Dáil Éireann debate -
Tuesday, 1 Jun 2010

Vol. 711 No. 1

Electricity Regulation (Amendment) (Carbon Revenue Levy) Bill 2010: Second Stage

Minister for Communications, Energy and Natural Resources (Deputy Eamon Ryan)

I move: "That the Bill be now read a Second Time."

I commend the Electricity Regulation (Amendment) (Carbon Revenue Levy) Bill 2010 to the House. I am very pleased to have this opportunity to present the Bill for consideration and I thank the Opposition Deputies for their co-operation in ensuring that it can be addressed today. Carbon windfall gains will only exist up to the end of 2012 which means that we only have a very limited window to recover these gains and a failure to enact the legislation in this session would see that window shrink considerably.

I know this subject is close to Deputy Coveney's heart in particular. His Private Members' motion of June 2008 set out the policy on this extremely complex matter. This legislation required substantial work to be undertaken by my Department, involving legal discussions with the Office of the Attorney General and much technical work in concert with the Commission for Energy Regulation. Electricity consumers did not lose out during this period of examination as the ESB, which is the largest electricity generator receiving the majority of the carbon windfall gains, provided a €300 million rebate which was used to reduce prices for all electricity consumers.

I propose to outline the background to the legislation and the structure of the electricity market that gives rises to carbon windfall gains for electricity generators, followed by a brief outline of the major provisions of the legislation. I hope that this can be accomplished relatively quickly to allow more time for me to get the views of the Opposition Members of the House in advance of the Committee Stage, which I believe is provisionally scheduled for next week. I have already held an informal briefing session for Deputies off-site on these measures and officials from my Department will also be happy to provide clarifications on any issues that may arise.

The main purpose of this Bill is to recover a substantial portion of the unearned carbon windfall gains that electricity generators are currently receiving through the single electricity market. Electricity generators are receiving these windfall gains because the market structure allows them to pass through to consumers the full opportunity cost of their carbon, in other words, what they would get for selling their carbon allowances. However, the generators receive the vast majority of their carbon allowances for free. This gives them a profit without any significant commensurate cost and it is these windfall profits that the levy will recover.

The European Union and its member states, including Ireland, are signatories to the Kyoto Protocol, which requires reductions in emissions of greenhouse gases by specific amounts. The EU emissions trading directive, Directive 2003/87/EC, was implemented to assist member states in achieving these targets by establishing a carbon trading regime whereby large emitters of greenhouse gases were required to possess allowances for their emissions. Article 10 of the directive requires member states to allocate at least 90% of the allowances free of charge in phase two of the emissions trading scheme which runs from 2008 to 2012.

The directive was transposed into Irish law by the European Communities (Greenhouse Gas Emissions Trading) Regulations 2004, SI 437 of 2004. These regulations led to the creation of national allocation plans which determined how the allowances were to be allocated sector by sector. Under the Irish national allocation plan covering phase two of the ETS, which runs from 2008 to 2012, electricity generators receive the vast bulk of their required carbon allowances for free with only a small amount of the allowances auctioned. The individual allocation to each generator is based upon an average of its emissions in the period 2003 to 2004.

Although generators receive the majority of their allowances for free, they are only able to monetise them through a decision taken by the single electricity market committee, which governs the operation of the all-island wholesale electricity market. In a decision paper published in March 2008, the SEM committee determined that regardless of how they receive the carbon allowances, all electricity generators must include the full opportunity cost of carbon in the bids they submit to the gross mandatory pool of the single electricity market. The net effect of this decision was to raise the wholesale cost of electricity by the opportunity cost of carbon faced by the marginal generator in the single electricity market, which in turn impacts the retail cost of electricity to all consumers.

However, as noted earlier, since generators receive the vast majority of these carbon permits for free, the higher system marginal price leads to increased profits for all generators in the market without any significant commensurate cost. These unearned gains are what we call carbon windfall gains and it is these gains that the carbon revenue levy seeks to recover. The levy will recover most, but not all, of the windfall profits that accrue to generators by requiring each electricity generator to pay a sum equal to its emissions on a quarterly basis, multiplied by the average price of carbon over that period, further modified by a percentage rate of 65%.

Technical and administrative restraints make it impossible in practice to determine the exact windfall gains that accrue to each electricity generator. In order to develop a levy that is workable, we have had to base the levy upon an approximation of the gains that are accruing to generators. To do this we are placing a levy upon each generator's total emissions, multiplied by the average price of carbon over the levy period. Calculating the levy in this way means that we do not have to consider the source of the generator's allowances, the internalised value they may represent to the generator or that portion of the emissions that may be attributable to the in-house consumption of the generator.

Using this methodology potentially creates the risk of placing a levy upon generators that would actually be in excess of the windfall gains that they are earning. Therefore, I have specified in the legislation that the levy will applied at a rate of 65%. This rate can be modified by ministerial order, following advice from the commission on the operation of the levy and a public consultation. I am satisfied that 65% represents an equitable return for the State at this stage. Some electricity generators claim that they already use some of their gains from the carbon windfall to offer lower electricity prices to their customers via their supply arms. Allowing generators to retain a portion of their windfall gains ensures that we do not entirely eliminate the scope for generators to pass carbon windfall gains on to consumers through their supply arms if they so wish.

Generating stations which are the subject of the public service obligation order made under section 39 of the Electricity Regulation Act are exempt from the carbon levy. In the case of conventional PSO plant such as the peat generating stations, Aughinish and Tynagh, these generators are not earning any carbon windfall profits. Since the levy is specifically designed to recover unearned carbon windfall gains, where there is no windfall gain there can be no levy liability. The gains arising from the incorporation of carbon to PSO plant accrue to electricity customers through reduced PSO costs.

With regard to the renewable plant in the PSO, renewable generators create no emissions and as such have no carbon allowances allocated by the EPA. Therefore, there is no basis upon which to levy renewable generators. The original purpose of the emissions trading scheme was to incentivise and make renewable electricity generation more competitive than conventional generation. Exempting renewable generators from the levy is, therefore, in keeping with the spirit of the directive.

It is anticipated, based upon modelling work undertaken by the CER, assisted by EirGrid, that setting the percentage rate at 65% will lead to the collection of approximately €75 million over the first 12 months of the operation of the levy. Of course, these sums are based on certain assumptions and any deviation from the assumptions made in the modelling work has the potential to affect levy proceeds. For example, changes in the price of carbon will directly affect the sums raised by the levy. Increases will see the levy raise additional sums, while falls in the price of carbon will see levy receipts decrease. The windfall profits earned by generators are of course affected in the same way.

