Priority Questions.

RTE Funding.

Simon Coveney


1 Deputy Simon Coveney asked the Minister for Communications, Energy and Natural Resources the discussions he has had with RTE in relation to funding difficulties over the past 12 months; the outcome of such discussions; and if he will make a statement on the matter. [24368/09]

I have met representatives of RTE on several occasions in the past 12 months. We have discussed a wide range of issues, including the current economic climate and the impact it is having on RTE's funding difficulties. RTE, as a dual-funded broadcaster, is heavily dependent on commercial revenue, of which advertising revenue is the primary component. RTE, like many other commercial organisations, has been subject to a significant decline in its commercial income in the latter half of 2008 and throughout 2009. I understand from RTE that following a satisfactory start to 2008, its commercial revenue fell sharply in the second half of that year. RTE's commercial income amounted to €239.9 million in 2008, compared to €245.5 million in 2007, representing a decline of 2.25% for 2008. It was clear early in 2009 that RTE's shortfall in commercial income was continuing at a rapid pace as the adverse domestic and international climate took a firmer hold. RTE is not alone in facing such problems. Along with officials from my Department, I meet the various interests that comprise the broadcasting sector from time to time. All commercial, independent and public service broadcasters face difficult and challenging times. They will need to manage their day-to-day operations as carefully and prudently as possible. RTE has put in place a package of cost-saving and efficiency measures. It is taking steps to address the significant shortfall in its commercial revenue. While the nature of these measures is an operational matter for RTE, I am satisfied that RTE is endeavouring to deal with its financial problems in the most prudent manner possible. I will continue to liaise with the RTE Authority and RTE management on an ongoing basis on issues, including the financial situation in the organisation.

I thank the Minister for his response. In 2007, did the Minister receive the Indecon report on costings within RTE that was referred to in last weekend's newspapers? What actions did he take, or insist that RTE take, as a result of the recommendations in that report? I understand the Indecon report indicated that Ireland's national broadcaster had higherper capita staffing costs than the BBC, and that the gap was growing. It suggested that the station needed to develop a corporate commitment to cost savings. It criticised RTE’s failure to undertake any formal benchmarking exercise over recent years, whether by comparison with public service broadcasters outside Ireland or commercial broadcasters in Ireland and elsewhere. It pointed out the obvious fact that 50% of RTE’s costs can be attributed to staffing costs. It said that while other public service broadcasters, like the BBC, were successfully introducing ambitious systems to reduce staffing costs, the opposite was happening in RTE. A series of warning signs should have been noted by RTE and the Minister before the downturn and the subsequent collapse in RTE’s advertising revenues. Did the Minister act on the recommendations in the Indecon report? He said he has had a number of conversations with Cathal Goan and others in RTE. Were those conversations influenced by the independent report I have mentioned?

I received the report in November 2007. I acted on it by sanctioning a television licence fee increase. The report mentioned that a five-year plan, including measures of performance, was set out after RTE's licence fee revenue increased significantly in 2002. The station had to reach certain hours of programming, for example. The report stated that although the plan had been successful in increasing the production of home-produced output, for example, RTE needed to go further.

We needed a metric of performance in RTE that first measured the quality of content not only simply in hours of output but in detailed metric analysis as to how it met its public service obligations. Second, we had to measure the efficiency or the effectiveness with which RTE delivered such programming on the basis of the measures the Deputy mentioned, namely, performance compared to other countries in terms of RTE's flexibility, efficiency and cost efficiency. We wanted a new measurement system in RTE on quality and effective flexibility to achieve savings within the operation. To achieve that we appointed PricewaterhouseCoopers in March 2008 to work with RTE to examine how we would develop that new metric of performance and efficiency within the organisation. That work was ongoing and is now completed. We are now assessing the 2007 and 2008 accounts on the basis of the original five year measurement system, but from 2009 onwards we will apply this new assessment method to establish how efficiently RTE is working and what is the quality of its programming.

