I move: "That the Bill be now read a Second Time."
I commend the Energy Bill 2016 to the House. On my first occasion addressing the energy part of my portfolio in this House, I am pleased to have this opportunity to present the Energy Bill 2016. Today, as everyone is aware, we will have the Second Stage debate on the Bill. This is the time to have a general discussion about the Bill and its various individual elements which I will set out later.
I will open the debate by describing the sections of the Bill in detail and regarding its main provisions set out some background and why they are needed. Given that there are quite a number of sections and that many of them are quite technical legislative updates, I hope my approach will help us all focus on the Bill's new and important elements.
Since this is my first time addressing an energy issue in the House, I first intend to take the opportunity to refer to the energy and climate change aspects of the programme for Government. I, as Minister, and the newly-framed Department face into a very challenging period as our remit will expand to include what is arguably one of the biggest global issues, that of climate change. Our programme states that "climate change is the global challenge of our generation, and requires radical and ambitious thinking to respond to a changing environment." The policy context is both domestic and international. Domestically, our climate change and energy policy frameworks have been set out in the Climate Action and Low Carbon Development Act and the White Paper on energy. The programme for Government sets out the key sectoral and cross-government priorities that will drive the Department's agenda for the period ahead. As we implement the programme for Government and the White Paper, balancing the three pillars of energy policy - sustainability, security of supply and competitiveness - will continue to be the key challenge in the energy sector and for all of us as policy-makers. In the coming years, Ireland's energy system will be driven by the need to decarbonise towards a more sustainable future, thus addressing climate change challenges.
Having reiterated our energy and climate policy challenges and noting that the Bill does not deal with these big picture issues, I will devote my remarks to the Bill's subject matter. The Bill was on the previous Government's legislative programme from summer 2014 when it was entitled the Energy (Miscellaneous Provisions) Bill. Its subject matter is in the public domain since then. It is designed to revise, consolidate, update and expand energy legislation in a number of certain, specific and well defined areas. Given that intention, it should be clear that the Bill does not set out to revise or recast the energy regulatory framework in an all-embracing or comprehensive way. Whether such wider and more comprehensive reform is required will be addressed by the review of the legal and institutional framework for the regulation of electricity and natural gas markets, including the Commission for Energy Regulation's mandate. The review is a specific commitment in the White Paper.
The Bill is important in its own right and in the overall context of the further development of Ireland's energy regulatory sector. The provisions on administrative sanctions and on the wholesale electricity market are major and significant elements, as I will explain later. There are many sections in the Bill. There are four elements in it that perhaps we need to focus on, namely, a new administrative sanctions regime for the Commission of Energy Regulation, CER; a change to the legal definition of an all-Ireland wholesale electricity market, the single electricity market, known as SEM; a provision for access rights along the route of the Galway-Mayo telecommunications duct; and the Commission for Energy Regulation's renaming as the Commission for the Regulation of Utilities, CRU. As Members will note, there are plenty of acronyms involved in this portfolio, particularly in the energy area. The Bill also contains amendments to specific provisions of existing energy legislation to make enforcement more robust and to restate in primary legislation provisions currently in secondary legislation.
Before I proceed to outline the detail of the Bill, section by section, I will spend some time explaining the background to the four elements I listed, namely, the administrative sanctions regime, the CER's renaming, the change in the statutory definition of SEM and the provision for access rights along the Galway-Mayo telecommunications duct. I will start with the proposed administrative sanctions regime for the CER. The CER's role has expanded considerably since its establishment in 1999. For a regulator to be effective in the performance of its duties it should have available to it sufficient powers to ensure that its decisions, properly taken in accordance with the law and the objectives of EU and national energy legislation, are implemented. The International Energy Agency, in its most recent review of Ireland's energy policy in 2012, stated that Ireland should ensure that the CER's powers are enhanced as necessary in order to ensure that market and competition rules are strictly adhered to and that the interests of consumers are protected. The 2013 Forfás report on sectoral regulation stated that regulatory sanctions are an essential feature of a regulatory enforcement toolkit and are central to achieving compliance.
Currently, the CER possesses a range of enforcement powers, including powers to issue directions, determinations, fines in certain limited circumstances and to revoke licences. However, it is missing an effective range of administrative sanctions below the ultimate measure of licence revocation. The Bill provides the CER with enhanced powers of investigation and specifically permits the imposition of administrative sanctions, including financial penalties, in respect of defined "improper conduct" by energy undertakings. It sets out a defined and structured process, both for the investigation of such improper conduct and for the imposition of sanctions. I will elaborate on this regime further when setting out the provisions of the Bill section by section.
The second main element of the Bill is the change to the existing statutory definition of the all-island wholesale electricity market, also known as the single electricity market or SEM. This change will facilitate the North-South regulators' market re-design project which will bring the SEM into full EU compliance. Compliance with the new EU cross-border trading electricity codes to enable closer integration with European electricity markets is the responsibility of the Governments of the Republic of Ireland and Northern Ireland. As current SEM rules are not compatible with the new EU trading codes, both Governments have tasked the SEM committee with developing new market arrangements for the single electricity market. The I-SEM project is well under way and the new market is expected to be completed by the end of 2017.
