Gas Regulation Bill 2013: Report Stage

Amendments Nos. 1, 4 and 6 are related and may be discussed together.

I move amendment No. 1:

In page 7, between lines 22 and 23, to insert the following:

"Report by Minister

4. (1) The Minister shall, not later than one year after the commencement of this Part, lay before each House of the Oireachtas a report on the operation of this Act during that period.

2) Notwithstanding the generality of subsection (1), a report under this section shall include information on—

(a) the formation of the network company,

(b) the approval of any network transfer plan,

(c) the approval of any transfer plan to an energy company,

(d) the disposal of any energy company, and

(e) the appointment of the majority-shareholding Minister under section 7B(2)(e) of the Act of 1976.".

This amendment owes its origins to an amendment tabled by Deputy Moynihan on Committee Stage. There was considerable debate on Committee Stage about Deputy Moynihan's amendment which had a good deal of support and for that reason, I did as I was requested and drafted an amendment which is before Deputies as amendment No. 1.

On Committee Stage, Deputy Moynihan proposed that a new section 30 be inserted to provide that within 12 months of enactment of this Act, a report be brought forward by me, as Minister for Communications, Energy and Natural Resources, providing a value for money assessment of the sale of the Bord Gáis Energy business. On Committee Stage, I undertook to try to accommodate the Deputy. Deputy Naughten's amendment No. 6 proposes that within two months of the disposal of the energy company, a report should be laid before each House detailing the plans for the allocation of the proceeds arising from the sale.

Having reflected on the need for accountability in this matter and in order to accommodate the Deputies, I propose amendment No. 1 which proposes that a new provision be inserted after section 2(3). The amendment has been drafted following discussions between my Department and the Office of the Parliamentary Counsel. I am of the view that accountability should extend beyond the sale transaction itself and that a better outcome will be achieved by acceptance of amendment No. 1.

As I mentioned on Committee Stage, the new Dáil reform package includes a post-legislative report whereby a Minister will report to the relevant Oireachtas select committee within 12 months of enactment to review the functioning of the Act. This will allow for the committee to consult with civil society groups and individuals with expertise in the relevant area. Accordingly, the amendment I propose provides that within 12 months of the commencement of Part 2 of the Act, a wide-ranging report on the operation of the Act will be prepared and laid before each House of the Oireachtas. The report will cover developments over the previous year and will include information on the formation of the network company, the approval of any network transfer plan, the approval of any transfer to an energy company, the disposal of any energy company and the appointment of the majority shareholding Minister.

Section 29 of the Bill provides that the sale of the energy business is subject to the consent of myself, as Minister, and the Minister for Public Expenditure and Reform. In consenting to any sale, I can assure the Deputies that we will be firmly focused on ensuring the State receives fair value from the transaction. This is particularly important because following much negotiation, it has been agreed with the troika that the proceeds of this asset disposal programme will be used to fund employment enhancing projects. This will include funding for the Exchequer element of the infrastructure stimulus package, which the Government announced in July 2012. Spending on infrastructure stimulus and other Exchequer capital projects is a matter for my colleague, the Minister for Public Expenditure and Reform. This is not a matter which is amenable to specific reporting under this Bill.

I found the debate on Committee Stage on this point very useful and the arguments advanced persuasive. The Deputies' input and proposed amendments contributed to my proposed amendment on this matter and have significantly enhanced the accountability framework for the operation of the legislation.

I welcome the inclusion of this amendment. It is welcome that a report will be before brought forward to give the Houses of the Oireachtas the opportunity to discuss this transaction. The report will include detail, including information on the money from the sale.

I presume it will be possible for the report to be negative about the proceeds or the survival of the networks after the sale. It must contain all of the good and the bad. Amendment No. 1 provides that "The Minister shall, not later than one year after the commencement of this Part, lay before each House of the Oireachtas a report on the operation of this Act." Would it be possible for this legislation to provide that the report must be considered by the Dáil rather than by a joint committee?

I thank the Minister and welcome his amendment, which is a significant step forward. I am glad he has listened to the arguments that were made on Committee Stage. It is fair and reasonable for us to acknowledge that here. Far too often, Ministers are not prepared to take on board constructive suggestions that are put to them. I acknowledge that the Minister, Deputy Rabbitte, has done so on this occasion. However, he knows that his amendment does not address the issue I have been raising. He has argued that his Department is not responsible for this aspect of the issue. This is the only opportunity we have to make any kind of provision with regard to the issue. This is the last time we will discuss the proposed sale of Bord Gáis Éireann. The Minister's predecessor was presented with a report from the Western Development Commission that dealt specifically with the problem of the provision of gas to the north west and the west midlands.