It is also possible that changes in underlying fossil fuel prices could affect levy receipts if the changes are big enough to shift the dispatch schedule of the market. For example, at present, with gas prices at historical lows, gas plants tend to be cheaper to operate than coal plants. In the Irish market this means that over the past year Moneypoint has run considerably less than it would otherwise have expected to. Since coal is particularly carbon intensive this means that our emissions are currently lower than would otherwise have been expected. Therefore, if gas prices were to increase enough that Moneypoint is dispatched before gas plant this would increase the sums raised by the levy, as coal is a more carbon intensive fuel than gas and ESB's emissions would be higher.

The legislation provides that proceeds from the levy will be disbursed into or for the benefit of the Exchequer. The CER will be collecting and accounting for levy proceeds on behalf of the Government and I, with the consent of the Minister for Finance, will direct the CER as to how the levy proceeds should be disbursed in line with Government policy.

Protection of the competitiveness of Irish enterprise is a key motivator of this legislation. The large energy users that will benefit are significant employers with both indigenous and multinational bases. Electricity costs are a key part of the competitive pressures on large energy users in Ireland, particularly energy-intensive exporters or those that are part of large multinationals which regularly review and benchmark costs across multiple locations. The Government is of the view that it is imperative to take all possible actions to support the enterprise sector and employment by focusing efforts on reducing costs, where we can, for large energy users.

The levy will come to an end at the close of 2012 as after that date all carbon allowances will be auctioned, rather than allocated to generators for free. This will end the issue of the windfall profits.

I now propose to outline the main provisions of the Bill. For the convenience of the House an explanatory memorandum provides a synopsis of the provisions of the Bill. Part 1 of the Bill is a standard provision concerning definitions. Part 2 of the Bill is an amendment to section 9 of the Electricity Regulation Act of 1999, assigning the collection and recovery of the carbon revenue levy to the CER as a new statutory function. Part 3 is the substance of the Bill. It inserts a new Part into the Electricity Regulation Act 1999 and deals with the calculation and collection of the levy.

Section 40B contains the definitions which are used in the new Part. The bulk of these definitions come from SI 437 of 2004, which is the Irish implementation of Directive 2003/87/EC which establishes a regime for greenhouse gas emissions trading. Section 40C clarifies which electricity generators will be subject to the levy — those who are in receipt of allowances from the Environmental Protection Agency and who are bound by the single electricity market trading and settlement code. Section 40D sets out the formula to be used for calculation of the carbon revenue levy. Section 40E provides for the modification of the amount calculated in the formula in section 40D by a percentage rate, as specified in the next section. Section 40F details the percentage rate that will be used to modify the levy amount payable. It also allows for the modification of this rate by the Minister via order, following a review of the levy's operation. Any draft order changing the percentage rate will be subject to public consultation before any final decision is made.

Section 40G requires electricity generators to make returns to the commission within ten working days following the end of each levy period. These returns must specify the emissions made by generator in the preceding levy period. This section also gives the commission the power to make regulations relating to the information that must be contained in the returns from the generators. Giving false information to the commission in a return will also become an offence under this section. Section 40H requires the commission to issue each electricity generator who makes a return to the commission, a levy assessment notice detailing the precise amount of the carbon revenue levy payable by each generator, along with the calculations used by the commission to determine that figure. The notice must be issued by the Commission within ten days of the receipt of the returns from generators containing their emissions.

Section 40I stipulates that each electricity generator has 15 working days from receipt of its levy assessment notice to pay the commission the amount specified in the notice. Section 40J makes compliance with the carbon revenue levy a condition of licences granted to electricity generators. Section 40K details the interest rate that will apply to any late payments made by electricity generators. The rate that will apply is the standard rate outlined in the late payments in commercial transactions legislation. Section 40L grants the commission the ability to recover any outstanding amounts owed by electricity generators as a simple contract debt in any court of competent jurisdiction.

The final section, 40M, outlines how the levy proceeds are to be dealt with by the commission. It is to pay the levy proceeds into an account which shall stand separate from all its other accounts and shall be subject to audit by the Comptroller and Auditor General. A report on the performance of the commission on its functions with regard to the carbon revenue levy will also be laid before the Houses of the Oireachtas each year. Funds will be disbursed from this account only on the direction of the Minister, with the consent of the Minister for Finance, and they shall be disbursed into, or for the benefit of, the Exchequer.

It is vital that the legislation be enacted by the end of June. I have signalled my intention to use the proceeds of the carbon levy to reduce electricity costs for large energy users who are typically large employers and concentrated in the high value export sector. To enable this, the levy must be in place by 1 July 2010 at the latest. For every month that the legislation is not enacted, approximately from €6 million to €7 million will be lost to the levy and electricity generators will continue to enjoy these unearned windfall gains. Over the past 12 months, Ireland had the second largest price reduction in gas prices to business in the EU and the third largest reduction in electricity prices for both business and householders. This Bill is another important measure that will boost our competitiveness and deliver real benefits to business and consumers alike. I look forward to working closely with the CER on ensuring the speedy implementation of the Bill's provisions, following enactment.

Deputy Simon Coveney

I welcome this legislation and recognise the work that has been done in the Department to produce the Bill as a Bill in its own right. It is important to give credit where it is due and I suspect there has been significant work in the Department over the past ten days or so to put this Bill in place. It is far more satisfactory to deal with the issue of the levy by way of a Bill. A Bill is more comprehensive and is preferable to an amendment to the bio-fuels legislation that passed through the House last week. I know producing a Bill meant there was a short delay and involved significant work and inconvenience for the Department, but the net result is that we will have sounder legislation that is separate from the bio-fuels legislation. In fact, we were not able to introduce an amendment on Committee Stage of that legislation because it was not directly related to bio-fuels.

I would like to signal some of the issues I suggest the Minister might try to take on board on Committee Stage. The Fine Gael Party intends to facilitate the passage of this legislation through the House, but hopes to make some helpful suggestions to help the Minister achieve his aims. We have been calling for this change for some time. I recognise this issue was not as easy to deal with as I outlined two years ago and that the Office of the Attorney General had to deal with some detailed legal issues. However, despite the fact the ESB has made a significant gesture and given a rebate to energy users, it is worth mentioning that because of the two-year delay, we have missed an opportunity and have not been able to recoup to the State the unearned profits made by all the non-ESB companies on the back of energy users. We should have been able to recoup and recycle that money back into either reducing energy costs or providing alternative energy conservation schemes.