The third main element of the Bill concerns provisions to ensure the requisite legal certainty in respect of rights of access along the route of the telecommunications duct alongside the Galway-Mayo gas pipeline. The Department funded the installation of a telecommunications duct alongside the Galway-Mayo gas pipeline and the intention is to place fibre optic cable in the duct to bring broadband infrastructure to the west. Gas Networks Ireland has taken grants of easement by deeds executed by landowners on the route. The Bill includes provision to ensure the requisite legal certainty in respect of rights of access along the route of the telecommunications duct. Additional legislation in respect of the telecommunications duct is being drafted and will be introduced on Committee Stage. During the briefing on the Bill, we explained to the Members opposite the need for that. I do not have the amendments as of yet, but we are quite happy to update Members on progress if they require it. As soon as we have the amendments, we will let the Members opposite have copies.
The fourth and last element of the Bill is the proposed change of name of the CER. As its remit now includes the economic regulation of water, it is appropriate and timely to change its name from the Commission for Energy Regulation to the commission for the regulation of utilities, or the CRU.
I propose now to outline the provisions of the Bill. The Bill consists of 31 sections. Section 1 of Part 1 contains standard provisions concerning the Short Title and commencement. Section 2 is also a standard provision which provides for a number of definitions for ease of reference. Section 3 provides for the repeal of a small number of redundant legislative provisions including the repeal of the Intoxicating Liquor Act 1946, which is now obsolete. Section 3 also provides for the repeal of section 27 of the Electricity Regulation Act 1999 and section 13(5) of the Gas Act 2002, which provisions are deemed obsolete. Section 4 of Part 2 provides for the renaming of the CER as previously explained.
Section 5 of Part 3 amends the Electricity Regulation Act 1999 to allow for the imposition of administrative sanctions on energy undertakings for improper conduct as follows. A new section 55 provides for a range of definitions including a definition of "improper conduct". A new section 56 provides for the appointment of inspectors to carry out investigations on behalf of the CER. A new section 57 provides that the CER can carry out an investigation for the purpose of the performance of any of the functions conferred on it by the Electricity Regulation Act 1999 Act or by any other Act of the Oireachtas. The commission may cause such investigations as it thinks fit to be carried out in order to identify any improper conduct by an energy undertaking. It also provides for the terms of the appointment of an inspector to carry out any such investigation. A new section 58 sets out the powers of an inspector to enter and search premises and vehicles, carry out examinations or inquiries and require the production of documents. If necessary, an inspector may be accompanied by a garda and seek a warrant from the District Court to enable entry to a relevant premises or private dwelling. An inspector may conduct an oral hearing on his or her own initiative or if requested to do so by the energy undertaking.
A new section 59 sets out the actions to be taken by an inspector on completion of an investigation, including the drafting of a report. An inspector cannot make any recommendation as to any sanction to be imposed. A new section 60 sets out the actions to be taken by the commission on receipt of the inspector's final report into the relevant improper conduct. The commission must review and evaluate the report and the level of sanction to be imposed is a matter for the commission not the inspector. If it is satisfied on reasonable grounds that improper conduct is occurring or has occurred, the commission may impose either a major or a minor sanction. It may also request the inspector either to carry out a further investigation or to take no further action. Before making a decision, the commission may conduct an oral hearing or invite the energy undertaking to make submissions on the report.
Any financial penalty imposed by the commission is subject to confirmation by the High Court, which can confirm it, reject it or impose a different sanction. Sections 61 to 65, inclusive, deal with court procedures in respect of sanctions imposed by the commission. A new section 61 provides that a decision by the commission to impose a major sanction will not take effect unless the decision is confirmed by the High Court. Section 62 provides that a specified body may appeal a major sanction to the High Court which may confirm or cancel the commission's decision or replace it with such decision as it considers appropriate. Section 63 provides that if the specified body does not appeal the decision of the commission to impose a sanction within the period allowed for such appeal, the commission must apply to the High Court to have its decision confirmed. Section 64 provides for an appeal by the commission or the specified body to the Court of Appeal on a point of law and sets out that any financial penalties shall be paid into or disposed of for the benefit of the Exchequer. The commission may recover its costs as a simple contract debt in any court. Section 65 includes a list of matters that must be considered by the commission or the court prior to the confirmation of a major sanction. Section 66 provides that the commission's power to impose administrative sanctions is without prejudice to any other powers of the commission under this or any other Act. Section 67 sets out the provisions relating to the holding of oral hearings by both an inspector and the commission.
Part 4 provides for further amendments to the Electricity Regulation Act 1999 in relation to the SEM element I have previously explained. The SEM is the single electricity market with which sections 7 and 8 of Part 4 deal. These sections refer to the arrangements in this State and in Northern Ireland, signed by both Governments in 2006, relating to the establishment and operation of a single, competitive wholesale electricity market. This is referred to as the "gross mandatory pool". Sections 7 and 8 provide for an amendment to the existing definition of the wholesale electricity arrangements in section 2 of the 1999 Act.