I will explain what I find hard to fathom. In fairness to the Minister, he has tried to be proactive in the case of the issue of broadband. I appreciate that many challenges have arisen in that regard. I hope we will soon see an initiative which will resolve many of this country's problems in that area. The Minister was proactive in dealing with the issue of market failure in that instance. He put incentives and financial supports in place. The significant challenge that the north west is facing with regard to gas - we cannot get gas into the region in the first place - also results from market failure. Some towns were marginally outside the eligibility criteria when the Commission for Energy Regulation conducted its restrictive cost benefit analysis. The Minister told us on Committee Stage that he is taking a hands-off approach to the Commission for Energy Regulation. He said he will not go near the commission to ask it to review its policy on conducting its evaluations. In other words, the people of the north west will have to wait for gas. The only other way we might be able to get gas is to hope the fracking industry, which has such a bad reputation in the United States, starts to do some fracking in the north west. I do not think that type of gun should be put to the heads of those involved in businesses and communities in the region. As citizens of this State, they have a right to access natural gas.

I spoke recently to an employer whose business, which is based in Roscommon town, is a high energy user. He told me that the energy costs of his business are 40% higher than those of businesses based in adjoining towns like Athlone and Mullingar or in the city of Galway, all of which have access to gas. The non-availability of natural gas is having a major impact not only on the viability of existing jobs in our region, but also on the potential for future jobs. The introduction of a carbon tax will undermine the financial viability of many of those businesses, which are trying to compete with other businesses in this country. I welcome the fact that employment has thankfully started to increase. As the Minister knows, the difficulty is that the increase in employment is centred on the Dublin catchment area. There is very little activity outside Dublin and the other cities.

The provision of gas would help to stimulate the creation of construction jobs and long-term manufacturing jobs in my region. I made the point on Committee Stage that the extension of the gas line to towns in the region would lead to an annual financial benefit of approximately €16.5 million for businesses in the region. It would also have an impact on job creation. The only opportunity we have - the Minister has ruled out every alternative - is to ring-fence for this purpose some of the funds generated from the disposal of Bord Gáis Éireann. It is within the Minister's control and competency to ask the Commission for Energy Regulation to re-examine the criteria and consider the issue of balanced regional development. Many of the 2,000 people who are leaving this country every week are moving away from my part of the country. Many communities are unable to field GAA teams because so many young people have departed. This problem is not confined to young people. I raised this sad aspect of the emigration issue during the summer. Whole families are leaving the region because they do not see any future or long-term hope that would encourage them to remain in this country.

There is a great deal of blue-chip foreign direct investment in my region, thankfully. I refer to companies like Abbott, which has facilities in Longford and Sligo. Such companies need to be able to access the gas network if they are to sustain the jobs they are providing into the long term. If the Commission for Energy Regulation continues to sit on its hands, the only mechanism available to us is to ring-fence some of these funds for this purpose. It is not possible for me to table an amendment that would have financial consequences, as the Minister so eloquently explained on Committee Stage. I have tabled an enabling amendment that places a responsibility on the Government to come back within two months of the disposal date of this asset, outlining how it intends to spend the proceeds from the said disposal.

I do not think I am asking for too much when I call on the Government to explain and justify how it intends to distribute this money. It will have to tell the European Commission how it intends to spend this money. However, the Minister is unwilling to legislate to ensure the elected Parliament of this country will have an opportunity to discuss this matter. I believe a commitment to revert to this House in this regard - to outline exactly how these moneys are being spent - should be laid down in statute. I would like to hear why these funds cannot be used to expand the gas network. This is our only opportunity to ensure gas is brought into a region that is haemorrhaging people at the moment. Communities are being decimated by emigration. This is an example of a definitive action the Government can take in support of balanced regional development. It would show that the Government wants people, investment and sustainable jobs to come to the region and stay there for the long term. I urge the Minister to reconsider his decision and accept my amendment.

Deputies will notice that there are no Report Stage amendments in my name. I submitted four amendments prior to Committee Stage, but they were ruled out of order because they were deemed to be in conflict with the principles of the Bill. I understand that ruling. I tabled the amendments in an effort to mitigate the worst consequences of this legislation. Given that I believe this legislation is fundamentally wrong, it is natural that the amendments were in conflict with the principles of it. I believe the Minister, Deputy Rabbitte, knows this in his heart. At a time when the State is almost bankrupt, it is proposed to sell off one of the few State-owned, taxpayer-funded assets that is making money.

Why are we doing this? It is to pay off bankers and their allies. On the Second Stage debate at the Oireachtas Select Sub-Committee on Communications, Energy and Natural Resources on 1 October the Minister said, "We have never had a forced sale in these circumstances since 1922". He is right. I have no doubt that were it three years ago and he was sitting over here, he would vigorously and rightly call on Government to stand up to the financial bullies and to seek to have the Bill thrown out. We cannot make good legislation out of bad legislation by amending a line here and a section there.

Deputy Naughten's amendment calls for a gas pipeline for the north west. He is right - we must have that. The situation is unfair and unjust. If one looks at any infrastructural map they would see that the north and north west is deprived and that we do not have an infrastructure that allows us to compete with the rest of the nation. Businesses and householders are at a serious disadvantage because of the lack of access. Let me be clear, lest anyone be in any doubt about my position: the people of the west and north west will not be bribed or bullied into allowing fracking in the region in return for any gas pipeline. Our right to access gas stands as a right. We will not allow that to be used as a trade-off and for the region to be destroyed by allowing hydraulic fracturing. That will not happen under my watch.