How will this legislation impact on the all-island market? Generators in Northern Ireland will not be subject to this legislation, but they operate in competition with generators in the Republic because of our single all-island electricity market. Will the Minister explain how the legislation will impact on the relationship between generators north and south of the Border in the area of competitiveness? Has the North a similar regime to ours whereby it gives generators free carbon allowances or provides 90% of the allowances they use for free?

On the issue of the 65%, the Minister has been quite conservative. He said the Government recognises the fact there are unearned profits, but it only intends to take back 65% of the value of the emissions the generators emitted during each quarter. I can understand it cannot be 100%, because generators only get only from 85% to 90% of the allowances they need. Therefore some percentage must be discounted. However, I do not agree with a part of the Minister's speech in this regard. He said:

It also should be noted that some electricity generators claim that they already use some of their gains from the carbon windfall to offer lower electricity prices to their customers via their supply arms. Allowing generators to retain a portion of their windfall gains ensures that we do not entirely eliminate the scope for generators to pass carbon windfall gains on to consumers through their supply arms if they so wish.

This is what we are trying to get away from. We are trying to get away from the idea that we should allow the generators themselves to decide how unearned profits are disbursed. It should be the Minister who decides whether that money is rebated to customers or used to reduce the cost of network charges. Therefore, we need to know the exact amount of unearned profits and to maximise the take back to the State of those profits before we decide how to rebate customers, reduce prices or offer alternatives.

It is not acceptable to state that we suspect energy generators are keeping their prices down because they have the cushion of unearned profits. Either we are recouping what is unearned or we are not. If customers are obliged to pay for the carbon element to which the electricity they are using gave rise when it was generated, then the State should take back as much of this money as possible and decide, in a responsible way, how best to provide people with a rebate. I understand from where the 65% comes but I am of the view that it can be revised upwards slightly.

The carbon revenue levy will not apply to energy generators that are subject to a PSO. I am aware that the Minister has some concerns in this area in respect of peat. Essentially, the carbon revenue levy is not going to be applied in respect of the dirtiest fuel we have which is responsible for emitting the most carbon per kilowatt hour. I ask that the Department reconsider the position in this regard. The Department's current rationale appears to be that this is power generation which is partially sponsored by a public service obligation for which everyone must pay and that if the cost of producing power from peat is going to be increased by adding a carbon revenue levy, well then the PSO will have to be increased in order to meet the cost. On the basis of the rationale to which I refer, the question then arises as to what is the point in doing it.

Would it not be more honest to inform people that the PSO will have to be increased because there is a cost for carbon which somebody must pay? Once the Bill is transparent in respect of how that money should be paid and as long as the unearned profit is recouped and paid back to people in a sensible way, then the rationale that is applied in respect of coal, gas and oil should also be applied to peat, even if this means the PSO must be slightly higher. We could show the increase on people's bills and expose the fact that producing energy by using certain fuels is expensive, rather than trying to hide the figure by incorporating within the PSO a windfall levy for which consumers are paying. Essentially, the latter involves hiding the truth. If other carbon-based fuels are subject to the PSO, then peat should also be subject to it.

There are a number of sensitive aspects to the debate on generating electricity from peat. There are people in my party who live in constituencies where large numbers of people are employed in peat-powered generating stations. For social, local and economic reasons, those stations must be kept intact. We need to phase out the use of peat over time while ensuring that people remain in employment during this process. We must even try to increase the level of employment by introducing more sustainable biomass products to replace peat.

Peat-powered generating stations are not going to disappear anytime soon. However, we must be honest with consumers and inform them as to what they are paying, why they are paying it and indicate on what the different charges on their bills are spent. I understand the new calculations to be introduced in the summer will mean that the PSO will increase to a significant degree. Regardless of whether it is this new PSO, the carbon revenue levy or a carbon-related element of one's energy bill — which the Government is going to recoup and actually spend in a way that will lead to price reductions — people must be provided with information in respect of what they are paying.

I wish to raise a rather controversial issue. Even though the principle relating to the recoupment of unearned profits is correct, there is something wrong with the fact that the energy generators who produce the most power generally operate the most efficient and modern plants and thereby cause the fewest emissions. The Viridian plant at Huntstown, the newly opened ESB plant in Cork harbour and the new Bord Gáis plant in the same location are the most efficient plants in the country in terms of emissions. One would like to believe that if we can get the infrastructure right in the Cork area, we can ensure that the most efficient plants are those which are producing the most power. This will mean that they will be charged most in respect of the windfall levy because they will be selling the most power onto the system. That is fine.

Let us consider the position with regard to our dirtiest plants. Moneypoint, which uses coal, is one of the dirtiest plants in the country. Moneypoint has not been used as much in the past 12 months as might have been the case because a number of gas-powered stations have competed successfully with it. As a result, the plant does not pay as much of a windfall levy because it is not producing as much power as heretofore. However, there are still carbon allowances attached to Moneypoint that were granted on foot of its producing power at a level that was calculated on the position in a base year. Should we not be recouping windfall profits that are made on the back of trading carbon allowances that are unused but that are given free of charge in the first instance? Does not this argument have as much merit as recouping carbon charges which are paid for by the customer but which are given free of charge to the generator?

Viridian is particularly concerned with regard to this matter. It is of the view that it is being hammered with carbon charges because, as a result of its modern plant, it can produce power efficiently, cost effectively and with relatively low emissions. What about the plants that are only producing power 20% or 40% of the time? They will have excess allowances available to them which they will be able to trade. Will the profits or windfall gains made from trading allowances which were provided free of charge but which remain unused also be recouped? Perhaps there is not a market for the ESB to trade unused carbon credits. If there is such a market, however, I do not understand why the Government should give something away for nothing and then not recoup the windfall gains that are made as a result. If the principle of recouping unearned profits for which consumers have paid holds sway, then the windfall gains to which I refer should also be recouped.

I accept that my argument in respect of this matter was somewhat long-winded in nature. I hope, however, the Minister understands the point I am making. Ultimately, we want to ensure that we incentivise the most effective, modern and cleanest power plants.

My next point relates to how the levy will be disbursed. The Bill is not as precise in this regard as was the briefing we received during the face-to-face discussion in which we previously engaged on this matter. I understand that the Minister intends to raise approximately €6 million to €7 million per month through the levy and will try to provide a rebate for large energy users by reducing the network charges relating to them. This will be similar to what the ESB has done in respect of the €300 million to which the Minister referred earlier.

