Priority Questions

Energy Prices

Michael Moynihan

Question:

1. Deputy Michael Moynihan asked the Minister for Communications, Energy and Natural Resources the actions he will take to address the increasing cost of electricity for customers and businesses; if his attention has been drawn to the great concern amongst multinationals at the recent increase in the PSO levy; and if he will make a statement on the matter. [31677/14]

I congratulate the new Minister and Minister of State and wish them the very best in the Department of Communications, Marine and Natural Resources. I pay tribute to the former Minister, Deputy Pat Rabbitte, and the former Minister of State, Deputy Fergus O'Dowd, and thank them for their courtesy over the past two years. I hope we will have as good a working relationship with the new Minister and Minister of State as we had with their predecessors.

Could the Minister tell me what actions he will take to address the increasing cost of electricity for consumers and business customers, whether his attention has been drawn to the great concern among high-energy users such as multinationals in respect of increasing the PSO levy and if he will make a statement on the matter?

I thank the Deputy for his kind words and I look forward to a fruitful relationship with him, the Opposition spokespersons and all Members of the House. I also join him in paying tribute to my predecessor, Deputy Rabbitte, for his stewardship in this role, and the former Minister of State, Deputy O'Dowd.

I am acutely aware of the financial challenges faced by families and businesses as a result of high electricity prices. However, it is important to note that the electricity and gas markets are commercial, liberalised and competitive, and operate within national and European regulatory regimes. As Minister, I have no statutory function in the setting of electricity prices. Responsibility for electricity and gas market regulation is a matter for the Commission for Energy Regulation, CER, which is an independent statutory body.

At a national level, the competitive energy market in place results in choices for consumers and businesses in terms of suppliers, products and prices. Such competition places downward pressure on prices. Consumers can seek to mitigate rising electricity prices by shopping around, and measures such as comparison websites, approved by the CER, exist to assist them. They can and should shop around to get the best possible price and service deal from suppliers.

The CER is focused on actions that can mitigate costs for business and domestic customers, including rigorous regulatory scrutiny of the network costs component of retail prices. Households can reduce their energy costs by being energy efficient. Indeed, there are energy efficiency measures to assist business and domestic energy consumers, with significant funding allocated to them. The energy efficiency fund, announced in February 2013, funds specific measures, including projects in the public and commercial sectors. In addition, the Sustainable Energy Authority of Ireland, SEAI, administers a number of grant schemes for homes under the better energy homes scheme, as well as assisting businesses.

The public service obligation, PSO, levy has been in place since 2001 and is the overall support mechanism for generation constructed for security of supply purposes, including the security of supply provided by using indigenous peat for electricity generation. The PSO also provides the support mechanism for the development of renewable electricity. The levy is designed to compensate electricity suppliers for the additional costs they incur by purchasing electricity generated by these producers.

The greatest driver for the proposed levy increase for 2014-15 is the lower predicted wholesale market electricity price, currently estimated to be some 10% lower than last year. This results in lower predicted market income for the PSO plants, which means a higher levy is required to cover the allowed costs. Lower wholesale electricity prices are currently resulting from the lower international gas prices evident since the spring. If these lower gas prices are sustained for the coming months, they should help to reduce the wholesale cost of electricity paid by suppliers and, in turn, enable suppliers to reduce their retail prices.

I thank the Minister for his reply. One of the main energy suppliers in the Irish market, ESB, made a profit of some €425 million in 2013, an increase of 23% on the previous year. My understanding is that the CER is there to protect householders and businesses by ensuring there is a competitive market and helping them to secure the cheapest possible electricity. I am concerned that the commission is not doing its job. Indeed, if an energy provider can make close to €0.5 billion in profits on the backs of Irish householders and business owners, it seems clear the CER is not fulfilling its protective role.