Is the Minister happy that just fewer than 150 people in RTE earn more than €100,000 a year? Seven or eight people in the organisation earn more than €300,000 per annum. Is that appropriate for an organisation the size of RTE? Perhaps it is, I do not know, but it is my job to ask those questions when RTE is currently under significant pressure financially and that pressure is being added to by the increased responsibilities in the organisation that will arise from the Broadcasting Bill and in particular from the DTT service.

I would like to recognise the vote among unions in RTE to introduce wage reductions, which involve significant sacrifices for many staff members. That was not an easy decision and it is important to recognise that.

I also recognise that decision by RTE unions, which was not an easy one to take to provide savings. In that consideration process, the rate of pay across the organisation was a central issue, but I am not going to intervene and micro-manage its payment structures.

Even with the efficiencies that we have introduced and the new ways of measuring that, it is clear that RTE in the current downturn, like all other broadcasting companies, will have to make difficult choices to make savings to make up for the loss of commercial revenue. They will have to be in pay costs and other non-personal operation costs, which is happening. It already made significant savings early this year. Decisions will have to be made on other one-off items to achieve savings. That is not an easy task, but at least it is starting off on the right foot in that both unions and management have agreed the broad principles in terms of the pay related issues.

Consumer Protection.

Liz McManus


2 Deputy Liz McManus asked the Minister for Communications, Energy and Natural Resources the protection there is for consumers from scams in regard to premium rate services, particularly subscription services targeting children in view of his failure to publish legislation and of the failure of Regtel to act effectively; when the Communications Regulation (Amendment) Bill 2009 will be published; the way it will ensure proper regulation; and if he will make a statement on the matter. [24318/09]

In accordance with its current remit, Regtel is independent in its functions and oversight is exercised by the Regtel board. At present, premium rate services are regulated in accordance with contractual arrangements between Regtel and the service providers and by means of a code of practice to which all service providers are obliged to adhere. In addition, Regtel provides advice to consumers and recently launched a major education and awareness campaign, the STOP campaign, to alert consumers to the negative aspects of subscription services and how to unsubscribe from these services in an easy manner. Information on Regtel's code of practice, including the sanctions available for non-compliance and their awareness and advice campaigns, can be viewed on their website

According to Regtel, the majority of premium rate service providers operate within its code of practice. There are, however, a small number of non-compliant providers in the sector whose activities have brought the sector into disrepute and who have undermined public confidence in the regulation of the sector. It is the activities of these operators that must be the target of stricter regulation and enforcement.

I have prepared a draft Bill for the purpose of transferring the regulation of premium rate services to ComReg and to provide the necessary enforcement measures for the more effective regulation of the sector in the interest of consumer protection. The draft Bill has been recently circulated to all Departments for their observations. I expect to submit the draft Bill to Government for approval, to publish it shortly and to have it enacted as soon as possible thereafter.

The actions I have taken have been aimed at ensuring a robust and timely response to those service providers who continue to flout the rules and mislead consumers. The transfer of the regulatory function to the ComReg and the strengthening of the regulatory regime has been the subject of extensive consultation between my Department, ComReg and Regtel and with the industry. Many issues had to be considered and teased out to ensure the necessary tools and resources are available to ComReg to effectively regulate this sector and to protect users of these services. I believe the Bill, which is due to be published in this session, will achieve that objective.

I thank the Minister for his reply. He must be aware this issue is a problem. It may involve only a small number of operators who are carrying out what are essentially scams but thousands of people are affected by them. Will the Minister accept that he needs to ensure the proposed Bill will be of the best standard in terms of regulation if it is to work, given that Regtel has been operating for some time and yet problems still persist.

Will the Minister publish the draft Bill before it is introduced in the House? I urge him to ensure there is some form of public consultation on this issue. Will he advise what protection there is in the Bill for the consumer? I understand there is provision in the Bill for the levying of fines on operators but that the current procedure where consumers are refunded money they are owed is not included. I urge the Minister to note that this is about consumers primarily and that many people have suffered considerable losses, some small amounts and others large amounts. Is he aware, for example, that the last annual report of Regtel indicated a payment of €179,000 was made to consumers in regard to an operator? Can he guarantee that in the Bill he will provide for a facility to refund customers who have a genuine complaint, as the people concerned are essentially being ripped off by unscrupulous operators?

