European Commission has recently proposed the introduction of new powers for national regulators which will facilitate the promotion of functional separation where it is deemed necessary due to market failure.

My objective in this regard is to further Government policy and to protect the public interest so that new higher speed communications services are delivered at the lowest possible price. Any engagement on this issue will be in terms of what will ultimately benefit the economy by reference to underlying competitiveness and how the consumer will be affected.

I am glad another Member has joined us. I largely agree with what the Minister said on this issue. The most important aspect is for us to be able to ensure for the future that we have a network that is open and neutral in terms of allowing access to the existing infrastructure to enhance telecommunications capacity.

I understand that Eircom favours a full structural split between its network and its retail arm. If that is the case, does the Minister consider there is a potential opportunity for the State to buy back an asset that potentially it should not have sold in the first place? When he was in opposition he was critical of the sale of it in terms of ensuring open and neutral access to the network or is he satisfied that a properly regulated marketplace can sufficiently sweat the asset when there is no retail arm to influence Eircom's policy in terms of allowing open access onto the network? Does he agree that access to the Eircom network has improved significantly in the past 12 months, even though until then it was a significant problem in terms of unbundling local loops and so on?

I thank the Deputy for his comments. This is a complicated area given the market is rapidly changing, as are the technologies. The volume of data on the networks of the main operators in the State has increased by the order of 300% or 400% per annum. This is a rapidly changing area. Moving from voice to data services and arranging new data services will result in a very much changed industry in the next few years.

One of the crucial developments is to ensure that significant investment is made in our next generation networks. We cannot rely on existing technology, we must ensure significant investment is made to deliver our next generation of networks. One of the main drivers behind that process will be competition. If we do not make such investment, we will fall behind.

A related issue is that we must have a strongly regulated sector. Where we try to encourage an open access network, we must ensure there is real certainty across the board for different operators as to the developments of the network, the nature of the new technology to be delivered and the level of access. Regulatory certainty for other operators and for the incumbent is crucial to ensure that investment decisions can be made in a market that is complex. Those issues extend beyond the ownership issue of the network, be that State or private ownership. That is the first and foremost issue.

We must have a consistent and clear sense of direction, particularly for the main core access network to ensure other operators know the type of open operation that exists and what role they have to play in that regard. Such an open access network would benefit the incumbent. The volumes of transactions that can increase would lead to a stream of revenue that could result in it being a profitable business, which would be able to afford further investment. Strong regulatory pressure in the United Kingdom, which led to the opening up of the access network, has resulted in a significant increase in competition, one that has benefited the network provider as well as other operators.

Different questions surround the issue of opting for structural or functional separations. Structural separation has not been tried yet. We do not have an example of where this has been done elsewhere and therefore cannot cite an example of how such separation works. There are questions around the benefits that might derive from functions separation in having a retail arm and keeping pressure on a network company to make sure standards are maintained. In the regulatory system we put in place, whether there is functional or structural separation, we must ensure we do not introduce a rigidity into the system such that new technological developments would not then take place. In other words, we must ensure we do not have a system that is regulated in such a conservative manner to deliver a certain return that it does not allow for competition to function. This is a difficult regulatory issue, on the detail of which ComReg must work.

While we must be cautious and take due care to make sure that the regulatory system is right, we must also be willing to make bold decisions within a suitable timeframe. We cannot wait for many years to make decisions on how to proceed regarding the next generation networks. The industry is developing at such a speed that it requires us to make strong regulatory and policy decisions sooner rather than later. That must be done on the back of detailed analysis, examining international examples and consulting all the players here to ensure we do not discourage investment by other operators who have an interest in the whole market.

That is a "No" so I take it the Government will not consider trying to buy back the Eircom network should it structurally split from the existing company. I accept the Minister's arguments on the advantages of functional separation versus structural separation. In fact, in the UK functional separation has unbundled local loops to quite a successful degree. However, is there not the same rationale with regard to the ESB's relationship with EirGrid and the ownership of the electricity grid in terms of the argument for functional separation versus full structural split when dealing with the ownership of assets? This is not directly connected to the question being discussed but there is similar thinking from a policy point of view.

I do not believe I said "No" to anything. I am keeping all options open. I would not predetermine what the final structures or ownership structures might be for any company in the area. The one difference between this area and any other utility, be it water or electricity, is that there is a multitude of ways to deliver the service. Electricity will only ever be delivered down a wire and water will only ever be delivered by pipe. Telecommunications, however, can be delivered by means of wireless, satellite, fixed cable, DSL or fixed line telecommunication services. It is intrinsically different and is a far more fast moving and changing utility sector, which means there will be different solutions. There is no comparison between electricity and telecommunications or in the example the Deputy mentioned of the separation of EirGrid from the ESB.

That complexity and the fact that there are myriad ways of delivering services adds to the regulatory issues I mentioned earlier. We are facing a more varied system. A telecommunications signal will go through a variety of different sources in the connection between laptops. It may go from a fixed line to wireless or vice versa, on into a backhaul network, that might actually be owned by the ESB, and then connect to another operator’s network into an international system and into a server. Not only are there various different ways of delivering it, one may well get a voice message that goes through a variety of systems and, indeed, different operators’ systems.

In general, I believe there should be as open an access network as possible, where mobile networks are open and other operators use their networks to deliver certain services, where the fixed line network is opened and where a variety of different users use services in a flexible way. That will be particularly appropriate in this country because we have two different distinct markets, an urban one and a rural one. We will require a flexible response which suits the different characteristics of the two.

Before we conclude, I wish the Minister a happy Christmas. He has had a busy six months and I hope he gets a good rest and time with his family over Christmas. I am sure he needs it.

We all wish to be associated with the Deputy's wishes.

On behalf of the Government, I wish a happy Christmas to the Deputy, the Chairman and all the staff in the Oireachtas. It has been a long term and we all look forward to a break before returning in the new year.

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