In the past three or four years, whenever energy prices have risen on the wholesale markets, energy providers have immediately raised the cost for consumers. When wholesale prices go down, however, the suppliers claim they must wait until the reserves are used up before they can reduce retail prices. It is time the CER justified its existence in terms of how it sets electricity prices in a situation where a prominent energy provider made profits of more than €400 million last year. I understand the Minister's point regarding statutory powers and so on, but I urge him to take a hands-on approach to address this unacceptable situation.

The Minister's role in this matter is very clearly delineated in law, as is the role of the Commission for Energy Regulation. That is as it should be in terms of the configuration of the different responsibilities residing in different entities. However, I note the Deputy's point in regard to prices generally. This issue is the subject of ongoing debate in a context where electricity prices in this country have historically been high compared with other countries. A long period without any price increases being granted to the ESB coupled with rapid growth in electricity demand resulted in a legacy of under-investment in energy infrastructure, both generation and networks. Accordingly, our current generation portfolio is older and less efficient than those of our neighbours, which sees plant performance suffer. A much higher level of investment is required and is being applied in our transmission and distribution systems.

Another point to note is that Ireland has possibly the highest dependence on fossil fuels in the EU, at more than 85%. Only Italy and the Netherlands have a comparable level of fossil fuel penetration. These are issues we must bear in mind when we survey the overall position in respect of prices.

Notwithstanding his point regarding statutory powers and so forth, which I accept, does the Minister, as custodian for the public interest in this area, intend to engage with the CER on this issue? I am sure there is provision for the Minister to seek a meeting with the regulator to discuss its performance and convey the concerns of the public and business owners regarding decisions it has already made and the decisions it will be making on costs, the PSO levy and so on.

To reiterate, there is no basis for the Minister in any way directing the CER. However, the Minister does, of course, have a responsibility in these matters in the public interest. On 6 June, the regulator published the proposed decision paper on the PSO levy for 2014-2015. That levy is of critical importance in the context of the issues the Deputy has raised. My predecessor wrote to the chairperson of the CER on 16 June noting that the proposed increase was very significant and that a reduction in retail prices might logically be assumed to follow on from falling wholesale electricity prices. The Minister further noted that although wholesale prices have fallen in recent years, consumers have not seen the benefit in lower retail prices. While acknowledging that other factors such as rising network costs may also affect retail prices, he noted that customers should be able to understand the relationship between wholesale and retail prices. The Minister concluded by expressing his confidence that the CER would take all appropriate action within the regulatory framework to ensure proper and effective price competition for the benefit of consumers. I intend to continue that approach as Minister in this portfolio.

Exploration Industry

Michael Colreavy

Question:

2. Deputy Michael Colreavy asked the Minister for Communications, Energy and Natural Resources the approach he will take regarding subterranean drilling and any conflict that could arise with property owners; and if he will make a statement on the matter. [31949/14]

I take this opportunity to congratulate the Minister, Deputy Alex White, and Minister of State, Deputy Joe McHugh, on their appointments. I look forward to working with them. Although I crossed swords on many occasions with their predecessors, Deputies Pat Rabbitte and Fergus O'Dowd, and was sometimes frustrated with them, I do recognise that they worked very hard and were making progress. In my view, the process around the ministerial reshuffle lacked decency. I will leave it at that.

My question concerns the approach the Minister intends to take on the issue of subterranean drilling and any potential associated conflict with property owners.

I thank the Deputy for his kind words. I look forward to working with him and with the Minister and departmental officials. The Deputy's question is a broad one and my response reflects that. If there is a specific issue the Deputy wishes to raise, I will be happy to address it in my supplementary reply.

Drilling is a normal part of mineral and hydrocarbon exploration and is comprehensively regulated under the authorisation rules of the Department and of other regulatory regimes. Landowners’ interests are fully recognised and protected through statutory notification and public consultation processes afforded by the relevant licensing regime, the statutory planning process and the integrated pollution prevention control licensing regime, as appropriate. Entry onto land is subject to landowner agreement. There are also provisions for the reinstatement of lands and the payment of compensation to affected landowners in specified circumstances.