I have a difficulty in respect of this matter. The first thing we must do is ensure that the charges that will be imposed will be as competitive as should be the case. In other words, we should not subsidise a system that is already overly expensive. The regulator, by means of a direction from the Minister's office, must ensure that we have the most efficient networks and grid business possible and that charges will be no higher than is necessary. It is only when that stage is reached that we should introduce a rebate to reduce costs even further. What we should not do is reduce costs from a level that is already too high.

The question many people would ask about the €300 million that was supposedly given back by the ESB is whether it is being taken away from a network charge that was already too high. I hope the Minister will consider that issue.

There is no requirement in the Bill that the proceeds of the carbon revenue levy be recycled into energy. That is left to a decision of the Minister with the prior consent of the Minister for Finance. Under subsection 40M(3), as inserted by section 3, the funds in the account "shall be paid into or disposed of for the benefit of the Exchequer in such manner as the Minister may direct following consultation with the Minister for Finance". In other words, money is going into the Exchequer and there will be a negotiation between the Minister, Deputy Ryan, and the Minister for Finance as to how it is spent. That is very different from what the Minister said in his speech. I welcome his undertaking to bring energy prices down for large energy users and perhaps look at using some of the money for other energy programmes.

However, that is not what is in the legislation. I would generally be slow to prescribe in legislation how money is spent because that is bad practice. A future Minister must have the flexibility to decide how revenues are spent; that is the job of a Minister. However, this legislation will apply only for a temporary period, between now and the end of 2012, so there are only another two and a half years to go before it becomes irrelevant. In that context, the Bill should prescribe in a more definite way how, in the next two and a half years, the €200 million or €300 million we raise through the carbon levy is spent in order to bring energy prices down to a level that will make us more competitive. I am anxious to see an amendment in this area so it is not simply the case that the moneys raised will go into the Exchequer and be allocated on the basis of a political decision. I am largely in agreement with the Minister on how it should be spent, but that should be prescribed in the Bill. If this legislation were to apply for the next ten or 20 years, it would be a different case entirely.

I propose to share the remainder of my time with Deputy Deenihan.

Acting Chairman (Deputy Jan O’Sullivan)

That is agreed.

Deputy Simon Coveney

This legislation may be challenged in the courts, although perhaps the only company willing to do so will be Viridian. I do not expect the State-owned energy companies will take the Minister to court; they would be ill advised to do so and will simply have to put up with it. However, the same does not apply to private energy companies and we must prepare for that by ensuring we have a legally sound case.

There is a particular case in regard to Endesa Ireland Limited, and the Minister is aware of my concerns in this regard. Endesa spent a substantial sum in purchasing two power generating stations from the ESB. My understanding is that it then paid a separate amount to purchase carbon allowances between now and the end of 2012. The ESB, which sold the allowances to Endesa, was paid for an average value of those allowances between now and 2012 taking an average value for carbon. Essentially, therefore, Endesa has already paid for its carbon allowances while everybody else got them for free. The ESB, meanwhile, has effectively been paid on the double for the carbon allowances that apply to the Endesa plants because it got them for free initially and then sold them. I do not blame the ESB for that; it did a great deal when it sold the two power plants.

I do not expect Endesa will have to pay a very large carbon levy in any case because I do not expect it will produce that much power onto the grid between now and the end of 2012. However, in the case of the energy it does produce, we must consider whether it may be appropriate to exempt the Endesa plants or to seek some other way of recouping what the company has already paid under its contract with the ESB. When I mentioned this to representatives of the ESB, they laughed at me and said I surely did not expect their company to pay for the emissions Endesa will produce between now and 2012. To some extent, however, fairness would dictate that this should be case, although legally it is probably not possible to do so. I ask the Minister to review this situation because it is a particular case. Endesa paid for its allowances in expectation that they would have value, unlike the other energy companies which got the allowances for free.

I look forward to Committee Stage of the Bill when I propose to table several amendments in respect of the issues I have raised. I hope the Minister will take some of them on board.

Deputy Jimmy Deenihan

I thank Deputy Coveney for sharing time. I too wish to address the Endesa issue as the legislation is a cause of significant concern for that company. Endesa Ireland Limited spent some €450 million purchasing two power stations from the ESB, at Great Island and Tarbert, and hopes to make an investment of €500 million in those plants. While the Bill may not impact the company to the extent it originally feared, it is nevertheless a negative as far as it is concerned. As I said during the debate on the Energy (Biofuel Obligation and Miscellaneous Provisions) Bill 2010, Endesa purchased all the carbon allowances allocated to the two stations from the ESB as part of the competition organised by the latter to divest some of its assets. The competition rules required that the participants included a separate line item setting out the value for the 2008 carbon emission allowances. The 2009 to 2012 carbon allowances were valued at the expected market rate of €25 per tonne and included in the total offer. That is one of the reasons Endesa paid such a large amount for the ESB's stations.

Since taking ownership of the assets, the value of the EU allowances, EUAs has fallen. Rather than enjoying a windfall gain, therefore, Endesa has suffered a loss. EUA prices are now approximately €12 per tonne compared to the €25 per tonne Endesa paid to the ESB. If anyone has enjoyed a windfall profit in respect of Endesa's EUAs, it is the ESB. As I said, Endesa intends to make a significant investment in the generation stations at Great Island and Tarbert. Such investment could create up to 300 jobs in construction at Tarbert as well as providing jobs in running the station and attracting further industry to the area. According to the company itself, Endesa's ability to invest will be diminished with each additional reduction in income. Endesa's income streams, energy sales and capacity payments have fallen significantly. Its 2009 running hours were 50% less than in 2008.

They are expected to fall again by half in 2010. The capacity payment was reduced by 15% from 2008 to 2009. This, too, is expected to fall further in 2010. The introduction of an emissions levy would further reduce Endesa's income. It is important to note this. This levy seeks to recover windfall profits. Endesa Ireland has not enjoyed windfall profits. Any windfall profits associated with Endesa's allowances are not as I have stated currently on hand.