I welcome the opportunity to give my full support for Deputy Naughten's amendment. It is well worded and its thrust is right. As Deputy Colreavy has mentioned, the north and the north west have justifiably merited the arrival of gas into the region for business, production and home consumption purposes. It makes sense that the Minister should be in a position to outline in a report before each of the Houses the plans for the allocation of the proceeds of the said disposal. He might not have destinations for the entire proceeds, but Deputy Naughten's suggestion that much of it should be ring-fenced for the north west region is imperative, and that could be expressed, with the balance to be further considered and decided on. It is an opportunity to identify and declare where certain amounts of the proceeds should go. That would be good for psychology and the uplifting of the hearts and minds of people in the region. That is important because we would see breaks in the sky in the general depression that has overcast the country for so long, and those breaks in the sky would bring encouragement and energy to people in their homes and places of work. I would commend such an approach. I give my full support to Deputy Naughten's amendment, and I hope that the Minister will make what he proposes happen.

I thank the Deputies for acknowledging that the amendment, hopefully, goes a long way to meet their arguments. To ensure there is accountability to the House, I assure Deputy Moynihan, who laid the original amendment, that the report will go to both Houses.

Will it be debated in both Houses?

Yes, the usual procedure will be followed. The report will laid before both Houses and it is for the Whips to agree when to roster it.

Deputy Naughten took the opportunity to set out again the arguments why it is important his region accesses the gas network and for industrial development in particular. I fully appreciate his arguments. I met the Western Development Commission following the publication of the report. I have a great deal of sympathy for the arguments set out. The problem is that, as Deputy Naughten knows, a system has been in place since, I think, 2002, whereby decisions to extend the natural gas network are made on the basis of economic viability tests. The north west region has not been deemed to meet those tests. That is being reviewed all the time and there are new applications all the time. For example, earlier this year Midleton was connected up. It was also agreed that Nenagh would be connected after a re-examination which, if my sources are correct, was based largely on the needs of a large employer, which played a significant factor in the economic assessment of whether it would be viable. The same consideration was made in Wexford town.

It is not, alas, a case of ring-fencing funds to enable the installation of the national gas network; rather, it is a question of the economic viability of the gas link. As things stand, a regulatory model assesses viability, and the model must apply unless the House decides to drive a coach and four through it. It is a chicken and egg situation. If there were a major employer sourced in one of the towns that Deputy Naughten has in mind, that would likely change the economic assessment of that town.

The Commission for Energy Regulation, which is a statutory, independent body, has since 2002 been charged with all aspects of the assessment and licensing of prospective operators who wish to develop and or operate a gas distribution system. The legislation that underpins these powers is the Gas (Interim) (Regulation) Act 2002. As the Minister for Communications, Energy and Natural Resources, I have no direct statutory function on the connection of towns to the gas network.

The regulator in 2006 approved a new network connections policy which created the opportunity to reassess the feasibility of connecting certain towns to the gas network. The policy was reviewed in 2011. In order for any town to be connected to the gas network certain economic criteria need to be satisfied as a prerequisite. The policy allows for the appraisal of a town on its own or as part of a regional group of towns. The regulator policy ensures that the costs of connecting a town or a group of towns to the network are recouped over a certain period through the economic consumption of gas and the associated tariffs, otherwise uneconomic projects will increase costs for all energy consumers.

I cannot be unmindful of that last point either. That is the system that has been operating. It is a dynamic situation. There have been decisions pretty much every year to connect new areas of the country depending on the economic criteria. I appreciate the arguments being advanced, but as Deputy Naughten admitted, it is not to do with this Bill but is an opportunity to ventilate the questions he has raised. The question of whether we want to revisit the 2002 Act is a separate question. If the issue is that it is no longer fit for purpose, that is a different question. Most people would accept that the business of us agreeing to connect the entire country, even where it would be manifestly economically unviable to do so, would drive up the cost of energy for all users.

Deputy Colreavy opposes the Bill. I respect that because it is his right to do so. However, we went through this on Committee Stage and I cannot agree that selling the energy business of Bord Gáis Éireann is in any way a blow to the national interest. Rather, I see the energy business growing in the future while the development of Irish Water under the aegis of Bord Gáis will see more people employed by Bord Gáis than ever before. That is happening as we speak. Whoever buys the energy company, one would expect that new investment will be brought in and jobs expanded in that company in the future.

Given the circumstances in which we find ourselves where we do not have an alternative in terms of the deal done on the bailout and the injunction on us from the troika, we do not really have a choice but to proceed with the sale. Deputy Colreavy is probably right to express his opposition to the Bill rather than seek to amend it because he agreed on the last occasion that his amendments did seek to oppose exactly the relevant sections of the Bill, which is fair enough.

My apologies to the Minister. I should have pointed out that as it is Report Stage, each Member can speak twice with the second contribution to last two minutes. The Minister as the person moving amendments can speak three times. I regret that I did not point that out and I forgot that the Minister had already spoken. Obviously, the Minister will be back again to speak a third time. The Deputies to speak next can speak for two minutes in their second contribution if they have already spoken.

Debate adjourned.