Dáil Éireann debate -
Wednesday, 9 Oct 2013

Vol. 816 No. 2

Gas Regulation Bill 2013: Report Stage (Resumed) and Final Stage

Debate resumed on 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.".

-(Minister for Communications, Energy and Natural Resources)

Deputy Denis Naughten

The Minister is being a bit disingenuous. He is trying to give the impression that I am trying to bring gas to every crossroads in Ireland. A Gaslink report has carried out an economic evaluation of these towns. Carrick-on-Shannon was €1.15 million short of making the viability threshold while Longford was €1.5 million short of making the threshold. That is the sort of money we are talking about. What I am looking for is a small amount of seed capital to get these towns over the threshold. I am not talking about bringing gas to a crossroads where there are no users and where it will not be financially viable in the long term.

It is far cheaper to have someone pay a couple of cent more for their gas than having to pay social welfare for them to remain on the dole. The difficulty is that as long as this economic viability test remains in place and because businesses are closing every day because they are uncompetitive with businesses in other parts of the country or the locations to which they are exporting, it will be increasingly economically unviable every day, week and month. It will make it far more difficult to meet the economic criteria.

When the Minister was on this side of the House, he often lectured the Government about the need to pick up the phone to have a word with the regulator to tell them to pull up their socks. Now he has made it quite clear that he is not prepared to do that. In light of the fact that he is not prepared to that, I am asking him to give home owners in the north west a break of €485 a year, give schools in that region that are struggling to heat themselves a break in respect of energy costs and give businesses a break by ensuring businesses in the likes of Ballaghaderreen would save €2.5 million per year and businesses in Carrick-on-Shannon would save €7 million per year by setting a small amount of seed capital - a small element of this fund - aside for that purpose, not just for the towns in the north west but for towns throughout the country that meet or come close to meeting the criteria. The Minister should put the seed capital aside to allow that to happen.

Deputy Peter Mathews

I wish to lend my absolute and unconditional support to that proposition. We need imagination in this country. The west and north west represent about one-sixth of the overall population. That is 700,000 people. If one looks at what Israel did to convert the desert to fertile and irrigated land that produces fruit, vegetables and crops, one sees that it did so with water. Our west and north west do not need water but they need gas. That is the energy that is needed to heat homes and run factories and distribution businesses and so on. We should use our imagination and harness the resources. They will be there and, as Deputy Naughten says, it is an investment. The marginal decision not to proceed on the basis of €1 million for one town and €1 million for another is not on. We should say that we will scrap that sum and use our imagination to produce the economic activity that will more than pay for itself and will in turn stop the chicken-and-egg negativity and produce chicken-and-egg positivity. There will be chickens and eggs rather than a paralysis. I ask the Minister to do it.

Minister for Communications, Energy and Natural Resources (Deputy Pat Rabbitte)

Deputy Naughten is being a bit unfair to me.

Deputy Peter Mathews

Tough love.

Deputy Pat Rabbitte

I did not say anything about what I would not do. We are confusing two things. We are confusing the cost of the installation of the network with the economic viability test applied by the regulator. They are two separate things.

The negotiation with the troika has determined how the proceeds from the sale of Bord Gáis Energy will be used. When we first met the troika to discuss this issue, it wanted all of the proceeds to be used to write down debt. Gradually over a period of six months, we got a commitment that 50% of the proceeds would be used for productive reinvestment and 50% for commercial investment as a stop gap and, ultimately, to write down debt.

I am not ruling out any project that is considered productive or to offer a commercial return. The money will, I hope, be realised and used productively but I am not ruling anything in or out. I hope to see more projects around the country that can show a commercial return or are productive investments in terms of creating jobs. If a town like Carrick-on-Shannon is as close to surmounting its barriers as Deputy Naughten suggests, it has a good prospect of being successful in the future.