Endesa Ireland is the only generating company in Ireland that has paid for EU aid and is actually suffering a loss as the allowances were in 2009 valued much higher than they are now. I appeal to the Minister to consider the Endesa case and to exempt it from the levy if at all possible. The Minister graciously met some time ago with a delegation from Endesa Ireland, which they appreciated. I believe it has put its case directly to the Minister and to his officials. From a small gain the Minister would enjoy a great deal of good will from this company which we want in the market in terms of competition and potential job creation in Cork and Kerry in the not too distant future. The Minister will be aware Endesa Ireland has applied to Kerry County Council for planning permission in respect of its proposed conversion operation in Tarbert. It is hoped there will be no problems in this regard. There is a proposal to provide a pipeline from Foynes to Tarbert to provide gas, which is another issue. Shannon LNG has received planning permission for a pipeline which pipeline it is hoped will in the future serve both Shannon LNG and Endesa.

Deputy Liz McManus

I welcome the Bill and the fact that a common sense approach has been taken by the Minister following a certain amount of pressure and protest from the party Whips on this side of the House. I was extremely concerned at the idea that a couple of amendments tacked onto the bio-fuels Bill would somehow suffice. That we now have a pristine Bill with an impressive title, namely, the Electricity Regulation (Amendment) (Carbon Revenue Levy) Bill 2010 is welcome. It is appropriate that we take this approach when it comes to legislative changes and that the Minister desists from trying to have a portmanteau approach to legislation which includes a bit of this and that. I am sure that may be a better use of time within the Department but it is not good legislation in terms of outcome. I regret democratic accountability tends to be a little slower but is the better fort at the end. I thank the Minister's officials for taking the time to brief me on the arcane workings of the Irish electricity market. The extent of expertise within the Department is reassuring in terms of what is a complex area. While currently this is a particularly complex area it will in 2012 become less complicated.

The Bill addresses an issue which has been raised many times in terms of windfall profits that exist in the market and need to be captured in some way. This legislation is the way the Minister has chosen to address the issue. I have some concerns about the Bill. The Minister has stated on a number of occasions that the funds will be used to relieve the high cost of electricity to large electricity users. However, there is not one mention in the Bill of small, big or large users. What we have is a mechanism whereby money is collected through the CER and put into an account along with what is left over from the dividend money. It will be the responsibility of the Minister of the day, with the sanction of the Minister for Finance, to decide how that money is disposed of.

It is worth setting the context of electricity prices in regard to which there are concerns. The recently published Sustainability Energy Ireland report states there has been some improvement in terms of price, which is extremely welcome. However, we have not reached a point where we can say that the price of electricity is not an issue, particularly when compared to other countries. We are still above the European average. Electricity prices for medium to large business consumers are 4% to 6% above the EU average. This group of customers accounts for approximately 53% of the market. That is a matter of great concern when one considers the economic situation in which we find ourselves and how important it is for us to be competitive. The price of electricity to the average consumer is approximately 7% above the EU average, which is not any source of comfort for us. There is a real danger that this type of measure to alleviate the burden on the larger user does not address the issues around cost.

The Minister made the point that generators have been provided with free carbon credits and that they were able to earn a monetary return on those credits, which led to excess windfall profits. He has also stated that the Bill seeks to remove these gains. The Minister indicated that it is estimated that €75 million per annum will accrue. That there is this pot of money is not disputed. It is interesting to see how significant it could be. In Britain, it is estimated to be as much as €15 billion. Obviously, this depends on the price of carbon. It is an important element when one considers that even in the couple of years prior to the changes a significant amount of money will accrue.

I am concerned that this legislation could be subject to legal challenge. I hope the Minister makes every effort to ensure this does not happen. Given we have only two to two and a half years during which this new regime will apply it would be problematic if much of that time was spent in the courts. An issue not yet mentioned by other speakers and on which I would like clarification because it comes up quite often is that according to the Government's own guidelines a regulatory impact assessment on this proposal should have been prepared and published. I am not aware of any such assessment. The eGovernment website states this is a requirement but it has not happened in this instance. Perhaps the Minister will clarify the matter when replying, maybe I am missing something. This is an issue that has been raised and not dealt with by the Minister.

Section 40 of the Bill proposes that the money go into a separate account and be disposed of by the Minister for Communications, Energy and Natural Resources with the consent of the Minister for Finance. There is no requirement other than public good to do anything specific. There is no commitment for example to assist carbon efficiency, fuel poverty, to enable better energy conservation or to assist the large energy user. This money could disappear into the maw of the Department of Finance. At a time when the public finances are under chronic pressure I wonder how secure are the commitments the Minister is making.

Will the Minister indicate if he has the sanction of the Minister for Finance for what he is planning? I would much prefer if a regulatory regime, even by way of secondary legislation, was part of this legislation to ensure that what the Minister said will happen will transpire to be the case. We will argue that on Committee Stage but in the meantime he might indicate if he has the sanction of the Minister for Finance for what he is planning. If this is vague and not pinned down, I am sure extreme pressure will be brought to bear to use that money for a different purpose. This is a lacuna in the legislation.

The Minister made an appointment to the CER some time ago, which was not publicly advertised, in the way I presumed it would have been. This is a fairly high paid job and the appointment was made by way of a telephone call and a cosy chat. That is no reflection on the person who was chosen for the position but it is not the way an appointment of such seriousness should be made by a Minister, regardless of the good intentions he or she may have. There was nothing legally wrong with what the Minister did. That is why I am concerned about a situation that could arise where nothing is stated in this respect in the Bill. In this instance, the Minister has said a good deal, but the Bill is silent. It is an anomaly that needs to be addressed.

I am raising issues not because I do not want to support the Minister or the measures but because I envisage that it is not political opposition but a legal challenge that is the biggest threat that will arise in regard to this Bill. The Bill needs to be robust and that is the reason I am raising questions. There is the issue of a regulatory impact analysis. Some generators are exempt from the levy such as peat burning plants owned by State companies, namely, the ESB and Bord na Móna, and the privately owned Tynagh Energy and Aughinish Alumina. The Minister has explained the reason for this and it makes sense. I listened to what Deputy Coveney said about this and he also made sense. It is not a central issue, although I would have thought it was a green issue.

Complaints have been made that this legislation is unfair and will militate against certain generators. While a certain number of issues will always arise that do not have a sound basis, they still have to be examined. For example, there is matter of the competitive disadvantage this measure will create in an all-island market where generators in Northern Ireland will not be governed by this regime. The ESB has a plant in Northern Ireland and it will be exempt because the same regime will not be in place there.