In terms of the impacts of exploration and drilling for minerals on land, it should be recognised that drilling small diameter bore holes to obtain basic geological information does not cause significant impacts. In the case of mining operations, works may be several hundred metres below the surface of the land. When damage or a nuisance is caused under authorisations, there is a requirement under the statute to pay compensation for such damage or nuisance to affected parties.

I thank the Minister of State for his reply. However, I am as wise now as I was before I tabled the question. Hydraulic fracturing involves vertical and horizontal drilling. A drill rig might be located 1 km from my home but as a result of the horizontal aspect, drilling could actually occur underneath it. What is the legal position for home owners and landowners in circumstances where this activity is occurring underneath their properties? Do they have the right to object? There is no question of a drilling company entering through a gate because the type of process to which I refer occurs underground. What rights do people have in the context of ensuring the integrity of their lands and homes will not be damaged? What legal protections are in place?

As already stated, the Deputy's initial question was general in nature and referred to subterranean drilling. Obviously, the latter encompasses mining. I asked him to pose a specific question following my reply and he has done so by focusing on hydraulic fracturing, or fracking, of rock formations. There is no plan at present to allow hydraulic fracturing to take place. Both of our predecessors in the Department, Deputies O'Dowd and Rabbitte, consistently stated that it is not proposed to consider applications for authorisations involving the use of hydraulic fracturing to take place until research the Environmental Protection Agency is carrying out into the potential environmental impact of this process has been completed and considered. It is important to point out that there are no plans to allow the use of hydraulic fracturing. It is also important to highlight that a call for tenders was issued by the EPA in November 2013 and that a steering group involving various departmental agencies has been established. That group has been reviewing the tenders received and an announcement on the award of the contract is expected shortly.

What precise legal protections are available to landowners, home owners, etc., if companies decide to drill beneath their properties? Will the Minister of State establish the position in that regard and communicate further with me in respect of it?

The Deputy asked a specific question on protections for landowners. In any context, entry onto land is subject to the agreement of the owner.

What legal protections apply with regard to underground or subterranean drilling?

Mining on land occurs in this country and there are statutory processes and planning obligations which apply. There are no plans to get involved in the hydraulic fracturing process.

Will the Minister of State just establish for me the legal rights home owners would have if subterranean mining occurred under their properties?

I reiterate that entry onto land, be it on the surface or underground, is subject to the agreement of the owner. I am not going to waffle or bluff. That is the answer.

So that is what applies.

Electricity Transmission Network

Seamus Healy

Question:

3. Deputy Seamus Healy asked the Minister for Communications, Energy and Natural Resources if he will provide an update on the work of the expert panel appointed to review the Grid Link routes, with specific reference to the undergrounding of cables; and if he will make a statement on the matter. [31679/14]

I congratulate the Minister and Minister of State on their appointments and wish them well for the future. The proposal to construct monster pylons 45 m high - ten times the height of an average bungalow - throughout the country to carry high-voltage power lines has given rise to significant concern among members of the public. When the process for submissions in respect of these closed on 8 January last, some 35,000 had been received. This provides an indication of the concern which exists. It is for this reason I have asked the Minister to provide an update on the work of the expert panel appointed to review the Grid Link routes, with specific reference to the undergrounding of cables.

I thank the Deputy for raising this issue. The independent expert panel considering EirGrid’s Grid West and Grid Link projects has held six meetings. The panel was asked to oversee the integrity of a process to be undertaken by EirGrid to report on the Grid West and Grid Link projects. That process is now under way and the panel expects to be in a position to provide an opinion to me on the Grid West project in January 2015 and on the Grid Link project by August 2015. The panel also agreed to provide an opinion to my predecessor on the compatibility of the methodologies to be employed on the Grid West and Grid Link projects with what has already been done in respect of the North-South project. Having considered multiple reports and discussed the matter at several meetings, on 1 July 2014, the panel advised it was unanimously of the opinion that, in all material respects, what has already been done on the North-South project is compatible with the methodologies now being employed on the Grid West and Grid Link projects. While the panel acknowledged that no two grid infrastructure projects are identical, and that some non-comparabilities were likely to arise when assessing the potential environmental impacts, technical efficacy and cost factors, it was of the opinion that no material differences in the methodologies arose.