It is not a question of allocating the seed capital in order to install the physical network but of whether we accept the economic viability test. I have no objection to engaging with the regulator on the viability criteria. Significant employment in the area could change the entire pattern. I do not know the specific details in respect of Ballaghaderreen, in which a significant creamery operation is located, but I am more than happy to see what can be done.

The Deputies opposite know that neither I nor the Minister for Public Expenditure and Reform can earmark how we will spend the proceeds from a sale that has not yet been transacted. I have undertaken to account for that to this House.

Amendment agreed to.

Deputy Michael Moynihan

I move amendment No. 2:

In page 16, to delete lines 12 to 15 and substitute the following:

“29. Any disposal by BGÉ of its shares in an energy company shall not result in an increase of the ratio of net debt to shareholder’s equity of BGÉ.”.

I previously tabled this amendment on Committee Stage. It deals with the question of where the debt will lie after the sale of Bord Gáis Energy and ensures the legislation divides the debt up properly, taking into consideration whether the bodies concerned will be able to sustain it. While we oppose the Bill, I ask the Minister to reflect on this issue because if the Government is determined to proceed with the sale, it is vital that the part of the company remaining in State ownership is not left with the debt burden.

Deputy Pat Rabbitte

I oppose the amendment because it seeks to fundamentally alter what we are trying to achieve with the Bill, namely, the sale of Bord Gáis Energy. The memorandum of understanding agreed in November 2010 between the then Government and the EU, IMF and ECB committed to setting appropriate targets for the possible privatisation of State-owned assets. Following lengthy and tough negotiations with the troika, the current Government has been able to agree a position whereby the quantum of disposals of State assets is smaller than the troika initially demanded. The proceeds will be used to assist in economic recovery and key strategic assets, such as the gas transmission and distribution systems, will be retained in State ownership. In order to deliver on our troika commitments and, more important, to fund our programme for jobs and economic recovery, we must proceed with the sale of Bord Gáis Energy. I cannot accept an amendment that seeks to delete section 29, which provides for the company to sell its energy business subject to ministerial consent.

As critical national infrastructure, the Government has committed to retaining the gas network in State ownership. In doing so, it is incumbent on us to ensure this important business remains well funded, with an investment grade credit rating, so that it can continue to invest and provide dividends to the State as shareholder. The Government will, therefore, ensure an appropriate gearing level in the network business following the sale. This is not a matter amenable to provision in primary legislation. While the attempt to do so may be well intentioned, it could preclude the ability to borrow to fund necessary infrastructure investment. That would not assist the company or deliver security and value to energy consumers and citizens.

However, while I am not able to accept the amendment, I assure Deputy Moynihan that the Minister for Public Expenditure and Reform and I will keep the matter under review and we will take the advice of our officials and the NewERA shareholder executive.

Deputy Michael Moynihan

I am disappointed the Minister is not in a position to tease out the issues in regard to debt and I am pressing the amendment.

Question, "That the words proposed to be deleted stand part of the Bill", put and declared carried.

Amendment declared lost.

Deputy Michael Moynihan

I move amendment No. 3:

In page 16, between lines 15 and 16, to insert the following:

“30. BGÉ shall not dispose of the assets of Irish Water.”.

It is vital that the Minister give a commitment on Irish Water. The establishment of that company and its operations over the coming years are topical issues. Concerns have been expressed that the legislation will offer scope to sell the company. We want to make a clear commitment in the primary legislation that it will not be sold in any way, shape or form. The major infrastructure assets that become part of Irish Water must remain in State ownership.

Deputy Pat Rabbitte

I gave that commitment to Deputy Moynihan on Committee Stage and I am happy to repeat it. There is no intention on the part of the Government to privatise Irish Water. Our water assets are critical national infrastructure. Irish Water has, therefore, been established as a fully State owned subsidiary of Bord Gáis Éireann and there is no intention either now or in the future to dispose of it or its assets.