I want to echo what has been stated about Endesa Ireland. In its submission it states:

As part of the Asset Strategy Agreement between the ESB and CER, ESB divested 1,068 MW of generation plant that were purchased by Endesa. As part of the package, Endesa purchased the . . . [allowances] allocated to these stations and the rights to future ... [allowances], which we valued at the 2008 spot price. Since 2008, the value of . . . [these allowances] has fallen, meaning that Endesa has suffered a loss relating to the . . . [allowances] rather than the windfall profits enjoyed by all the other generation companies in Ireland.

Endesa's existing units are older, inefficient and are not scheduled to run in the market. They are only used to provide critical support to the grid and it believes that only generators that are included in the market schedule should be included in the levy. It would be useful if the Minister were to provide some comfort in regard to an issue that is having an effect and about which a number of Deputies have expressed concern.

The semi-State sector is dealing with this levy in its own way and it will be able to accommodate it but there are concerns about its impact in the private sector, namely that it will discourage efficient plants and will result in increased emissions. If it were to be the case, and I hope it will not be, that higher electricity prices and higher emissions resulted from the introduction of this legislation, we would all be extremely disappointed. Therefore, we must make sure that will not be the case.

To make certain presumptions about generators without having evidence one way or the other raises questions. If it transpires that the presumptions were wrong, we will end up with either higher prices or higher emissions. Private sector operators have said that some generators at least are recycling the windfall back to their customers in the form of discounts. Their concern is that this will end up being a discount that will be taken from their customers, which tend to be small and medium-sized enterprises, and given to the large energy users. It seems extraordinary that there is no way for that to be assessed and analysed in some limited way to ascertain whether that is the case. Viridian is a front-runner in arguing its case. In its submission to the Department it states:

The measure cannot have the effect of reducing electricity prices to consumers. On the contrary, it is almost certain to increase costs for consumers to the extent that the Levy is passed through wholesale or retail tariffs. Suggestions that the Levy might subsequently be rebated to certain consumers are misplaced. It is not permitted under the Bill and, more importantly, it is open to the same criticism that forced the European Commission to reject part of the national allocation plan for the Netherlands. Put simply, it unduly favours those singled out to get the rebates, has negative environmental effects and it is likely to distort competition. The best possible outcome for consumers is that they will be no worse off and even that outcome is most unlikely.

As a consequence, competitiveness of Irish business is likely to be harmed. Furthermore, the disproportionate impact on Viridian, as a private investor in the Irish market, sends an adverse signal to potential inward investment.

Proposals of a similar kind have encountered difficulty in other EU member states. The Spanish Government abandoned a similar measure in July 2009 and litigation connected with the period when the measure applied is ongoing in the Spanish courts. A similar measure was recently proposed and abandoned in the Walloon region of Belgium. In Germany, where we understand that connected litigation has been successful, the Government abandoned measures in December 2007.

Any Regulatory Impact Analysis . . . of the impact on generators and/or the price of electricity to consumers would have revealed several fundamental issues with the measure. No RIA has been carried out, whether for this measure or previously, and the measure suffers from this missing analysis.

I have not had a chance to consider the European context. I am merely referring to cases and situations covered in Viridian's submission. I presume that this issue has not foundered in other countries where similar attempts were made by governments because if it has foundered, we need to take account of that experience. It might be useful if the Minister were to comment on that point in terms of what has happened elsewhere.

Some informal meetings were held with some generators and the Department and even the Minister, consequent on the paper that was produced in July 2009 which generated a certain amount of interest. However, that is not equivalent to a form of consultation, which I would have thought was a requirement and certainly a way of pre-empting any difficulties that might arise subsequently.

The general point about the windfall tax is indisputable. I do not believe anybody in the House will create difficulties in that regard.

What is done with the money is open to question. Measures that would ensure greater energy efficiency or deal with fuel poverty, for example, might have been something a Green Party Minister would promote. However, the Minister has chosen instead to reduce the cost for the large energy or electricity user. Whatever he does about that needs to be regulated and the regulations must be provided for in this legislation which will last for only two years, in any case. There may be other ways to deal with this but we can talk about that on Committee Stage.

The fact that sizeable money, some €300 million, was found as a sweetener when the ESB made its case for a price reduction to ensure it was accepted was a great relief to customers. However, I have concerns. One does not relate directly to this Bill but I wish to raise it. It is a small matter but seems to me to indicate an approach by the CER that goes outside its brief. The commission is pulling weight in a way I find not to be in the interests of the consumer. The recommendation of the CER is that the ESB price controls will go when they hit 60% of the domestic sector market. I welcome that. It is a good sign and a good move forward. Let us see what happens. However, tagged on to that recommendation, the CER stated the ESB must take its brand name off the retail part of its business. The officials who came before the Oireachtas committee said they, too, were not happy with the requirement and I got the impression the measure would not go ahead. However, what the CER is saying, in essence, is that if the ESB does not take its name from the retail part of its business, the commission will make the mark at 50% which would slow the chance of having either a price reduction or the freedom from controls that is sought by the ESB.

It may seem like a small point but I do not believe any interest is served in taking away a brand name people know and trust. The semi-State companies in this country developed in times when we were extremely restricted in what we could do. The private sector did not deliver through the period from the 1930s to the 1960s and the semi-State companies were the pioneers that showed what could be done. Those were flagship industries, whether the ESB, Bord na Móna, or whatever. The idea that older people, in particular, can no longer have their ESB account because the CER decides the company must get rid of that name and call itself something else oversteps the mark. I do not believe it is the business of an energy regulator to determine a brand name, quite apart from the cost involved which would be phenomenal. It is not in the interest of consumers for the CER to determine the tried and trusted brand name which is available to people, or to take it out simply at the stroke of the regulator's pen. The regulator should be more concerned about prices and less about brand names.

Acting Chairman (Deputy Jan O’Sullivan)

Deputy Seán Fleming has 20 minutes.

Deputy Seán Fleming

I wish to share time with Deputy Michael Kitt.

I welcome the opportunity to speak on the Electricity Regulation (Amendment) (Carbon Revenue Levy) Bill 2010, legislation that has only recently come before us and which is moving quickly through the Oireachtas. I understand the Minister is very keen for it to be completed as soon as possible. I will make some observations on the Bill before moving to a specific issue I wish to raise that is connected with it.

The purpose of the Bill is to provide a new function for the Commissioner for Energy Regulation to collect and recover the carbon levy and to insert a new part in current legislation stating how the levy will be applied and administered by the commission. It places a requirement on relevant electricity generators to pay the levy in line with the provisions of this Bill and sets out the enforcement regime and implementation of the levy.