I agree with the Deputy that this is a serious issue. What drew my attention to it and to amending the law on this issue was the volume of complaints received. In 2007 to 2008 some 21,000 people sought to unsubscribe to services and more than 6,000 direct consumer complaints were made. If one receives that level of public complaint, there is a serious problem concerning an issue. Part of the problem is that there is not sufficient legal protection or legal enforcement and that is what will be addressed in the Bill. It is on the A list of the Government's legislative programme and is to be published this session. I still expect we will be able to do that subject to Cabinet approval. That allows us the summer for any other bodies to consider it before it will be introduced in the Dáil to be enacted.

The Deputy is right in what she said. I will not go into the details of the Bill before it is published. We are seeking to ensure there is provision in the Bill for the imposition of significant fines, real powers and, crucially, codes of conduct for operators to ensure the refunds the Deputy mentioned are effectively delivered. This is important legislation covering an issue that annoys many people. Such practices involve a financial loss for them that is often daylight robbery. We have to stop that.

I want clarification on this matter. The Minister mentioned fines which would be levied on the operator. What I am talking about is refunding the consumer for his or her loss. Is the Minister saying there is provision in the Bill specifically for consumers to receive refunds? It is not satisfactory to expect people to go to court to achieve their rights. Refunds are currently being paid back to consumer by way of Regtel. Is that specific provision included in the Bill? If it is not, and if the Minister does not want to publish the Bill before it has done the rounds, will he ensure that provision is included in the Bill?

A recent High Court challenge by Realm, a company with a non-compliant reputation, to a Regtel adjudication against the company resulted in an out-of-court settlement in which the company agreed to comply with Regtel's code of practice to refund consumers and to reimburse Regtel for expenses. It is our intention within the Bill to have the facility for customers to be refunded, but we need to get the Bill approved by Cabinet first before we go into the detail.

Is that provision in the Bill or is it not?

I cannot discuss the Bill until it is through Cabinet, after which we can publish it in the House and then go through its full details.

Energy Prices.

Simon Coveney


3 Deputy Simon Coveney asked the Minister for Communications, Energy and Natural Resources when he will change the regulatory model for gas and electricity prices at a domestic household and small business level to facilitate direct price competition in a effort to bring prices down; and if he will make a statement on the matter. [24369/09]

In 2006 the Commission for Energy Regulation, CER, ended the regulation of tariffs for large energy users. Some 90% of large energy users have now switched to independent suppliers. The CER has signalled that it intends to cease regulating ESB public electricity supply prices when sufficient competition has taken hold in the domestic and small and medium enterprise market. This is in line with EU legal requirements for the internal energy market.

In recent months domestic customers have been switching to independent suppliers in unprecedented numbers, thereby availing of the significant discounts available from these suppliers. However, it is important to note that there are close to 2 million domestic electricity customers and that the ESB still retains approximately 90% of the market share. The ESB also retains a market share of approximately 43% of the SME market. I am advised that discounts of between 10% and 20% are available to SMEs from competing suppliers and I strongly encourage small businesses to shop around in the interest of obtaining competitive quotations.

Energy price regulation is designed to ensure that a dominant player does not engage in uncompetitive short-term pricing practices which could undermine or drive out emerging competition. Regulation should cease once competition has taken firm hold in the domestic market. The ESB's tariffs are set by the CER at a level that reflects the costs borne by the ESB in supplying that electricity. Effectively, that means that if it can lower its legitimate costs the regulator will permit it to charge a lower tariff. What is not permitted under the regulatory model is below-cost selling of electricity or other anti-competitive practices.

The CER has also exited from the regulation of gas tariffs for large users. In that sector around 88% of business, in volume terms, has switched to independent gas suppliers. The gas market has been fully opened up to competition since July 2007. Experience in other markets has shown that there is a time lag between full market opening and the emergence of viable competition. The potential for ending tariff regulation in the domestic gas market is limited by the size of the Irish market, which is very small by international standards. Of the companies that supply gas in Ireland, Bord Gáis Energy has approximately 600,000 residential customers, while Flogas has approximately 9,000. Neither Vayu nor Energia currently supplies residential customers.