The panel also noted that the North-South project is part of an ongoing process which it expects will be subjected to a rigorous assessment as part of the planning processes in Ireland and Northern Ireland. Those planning processes allow all concerned parties, including potential objectors to the North-South project, to register their objections and to have them considered by the planning authorities. Having provided this opinion to the previous Minister earlier this month, the panel has completed its consideration of the North-South project.

The Minister stated that the independent expert panel is examining this matter. Many people throughout the country are concerned about the actual independence of the panel. That concern arises for two reasons in particular. In the first instance, the panel is being advised and provided with technical, financial and engineering information by EirGrid. There is a significant lack of confidence regarding the latter being in a position to provide independent advice and expertise to the panel. The process of consultation used by EirGrid up to now has been flawed. A further difficulty arises in that the panel will be making recommendations to the Minister, Deputy White. His predecessor made it quite clear that he was wedded to the option of using overhead pylons. Will the Minister confirm that he has an open mind, that he is not wedded to the latter option and that he is prepared to consider the undergrounding of cables?

One of the key concerns arising from the public consultation process on Grid25 was the extent to which undergrounding options had been explored to allow ready comparison to be made in respect of overhead line solutions for individual projects. That is why EirGrid was asked to conduct a comprehensive analysis of what would be involved in undergrounding the high-voltage cables for the Grid West and Grid Link projects. As already outlined, the independent expert panel was put in place by my predecessor.

To the extent that there is any concern or lack of confidence about the process or its independence, the composition of this independent expert panel and the expertise of its members should allay any such concern or lack of confidence. Mrs. Justice Catherine McGuinness, a retired Supreme Court judge, is chairing the expert panel. The other members are the economists Mr. John FitzGerald and Mr. Colm McCarthy, engineering professor Keith Bell of the University of Strathclyde and Dr. Karen Foley, head of the school of landscape architecture in UCD. They are entirely independent persons who will do a good job and provide their report to me. I will await that report before making any further comment.

Membership of the panel is not the issue I raised. The issue is that this panel will be making recommendations to the Minister. The previous Minister made it quite clear that he was completely wedded to pylons and I am asking the current Minister to confirm that he at least has an open mind on this issue and that he is prepared to consider seriously, and to construct if that be the case, the undergrounding of these cables. Can he give confirmation of that?

These are complex processes involving the assessment of evidence, particularly relating to planning. The Deputy knows the planning process is set out quite clearly in statute and is not a matter of the opinion of any individual Minister or otherwise on it. The job I must do is to uphold the integrity of that process, and I intend to do that. The independent expert panel will enhance the integrity of the process. The panel's job is to provide an opinion to me on the objectivity, comparability and completeness of the studies that have been done. Are the methodologies up to scratch and fit for purpose? Are they right and are they in accordance with what one would expect in terms of proper assessment and evaluation of these projects? That is what the independent expert panel is doing. It is not making ultimate decisions on the merits but looking at the methodologies employed in comparing underground and overground options. I will await the views of the independent panel before making any comment on it.

Post Office Network

Michael Moynihan

Question:

4. Deputy Michael Moynihan asked the Minister for Communications, Energy and Natural Resources the actions he has taken to secure the future of our post office network; his position regarding the impact on local post offices of the use of electronic transfer for social welfare payments; and if he will make a statement on the matter. [31678/14]

What actions does the Minister intend to take regarding the future of the post office network? The network is under constant threat due to the impact of electronic transfers in the social welfare payments system. Will he give his opinion on the future of the post office network?