It is generally agreed that the Bill does not contain specific details as to how the levy will be spent. That probably will be arranged by regulation or an enabling section, allowing the Minister, with the consent of the Minister for Finance, to decide how this will be done by the Exchequer. Although we do not have those details now, on Committee Stage the Minister will be able to flesh them out. Some of the detailed implementation of that aspect of the Bill will have to be worked out after the primary legislation goes through the House.

Under an Irish implementation directive, electricity generators receive an annual allocation of carbon allowances for free. I am conscious that in debating this legislation we are talking a good deal of jargon. Some people fully understand this, others do to some extent but many people will not grasp what we are talking about tonight and it is important to recognise that. I wish to keep my language as simple and basic as possible because this language is specific to the industry.

The net effect of the single electricity market committee decision to include the full cost of carbon in the wholesale price of electricity is that the higher wholesale price leads to increased revenues for all generators in the market. The levy on those revenues will be in place until the end of 2012. I shall return to the issue of the wholesale price of electricity because I have a specific point regarding what I believe should be included in the wholesale price. I do not believe it is now included but that can be clarified by the Minister in due course.

I refer to specific sections of the Bill. It provides for the function and setting up of new powers for the commission in regard to this levy. Subsection (3) of the Bill provides that generators which are subject to the public service order obligation under current legislation are exempted from paying that levy. I shall come to that in more detail presently.

The detail of the legislation is very strong on the powers of the commission. Generators will have to make returns to the commission within ten working days following the end of each levy period. They will then get a certificate and have 15 days to pay the levy, after which conditions of licence will be granted, as specified in the legislation. There may be an issue about interest on unpaid amounts of the carbon revenue levy or late payments, and how the proceeds of the levy are to be administered by the commission. There will be a dedicated bank account, the payment is to be in a manner auditable by the Comptroller and Auditor General and the accounts will be laid before the Oireachtas each year in the annual report. That is all very good concerning getting in the income and it will be all accounted for, but it is accepted that the legislation does not go into similar detail in regard to how the particular levies as collected will be spent. That is a fair comment and further light will be cast on this matter as the legislation goes through.

For the benefit of the public, it is important to acknowledge that this is an all-Ireland project. People forget that when we go into the nitty-gritty detail of the Bill. The all-Ireland project is a joint initiative by the Commission for Energy Regulation and the Northern Ireland authority on utility regulation. The aim is to create a single market for natural gas and electricity on the island of Ireland on an all-island basis, to start it following joint meetings of our respective Ministers and the Northern Ireland Minister with regard to creating an all-Ireland energy market. In November 2007, the single electricity market went live and commenced the trading of wholesale electricity in the Republic of Ireland and Northern Ireland on an all-Ireland basis. That is a small point I wish to make in the context of the legislation.

Power companies are benefiting from the windfall at present because they are charging their customers the full cost of greenhouse gas emissions even though EU law has decreed that the generators do not have to bear this cost until 2012. The opportunity cost is included in the wholesale prices, and revenue has been raised as a result. It is important to recognise that the biggest generator of electricity in Ireland for a long period has been the ESB and it receives the majority of the carbon windfall gains. It has utilised this to reduce prices for electricity consumers, with the ESB quoting a figure in the order of €300 million passed on to its customers.

Generating stations, which are the subject of the public service order obligation, are exempt from the carbon levy. Peat generating stations, such as those owned by Tynagh Energy and Aughinish Alumina, do not earn any carbon credit windfall profits and as such will not be liable to any levy. This is logical — if the plants are not gaining the profits, they cannot be levied on such profits. It is important that the legislation exempts renewable energy generators from the levy, which would be in keeping with the spirit of the EU directive. Renewable energy does not create emissions and should not be included in this measure.

The legislation provides for proceeds to be distributed for the benefit of the Exchequer. The Minister indicated in his speech tonight that he will direct the regulator on how to disburse the proceeds in line with Government policy, and we look forward to receiving it in due course.

The wholesale price is a key factor which I would like to see taken into account. The wholesale price is not just the cost of generation at the power stations and should include the cost of transmission of the electricity to the customer. The wholesale price of any product is not the price inside the factory gate but takes into account the price which the retailer of electricity can achieve. They must bear the cost of transmission from the power plant to where it is sold.

This issue involves EirGrid, which has a 20-year plan to upgrade electricity transmission across Ireland with billions of euro in investment. It is welcome but portions of the plan will be quite controversial. EirGrid has a plan that can be distilled to the single idea of producing a phenomenal amount of renewable energy along the west coast of the country, with the erection of pylons across the country facilitating its transmission to where it is needed on the east cost. In itself, that will cause major issues for the environment and carbon footprints. I do not know if that has been taken into account.

The cost of EirGrid investment should be taken into the wholesale price of generating electricity and transmitting it to customers. The cost of production at the plants is a key cost but is not the only one; if power cannot be moved from the plant where it is generated, it cannot be passed to a customer. That should be considered.

EirGrid is embarking on a very ambitious 20-year plan to upgrade and strengthen the country's network. Detailed correspondence arrived from EirGrid today detailing the proposal for a Laois-Kilkenny electricity transmission network reinforcement scheme, which is running into much local opposition. EirGrid has indicated its wish for a major new substation in the centre of Ireland to take power from the 400 kV lines and spread it across the 110 kV lines into various other surrounding counties. The documentation deals with upgrading the Laois and Kilkenny area but the details include several other counties. EirGrid set out a document and participated in public consultation, which commenced prior to going under the critical infrastructure section of An Bord Pleanála. The documentation, however, is not a full representation of what is proposed behind the scenes.

I will refer to the issue again. I have highlighted the point and there have been public meetings. I will conclude as I have agreed to share time with Deputy Micheál Kitt.

Deputy Michael P. Kitt

I welcome the opportunity to speak on the Bill and thank the Minister for introducing the legislation. He has taken a common sense approach despite having to take the decision quickly because carbon windfall gains only exist up to the end of 2012. There is a short period of use.

With regard to the €300 million rebate announced by the ESB which has reduced prices, it is fair to say we had a very cold winter and start to the year, so it was important that the reduction came about. It was difficult for older people in particular. I welcome the Minister's comments on the all-island wholesale electricity market but I would raise the question of how this affects us. We are signatories to the Kyoto Protocol as well.