Additional information not given on the floor of the House

Bord Gáis Energy also has a dominant market share in the small commercial users' market segment and tariffs in this sector are also regulated by the CER.

The nature of regulation is to drive improved efficiencies and lower costs in areas that are under regulatory control. This is designed to benefit customers primarily. The CER will continue to review overall energy tariff structures in the coming months, taking account of global fuel prices, the importance of regulatory and market certainty for the energy sector, and the competitiveness challenges facing industry.

We have had this debate before, and I will continue to make the same point, particularly with regard to the electricity market; I accept that the gas market is slightly different. We have a crazy situation in which the ESB could supply households in Ireland with electricity for at least 10% less than the cost of producing it at the moment. Yet it is not allowed to do so because of regulation, in an attempt, as the Minister has clearly outlined, to promote competition and to allow competitors of the ESB in the household market to gain a foothold. In other words, we are waiting for Bord Gáis Energy and Airtricity, which are the two main competitors for the ESB, to get more customers before we will allow the ESB to reduce its prices.

One can consider this from the perspective of the ESB, in which it is not allowed to compete to keep its customers, but more importantly, one can consider it from the perspective of the 2 million households which are paying 10% more for electricity than they should be. If BGE and Airtricity can produce electricity and sell it at a price that is not considered to be anti-competitive or below-cost selling but the main supplier of electricity cannot, we are essentially overcharging households that use the main supplier. That accusation is backed up by all the evidence which suggests that when one compares Ireland to other countries across the EU, Irish households are paying too much for electricity.

The Deputy must ask a question.

At what point in the electricity market will the Minister insist on opening up the household market to competition so the ESB can compete? How many customers do BGE and Airtricity have to take from the ESB before the Minister will allow an opening of the market so everyone can benefit?

We have a competitive market in electricity for many users — the big users, the business customers——

We are talking about households. That is what the question was about and I ask the Minister to stick to that.

These users have at least four large international suppliers competing fiercely for their business.

What about households?

Such competition is the best way to bring down prices. The way we do that is through proper regulation and that is what we are doing, similarly, in the residential sector.

Ireland is the most expensive market in Europe outside the household market, so that is not a good example.

Anyone seeking a 10% or 13% reduction in his or her electricity bill can make a phone call today and switch supplier, which brings down the price. This is a highly competitive situation which has been delivered by the regulated market. That regulatory market works. It is bringing about the price reductions that anyone can see are available.

To 150,000 people.

Yes. They are available and 200,000 people have picked up the phone and made the call.

What about the other 1.8 million who are being overcharged?

There is nothing stopping any one of them from making a transfer in the morning without the slightest difficulty. It only takes a single phone call. We have a successful, competitive market that is delivering lower prices because we are forcing competition through. That is what works. Once we start moving away from that we are doing customers a disservice because we are going back to a protected monopoly in which the main suppliers crowd out everyone else and keep prices high in the medium to long term. That is not in the customer's interest or the country's interest. What we are doing is working. I do not think the Deputy opposite has an alternative that would not destroy the competitive process.

The Minister is talking nonsense. He claims that competition works, yet he is preventing the largest supplier in the market from competing. We have a controlled market in terms of price. It is true that people can pick up the phone and switch to Bord Gáis as long as they can be sure their bank account details are safe——

Or Airtricity.

I am coming to that. They can also switch to Airtricity. I encourage people to switch. Both Bord Gáis and Airtricity are fine companies that can provide reliable electricity. However, this idea that by allowing the ESB to reduce its prices we will drive Airtricity and Bord Gáis out of the market is utter nonsense. These are large, powerful companies with big backers, particularly in the case of Airtricity. Bord Gáis is currently building power stations in order to supply electricity at more competitive prices than the ESB. It is committed to that expenditure. It will not be driven out of the marketplace by the ESB; it is fanciful to suggest that. At present, whether the Minister likes it or not, 1.8 million of the 2 million households in Ireland are paying 10% more for electricity than they should be because the ESB is not allowed to reduce its prices.