The Minister for the Environment, Community and Local Government will bring a new water services Bill before the Oireachtas in the coming months. I understand an outline of the draft scheme of the Bill has been published on the Department's website. The matter raised in Deputy Moynihan's amendment is more properly addressed in this forthcoming legislation. On that basis I regret that I cannot accept the amendment.

Deputy Michael Moynihan

As the Minister is giving a commitment that the matter will be addressed in forthcoming legislation, I withdraw my amendment.

Amendment, by leave, withdrawn.

Deputy Michael Moynihan

I move amendment No. 4:

In page 16, between lines 15 and 16, to insert the following:

"30. The Minister shall, within 12 months of the enactment of this Act, bring forward a report which shall assess whether or not the State received value for money from the sale of an energy company (Bord Gáis Energy).".

Amendment put and declared lost.

Deputy Michael Moynihan

I move amendment No. 5:

In page 16, between lines 15 and 16, to insert the following:

"30. The Minister shall, within 12 months of the enactment of this Act, bring forward a report which shall outline a review of the retail energy market in Ireland, assessing whether or not sufficient competition and regulation is in place to ensure prices are kept low for consumers.".

There is a major issue with the retail energy market. The energy regulator has granted price increases to a raft of energy companies, sometimes far in excess of what those companies sought. Given the level of fuel poverty and the evidence of businesses and families from all socioeconomic backgrounds experiencing energy difficulties, there should be a review of the energy market, particularly the retail energy market. The line on gas is always that we are at the end of a long line and are beholden to external organisations and fluctuations in the market.

Deputies raised points about the regulator but I have a serious concern about how it operates in the granting of increases. We should review the situation. Although this legislation is on Bord Gáis Energy, it should be used as a vehicle to ensure that an annual retail energy report is made and discussed at committees of the Dáil and Seanad. In this way, the regulator would be held to account for price increases, particularly those that were far in excess of the levels requested by the companies involved.

Deputy Pat Rabbitte

I cannot accept this amendment for the reasons that we outlined at some length on Committee Stage. To summarise, detailed comprehensive information on the retail energy market, including the state of competition in that market, is already being reported on and published on an ongoing basis by the Commission for Energy Regulation, CER. As the Minister, I am regularly updated by the regulator on developments and the state of competition. I have no statutory function in regard to the regulation of either the electricity or gas market. Responsibility for their regulation is a matter for the regulator, which is an independent statutory body. The functions of the regulator include protecting the interests of final customers, including the disadvantaged and the elderly. The regulator is also responsible for promoting efficient, orderly, fair and competitive markets and for monitoring competition.

Prices in the electricity retail market are fully deregulated. Prices in the gas market are also deregulated, with the exception of gas prices charged by Bord Gáis Energy to its domestic customers. Therefore, customers can avail of competitive offerings from suppliers. Prices are set by suppliers and are commercial and operational matters for them.

The regulator is accountable to the Oireachtas. Indeed, the commissioners have appeared before the joint committees of the Oireachtas a number of times on a range of issues. The regulator is required to report on an annual basis to the European Commission, detailing its economic role in associated policy developments. Its report includes details of developments in regard to competition in the energy markets.

In addition, in carrying out its consumer protection and market monitoring roles, the CER publishes quarterly and annual reports on the development of competition in the market. The information provided in the annual report includes prices and commentary on developments. All of these reports are publicly available on the website.

Amendment put and declared lost.

Deputy Denis Naughten

I move amendment No. 6:

In page 16, between lines 15 and 16, to insert the following:

"30. The Minister shall, within 2 months of the disposal date of the energy company lay a report before each house detailing the plans for the allocation of the proceeds from the said disposal.".

Amendment put and declared lost.

Bill, as amended, received for final consideration.

Question put: "That the Bill do now pass."

The Dáil divided: Tá, 83; Níl, 44.