It is Government policy that An Post remains a strong and viable company, in a position to provide a high quality, nationwide postal service and maintain a nationwide customer-focused network of post offices in the community. Proposals for a whole-of-government review of the scope for providing additional public services through local post offices were presented to the Cabinet committee on social policy at its meeting on 28 April last. In its initial consideration, the committee agreed to the proposal for a review of the scope for providing additional public services through the post offices. This process is under way and my Department is examining the initial responses received from other Departments with a view to engaging in further discussions with the relevant Departments, as necessary, with the aim of presenting a final report to the Cabinet committee in September. The impact of the use of electronic transfer for social welfare payments on local post offices is a factor to be considered as part of this process.

An Post has undertaken a programme of capital investment in the computerisation of the post office network, including the automation of all post offices. The post office network is well positioned to become the front office provider of choice for Government and the financial services sector for both electronic transactions as well as the more traditional over-the-counter transactions. Any such developments would be subject to public procurement requirements. I envisage a strong future for the network by using its existing strengths to remain a significant player in the provision of Government, financial and other services.

There has been huge debate both inside and outside this House about the post office network and what it requires. We all support the post office network but despite that, the network across the country is dwindling. It is time for a fundamental shift in policy. Earlier we referred to the obligation on the ESB to maintain its network deep in rural communities, which is an obligation imposed on the company under statutory instrument and legislation. It is time we examined the memorandum of understanding for the establishment of An Post and its management and governance and told An Post that it must maintain the network. It must be provided for in statute that An Post must maintain the network in rural communities. Then it can go after the business to make those post offices viable. What is happening at present is that services are being withdrawn, piece by piece, from An Post and the post offices are becoming non-viable both for the postmasters or the postmistresses and An Post. We must fundamentally change the way An Post is established to ensure there is a statutory obligation on it to maintain the network. After that, it can pursue the business.

The Deputy makes some interesting points which I am sure will feature in the ongoing debate and consideration of this issue. As he correctly pointed out, it has been debated extensively in the Dáil. An Post has the largest retail presence in the country. Ireland has one of the most extensive post office networks per head of population in the EU. There are 1,147 active company and contractor operated post offices and 145 postal agents. A total of 65% of post offices are located in rural areas, bringing important local services to local communities in rural areas of the country. The Deputy mentioned that the number is dwindling. There have been some closures but it is interesting to note that although there were 197 closures between 2006 and 2010, from the end of 2010 to date only 17 closures have occurred. It is important to bear that in mind, but I accept the points the Deputy makes.

I have studied this back and forth. There has been much talk about giving State business to An Post. The driver licence system should have been given to An Post and the terms of reference for the tendering should have been changed to ensure it did go to An Post. What should emerge from the whole-of-government report is that every State service should be geared towards An Post. Of the 17 post offices the Minister mentioned that have closed, I believe three of them closed in north Cork over the past six or eight months. We must fundamentally change how An Post is set up and governed. We might talk about putting Government services in An Post or making it a special office for Government services but unless we compel the State company, An Post, to maintain the services deep in the rural communities, that 65% of post offices will dwindle further over the years.

I accept the Deputy's point regarding the post office network and this issue being an important matter of public policy. However, we also live in a world that is characterised by public procurement rules, and we must live with those rules. I doubt that anybody is suggesting that such important rules should be bent or moved in a particular direction. I believe the two worlds, the world of the rules governing public procurement on the one hand and the important public policy consideration that the Deputy mentions on the other, can co-exist. How best to balance these imperatives is the issue the Cabinet committee on social policy is addressing. As I mentioned earlier, that Cabinet committee will return to this matter in the autumn. The Deputy should be reassured that the Government strongly believes in the continuing role of the post office network in providing important services in local communities.

Broadband Service Provision

Seamus Healy

Question:

5. Deputy Seamus Healy asked the Minister for Communications, Energy and Natural Resources if he will provide an update on the provision of high-speed broadband throughout the country; the progress being made in the provision of high-speed broadband services to rural areas; and if he will make a statement on the matter. [31680/14]

The availability of quality high-speed broadband in both urban and rural areas throughout the country is vital for job retention, job creation and social and economic development. Will the Minister provide an update on the provision of this broadband throughout the country?