Bord Gáis will not leave the market when the ESB reduces its prices. That is what happens when the proper regulatory system is applied.

Why is the Minister delaying it?

The regulator will assess the ESB's costs and set the conditions again for October. That is the regulatory process that works effectively here and in every other liberalised market. We are delivering competition and lower prices.

It is not the regulatory market that works anywhere else.

It is the regulatory model which brings down prices and it is working in the large business and residential market——

It is not the market in the UK.

——because we are sticking to a good competitive policy that is delivering price reductions.

Telecommunications Services.

Simon Coveney


4 Deputy Simon Coveney asked the Minister for Communications, Energy and Natural Resources if he has completed an audit of all State owned broadband infrastructure; if he will publish the findings of such results; and if he will make a statement on the matter. [24370/09]

The consultation paper on next generation broadband, which I launched in July 2008, proposed the establishment of a one-stop shop to provide service providers with flexible and open access to existing and future State-owned infrastructure for telecommunications services. Trade over digital networks is becoming increasingly important and access to high-speed broadband networks will be necessary if indigenous and foreign-owned enterprises in the regions are to prosper in the smart economy. Leveraging publicly owned ducting has the capacity to reduce costs significantly for private sector investors in rolling out fibre-optic cabling to the regions and thereby improve competition in the electronic communications market.

The idea of a one-stop shop received a largely positive response in the consultation process on the NGB draft paper and contributors recognised the potential of utilising State assets to provide fibre networks in the regions. Officials from my Department have worked with the relevant State agencies in the energy and transport sectors to compile a database of the supply of publicly owned infrastructure which can currently or potentially support high-speed broadband networks. Following this process, maps were compiled which provide an indicative depiction of the supply and gaps in relevant State infrastructure. The maps also include the metropolitan area networks, an important component of broadband connectivity in the regions. These maps will be included in the final version of the next generation broadband policy paper, which will be launched shortly.

These maps indicate that there is an extensive network of State infrastructure which has the potential to improve our broadband infrastructure significantly. However, the readiness of the State infrastructure to be utilised as telecommunications infrastructure varies greatly between the different agencies. For example, some agencies are already making their infrastructure available while others have not done so or have no local infrastructure in place. Another factor is that some publicly-owned infrastructure may be subject to existing contractual arrangements and may not be currently available on an open access basis. Nevertheless, I am determined to move on the process speedily so that optimal utilisation of these assets can be achieved. The next step in developing the one-stop shop is to decide on the best operational model. I expect to make a decision on this in the summer.

I thank the Minister for that information. It is a bugbear of mine that it has taken so long to put in place an audit to establish the amount of broadband infrastructure owned by the State and its agencies or companies. That information is required in order that we can begin to concentrate on bridging the gaps in existing services to ensure we have a modern broadband infrastructure.

I welcome the Minister's assurance that the job has now been done. He indicated that the results will be included in the policy paper on next generation broadband which will be published "shortly". Will he provide a specific date? It is difficult not to be cynical about the timetable that has been set out for broadband roll-out when one considers how long it has taken the Department even to put in place a management contract for the second phase of the metropolitan area networks, MANs, project. I ask for a definitive indication of the date of publication of the policy paper on next generation broadband so that we can move on to have a proper debate on these issues.

The report will be published within days. As I said, the work has been done and the crucial issue now is how to use the information. We are all agreed on the concept of providing access to State infrastructure. One option is to go for a public private partnership model whereby an external body would be brought in to manage the variety of different assets available in a single one-stop shop. Alternatively, we could deploy an existing provider, possibly a State company, to take over the other assets and operate them on a one-stop basis. Whichever option we choose, what is important is that we provide that access in a way that helps all operators. The objective is a platform and operator neutral provision of much higher bandwidth speeds throughout the country using State infrastructure to support commercial investment.