Tá

• Barry, Tom.
• Bruton, Richard.
• Burton, Joan.
• Butler, Ray.
• Buttimer, Jerry.
• Byrne, Catherine.
• Byrne, Eric.
• Carey, Joe.
• Coffey, Paudie.
• Collins, Áine.
• Conaghan, Michael.
• Conlan, Seán.
• Connaughton, Paul J.
• Conway, Ciara.
• Coonan, Noel.
• Corcoran Kennedy, Marcella.
• Coveney, Simon.
• Creed, Michael.
• Creighton, Lucinda.
• Daly, Jim.
• Deasy, John.
• Deenihan, Jimmy.
• Deering, Pat.
• Doherty, Regina.
• Doyle, Andrew.
• Durkan, Bernard J.
• English, Damien.
• Farrell, Alan.
• Ferris, Anne.
• Fitzgerald, Frances.
• Fitzpatrick, Peter.
• Flanagan, Charles.
• Gilmore, Eamon.
• Griffin, Brendan.
• Hannigan, Dominic.
• Harrington, Noel.
• Harris, Simon.
• Hayes, Brian.
• Hayes, Tom.
• Heydon, Martin.
• Hogan, Phil.
• Howlin, Brendan.
• Humphreys, Heather.
• Humphreys, Kevin.
• Keating, Derek.
• Kehoe, Paul.
• Kenny, Seán.
• Kyne, Seán.
• Lawlor, Anthony.
• Lynch, Ciarán.
• Lynch, Kathleen.
• Lyons, John.
• Maloney, Eamonn.
• Mathews, Peter.
• McCarthy, Michael.
• McEntee, Helen.
• McGinley, Dinny.
• McHugh, Joe.
• McLoughlin, Tony.
• McNamara, Michael.
• Murphy, Dara.
• Murphy, Eoghan.
• Nash, Gerald.
• Naughten, Denis.
• Nolan, Derek.
• Ó Ríordáin, Aodhán.
• O'Donnell, Kieran.
• O'Mahony, John.
• Penrose, Willie.
• Phelan, Ann.
• Quinn, Ruairí.
• Rabbitte, Pat.
• Reilly, James.
• Ring, Michael.
• Ryan, Brendan.
• Spring, Arthur.
• Stagg, Emmet.
• Stanton, David.
• Tuffy, Joanna.
• Twomey, Liam.
• Wall, Jack.
• Walsh, Brian.
• White, Alex.

Níl

• Adams, Gerry.
• Boyd Barrett, Richard.
• Broughan, Thomas P.
• Browne, John.
• Calleary, Dara.
• Collins, Niall.
• Colreavy, Michael.
• Crowe, Seán.
• Daly, Clare.
• Doherty, Pearse.
• Donnelly, Stephen S.
• Dooley, Timmy.
• Ellis, Dessie.
• Ferris, Martin.
• Fleming, Sean.
• Fleming, Tom.
• Grealish, Noel.
• Halligan, John.
• Healy-Rae, Michael.
• Keaveney, Colm.
• Kelleher, Billy.
• Kirk, Seamus.
• Mac Lochlainn, Pádraig.
• Martin, Micheál.
• McDonald, Mary Lou.
• McGrath, Finian.
• McGrath, Michael.
• McGuinness, John.
• McLellan, Sandra.
• Moynihan, Michael.
• Murphy, Catherine.
• Nulty, Patrick.
• Ó Caoláin, Caoimhghín.
• Ó Cuív, Éamon.
• Ó Fearghaíl, Seán.
• Ó Snodaigh, Aengus.
• O'Sullivan, Maureen.
• Pringle, Thomas.
• Ross, Shane.
• Smith, Brendan.
• Stanley, Brian.
• Tóibín, Peadar.
• Troy, Robert.
• Wallace, Mick.

Tellers: Tá, Deputies Paul Kehoe and Emmet Stagg; Níl, Deputies Aengus Ó Snodaigh and Seán Ó Fearghaíl.

Question declared carried.