The Government's statement of priorities for the period 2014 to 2016 reaffirms our commitment to delivering State-led broadband intervention in rural areas. The Government's national broadband plan aims to change radically the broadband landscape in Ireland by ensuring high-speed broadband is available to all citizens and businesses. This is being achieved through measures designed to accelerate commercial investment and the development of State-led intervention for non-commercial areas.

Since publication of the plan, investments by the commercial sector have accelerated with commercial operators investing, or committing to invest, approximately €2.5 billion in networks and services. The recent announcement of a joint venture between ESB and Vodafone will result in further deployment of high-speed networks in 50 towns, providing the possibility of direct fibre connectivity for 500,000 premises.

The Government has committed to an ambitious plan which involves ensuring the delivery of broadband services to those parts of rural Ireland that will not be served by the commercial sector. Services will be delivered over a network, with fibre at its foundation, which is sustainable and guarantees a quality broadband service to rural consumers in future. This will be the key element of an intervention strategy that will ensure all citizens and businesses can access high-speed broadband services regardless of where they live.

Under EU state aid guidelines, member states cannot intervene where commercial investors have plans to roll out services. A comprehensive mapping exercise is under way in my Department to identify areas that require State intervention. An initial list has already been identified and includes over 1,100 locations throughout the country.

A stakeholder consultation on the implementation of the State-led intervention has recently been launched and will feed in to the mapping exercise, which I expect to conclude in the autumn. It is my intention to conduct a full public consultation on the outcome of the mapping process and the proposed intervention strategy. EU state aid clearance will be required. This will be followed by a detailed procurement process with a view to commencing the roll-out of high-speed broadband services as quickly as possible.

Additional information not given on the floor of the House

It is my intention to progress this complex and ambitious project as a key priority. I believe it will address current connectivity challenges in a sustainable and meaningful way and will ensure that rural Ireland can enjoy comparable levels of quality and service to those experienced in urban areas.

I thank the Minister for his reply. This is a vital area for job retention and creation especially in areas deemed to be non-commercial. These areas are generally small towns and villages and rural areas where job creation is all about small industries such as home industries or individuals working from home. This is vital. Will the Minister give some indication of the timescale for the development?

Intensive work is continuing in the Department to develop full details of the intervention strategy I have outlined. The outcome of the mapping exercise to which I referred will be published for public consultation in quarter four of this year. There are two items. The mapping exercise will be available in quarter four of this year and the comprehensive implementation strategy to which I referred will be published in early 2015 for public consultation. It is important for this to be done. Stakeholder consultation on the implementation of the intervention has recently been launched. It is important to seek views on the criteria to be used in finalising the locations throughout the country.

I agree with what the Deputy has said about the importance of this area. He said it was vital and I agree with him. It is my intention to progress this ambitious project and it is a key priority for me and the Department. We need to do this to address the connectivity challenges that exist and that cannot and realistically will not be addressed by the commercial sector and which, therefore, must be addressed through state intervention. I am committed to ensuring this happens.

Will the Minister indicate the nature of the consultation? It is vital that there is full and adequate consultation on this issue.

As I said, the steps required to be taken include the completion of the mapping exercise. I referred to that earlier. The idea is to map out where the areas of need are throughout the country. We are being assisted by NUI Maynooth in this regard. This is a useful mapping exercise which I have seen used in other areas of public policy. The idea is that where we see need across the country, we map it. Then people can get the chance for consultation on the mapping exercise in respect of their own areas and towns. For example, the Deputy will have the opportunity in respect of his constituency and the areas of need he may have identified there. Other colleagues and citizens will have an opportunity to respond as well. We will publish the exercise for public consultation in quarter four of this year. The implementation strategy that arises from all of this will then be published for public consultation in early 2015. I cannot give a specific date but it is my intention that it will be done in early 2015. The consultation is critical to this process. There should be every opportunity for citizens, public representatives and businesses to have an input into the process in order that we get the thing right.