I am excited by the Minister's response. What he has outlined is precisely what we should be doing. In a recent policy document, my party set out its view on how we should proceed in regard to State-owned broadband infrastructure. We have proposed the establishment of a new State company and the amalgamation of some existing bodies to manage that infrastructure. I look forward to the Minister developing his ideas and hopefully taking on board some of the proposals my party has made.

While we have had difficulties arising from lack of investment in some of our networks, we enjoy certain advantages in some of the mobile technologies that have developed here. We also have an advantage in terms of the fibre optic under State ownership which we can use to help companies provide the bandwidths we require.

Housing Grants.

Simon Coveney


5 Deputy Simon Coveney asked the Minister for Communications, Energy and Natural Resources if he will introduce a grant support scheme for the upgrading of windows in homes in line with the objectives of the greener homes scheme and the home energy saving scheme; and if he will make a statement on the matter. [24371/09]

The home energy saving, HES, scheme, which opened for applications on 25 March, provides grant assistance for a range of energy efficiency applications. These include roof insulation, as well as specific internal and external wall insulation, and boilers and heating controls. Grant assistance is also provided for the assessment of energy upgrade requirements, through a building energy rating, BER, before and after the remedial works. Applications were selected for inclusion in the scheme on the basis of expert advice from Sustainable Energy Ireland, SEI, and in light of the pilot phase of the scheme last year. SEI recommended those applications to my Department which it considered optimum in terms of delivering significant energy savings to home owners at least cost and as representing best use of budgetary resources.

Replacement windows are not currently eligible for grant assistance under the scheme. My Department and SEI are keeping the scheme under constant review and will continue to give consideration to the scope for adding other measures, subject to budgetary and technical considerations. Similar to the greener homes scheme, it is anticipated that the HES scheme will evolve and adapt as it rolls out and as the market for these applications matures. This may give rise to changes to the applications eligible under the scheme over time.

To date, there has been very strong interest in taking up grant offers for the existing six measures. Since the scheme opened less than three months ago, grants worth €16 million have been offered to 12,000 home owners nationwide. There are critical benefits accruing for the construction industry from the scheme in terms of economic activity, retraining and job retention. To date, more than 2,000 contractors have registered with SEI to install approved applications under the scheme, with a similar number of BER assessors also being deployed.

It is important to recognise that the home energy saving scheme is operating well. However, as I have discussed with the Minister on previous occasions, there are concerns about SEI-registered companies charging more than they should. We must ensure there is effective competition in terms of pricing so that home owners get the best possible value from the companies that are registered.

The focus of this question is whether the scheme can be extended to include windows. In most cases, up to 40% of heat loss from a room is lost through closed windows. It is not good value for money to insulate walls and ceilings if the room contains single glazed or poorly double glazed windows. If we are serious about upgrading the stock of approximately 2 million houses throughout the State, we must tackle the issue of insulation for windows as well as walls and ceilings. Windows represent a problem in terms of energy efficiency in most housing stock that is more than five years old.

It makes sense to replace existing windows with energy efficient ones. Many people live in the same house for 20 or 30 years and it is only logical that energy efficient improvements should be as effective as possible. The reason we selected certain insulation technologies and control systems for inclusion in the HES scheme was their very short payback period of typically three, four or five years. Investing in windows takes longer, sometimes taking 20 or 30 years to achieve payback. We wanted to get the most extensive return possible from the budget we have.

I am keeping the scheme under review to see how it works out. As I said, it has advantages in terms of employment generation as well as energy efficiency by providing jobs in the construction industry. I have asked SEI to report back to me after the first three months to see how the scheme is progressing, how we are using our budget and whether adjustments are required. I will await its advice before making any changes. The scheme is working as it was intended, although I would like to see applications coming in faster. I am confident that will happen as energy service companies begin to promote the scheme and find ways of getting large numbers of houses done quickly. I am not ruling out an extension to the scheme as proposed by the Deputy but I do not wish to raise his expectations. We will continue to monitor and review the scheme as we do with all such schemes on an ongoing basis.