I am glad that Tynagh in Galway has been mentioned, along with Aughinish. Tynagh is not an old plant and although it is conventional, much good work is being done there. I support Deputy Coveney's comments on biomass. It is important to emphasise that gas prices are lower because there has been a great variation in oil prices. Oil is now dearer than ever before and in discussing competition and exports, we must hope that the figures for gas will stay low and the oil price will not increase. We would like to see reductions. Ireland has had the second-largest reduction in gas prices for businesses in the EU, and it has seen the third-largest reduction in electricity prices for both businesses and householders.

In Tuam, there is a good example of bodies working together, particularly where the ESB is putting down infrastructure in conjunction with gas, telecoms and the broadband which the Minister provided money for as part of a €30 million package for the Tuam water and sewerage scheme. I would like to see more of those pipes going underground, as would tidy town committees. Many school boards of management have written to us saying that they would like to see ESB lines underground.

The Minister for Finance spoke about a carbon tax, inclusive of VAT, yielding approximately €250 million in 2010. He mentioned this would boost energy efficiency, support rural transport, which is very important in a rural constituency like my own, and alleviate fuel poverty. The question of fuel poverty must be tackled as we help people on low incomes. I am told we cannot ring-fence revenue for specific purposes but those areas are important and there should be investment in them.

There has been much concern about increases in prices for petrol and agricultural diesel but there would also be concern if other fuel products see price increases. It is important that with this Bill we see funding in the short term to ensure progress in this regard.

Deputy Andrew Doyle

I understand the Minister wishes to conclude so I will be brief. I compliment Deputy Coveney on hammering away at the issue of windfall tax for the past number of years. My colleague, Deputy Connaughton, said he was sick of listening to him going on about the issue up to the point that he did not believe Deputy Coveney but his efforts have borne fruit. Part of the problem with windfall tax as it was discussed was that nobody understood the issue or believed it. It is complex.

The fundamental purpose of any kind of carbon levy is to reduce the amount of carbon going into the atmosphere and drive down the cost of energy. I am concerned that the revenue from this Bill will disappear into a black hole in the Exchequer, to be redistributed on the approval of the Minister for Finance. This does not offer much comfort to those involved in alternative energy projects that are waiting to be primed and promoted in an effort to deliver more carbon efficient energy at a competitive cost that will drive down the price of energy.

We are moving into an era in which the emissions trading system, ETS, will be reviewed and the cost of providing carbon credits as a currency will inevitably increase, impacting on food production and general energy production. The Bill seems simple, but what it is trying to achieve is complex. Unless we are careful that the Bill is not challenged and that the €6 million or €7 million referred to by the Minister reverts directly to the alternative energy projects, the rapid expansion of which would allow consumers to avail of cheaper energy, we will be in trouble.

A paradox of the Bill is that the most inefficient energy generation stations will suffer the most even if they are trying to improve their efficiency levels. Deputies McManus, Coveney and Deenihan referred to Endesa's problems. On the one hand, it is trying to make stations more efficient and, on the other, it is being levied at the highest level while other stations, such as Moneypoint, have a vast amount of free carbon allowances that are calculated on old generation figures. If the Bill is to work, there must be some way of recalculating to whom the carbon allowances will be allocated. If we do not do this, the old inefficient stations will stay inefficient and they will be unable to play their part while some newer stations will benefit.

The question of who will benefit from the Bill has been raised. It is feared that a select few will be chosen to benefit at the expense of small and medium-sized enterprises that can provide jobs. I know we are all under pressure, but we must be careful about the way in which the funds generated are re-allocated. This is key. People involved in the alternative energy sector, including biomass generators, are concerned that, instead of their sector seeing a benefit from the Bill, the money will vanish into a black hole like lotto funding to shore up the Exchequer's accounts.

Minister for Communications, Energy and Natural Resources (Deputy Eamon Ryan)

I am pleased that we have been able to have this Second Stage debate and that we have been able to introduce stand-alone legislation. As Deputies have stated, the Bill is complex and difficult. As I have mentioned several times, I was told by my Department that it would have been possible to handle this matter in an alternative way, but the flexibility shown in getting through Second Stage tonight will allow us on Committee Stage to get into many of the complex details raised on the floor. They are not easily understood, but they are worth serious consideration. Deputy Coveney raised North-South issues and we will revert to the valuable questions involved on Committee Stage.

As to the 65% figure, being precise about the real windfall accruing to each generation station is difficult. During our more extensive debate on Committee Stage, we can revert to the question of what the figure should be and discuss why we believe 65% is the right figure while still allowing flexibility in the ministerial order for adjustment if we see fit.

I could use up my full 15 minutes discussing the PSO, which is a sensitive issue for many Deputies opposite.

Deputy Paul Connaughton

Very sensitive.

Deputy Eamon Ryan

Deputy Connaughton should look to his left rather than straight ahead.

Deputy Simon Coveney

The Minister might find I have reviewed my position on the matter by next week.

Deputy Eamon Ryan

Were I Deputy Coveney, I would watch out. He has a big man on either side. We will revert to the issue, as I would like to see progress. We must give detailed consideration to the point on whether we will be punishing inefficient generators.

Regarding some of the questions raised by Deputy McManus and others about whether we can be certain of the proceeds and whether the Minister for Finance has bought into the idea, the answer is "Yes". We have put a great deal of work into this area in the past two years to try to improve competitiveness for certain industries at this particularly sensitive time. For example, the food industry was at real risk one or two years ago because of high electricity prices and a dramatic drop in sterling. Many industries employing a large number of people were placed in danger. The Government worked to put together a platform of changes to achieve what has actually occurred, namely, a lowering of the cost at a critical time. I have entered into commitments to draft a flight path out of some of our high costs. This Bill is one element of that and the Government has agreed the overall approach, for which reason we are making these provisions in this way.

I have a myriad of areas in which we could spend money, but the Bill is part of a wider approach agreed with the regulator in terms of the pricing of electricity in an appropriately regulated and marketed way. However, it is not appropriate to include the detail of the allocation of funds in the Bill. It is better to put the money in the fund and then redistribute it in an effective way.

The Bill must be market based. We must work within the single electricity market and our regulated system, which has served us well. The Bill will be of benefit in achieving certain policy objectives in the next two years, but it cannot interfere with the competitive market because the latter is working.

I have listened to the Deputies' comments on players, in particular Endesa. We can revert to this matter on Committee Stage without committing to specific changes on Second Stage. The primary purpose of this Stage was to get the arguments out and to get the Bill into Committee Stage for further consideration. I look forward to that Stage.

Question put and agreed to.