They also include a transitional provision to allow the regulators to continue operating under the current SEM definition while developing the new EU-compliant market rules in preparation for the going live of the new I-SEM market in late 2017.
Sections 9 to 16, inclusive, provide for various amendments to provisions in the 1999 Act. Section 9 provides for the service of notices by electronic means or fax. Section 10 provides for timelines for the prosecution of offences under section 6 of the 1999 Act. Section 11 provides for a clarification that reference to "final customer" is inclusive of electricity and natural gas. Section 12 replaces the reference to a monetary amount in the 1999 Act with a reference to a class A fine in line with the Fines Act 2010 and increases the existing penalty provisions for offences in respect of unregistered gas installers and electrical contractors. Section 13 makes minor amendments regarding the terms and duration of the appointment of authorised officers by the commission and provides for the replacement of a penalty provision of £1,500 and up to 12 months of imprisonment with a reference to a class A fine.
Section 14 provides that the commission may specify in a licence to supply electricity such standards of performance and quality as it determines ought to be achieved by the licenceholder. This places a statutory obligation on the licenceholder to achieve and comply with those standards of performance. Failure to comply comes under the definition of "improper conduct" and is, therefore, open to investigation and application of a sanction by the commission.
Section 15 provides for the formal closure of the carbon levy account. This addresses the Comptroller and Auditor General's concern that the existing text of the Bill did not appear to provide for the formal closure of the account. Section 16 places a statutory obligation on the CER to produce an energy strategy statement in respect of its energy remit.
Part 5 relates to amendments to the Gas (Interim) (Regulation) Act 2002. Sections 17 and 18 are technical amendments. Section 17 provides that "the Act of 2002" is a reference to the Gas (Interim) (Regulation) Act 2002. Section 18 corrects a typographical error in section 13(1) of the 2002 Act.
Section 19 amends the text of section 16 of the 2002 Act in respect of licences for natural gas in order to enable the commission to specify in licences such standards of performance and quality as it determines ought to be achieved. This places a statutory obligation on the relevant licenceholder to achieve and comply with those standards of performance, with failure to comply coming under the definition of "improper conduct".
Part 6 relates to the restatement of Regulation of Energy Market Integrity and Transparency, REMIT, penalties. Penalties for breaches of REMIT are currently provided by way of secondary legislation, namely, SI 480 of 2014, which provides for penalties on conviction of €50,000 for an individual and €500,000 for a body corporate, the maximum limit that may be imposed under secondary legislation. This should be replaced by a more robust and appropriate sanctions model on a par with penalties in neighbouring jurisdictions. Section 20 now allows for increased penalties of up to €250,000 for an individual and up to 10% of turnover for a body corporate.
Part 7 amends the Sustainable Energy Act 2002. Section 21 provides that any reference in this Part to the "Act of 2002" is to be read as a reference to the Sustainable Energy Act 2002. Section 22 amends that Act in respect of Sustainable Energy Authority of Ireland, SEAI, board appointments. It removes the requirement that each year on 1 May, the three longest-serving members must retire. Instead, it provides that members may be appointed for a period not exceeding five years, subject to a maximum of ten years. Section 23 obliges the authority to submit its annual report to the Minister within six months of the end of the financial year.
Part 8 amends the National Oil Reserves Agency Act 2007 to provide for greater flexibility by the National Oil Reserves Agency, NORA, in the administration of the biofuels obligation scheme. Section 24 provides that a reference to the "Act of 2007" is to be read as a reference to the National Oil Reserves Agency Act 2007. Section 25 amends that Act by inserting into it a new subsection 43A to provide arrangements regarding the exchange of oil data, which will enable the Department to cross-check data received by it and thereby ensure that all oil importing companies are correctly paying the NORA levy.
Section 26 provides for a definition of the term "reporting period" in the NORA Act. Section 27 enables NORA to make a determination as to the deadlines to apply to biofuel obligation account holders for submitting the relevant information; the closing date for receipt of applications for biofuel obligation certificates for an obligation period; and the timing and dates within an obligation period for biofuel obligation account holders to apply for certificates.
Section 28 removes the specified deadlines for NORA to issue notices and provides that NORA shall make a determination specifying the date by which it will issue a statement on any revised deadline and that this shall be published on its website. Section 29 amends the 2007 Act to increase the deadline under section 44 from 35 to 75 days.
The final Part of the Bill is Part 9, which provides for miscellaneous amendments to existing legislation. Section 30 amends subsection 72(4)(b) of the Registration of Title Act 1964 to clarify that existing telecommunications deeds of easement shall have the same legal effect that section 72 of the Act already confers on deeds of easement for gas pipelines. Section 31 provides for the correction of a typographical error in section 6 of the Continental Shelf Act 1968.
I ask the House to note that I intend to table a number of amendments on Committee Stage to include further amendments to the Registration of Title Act 1964 and some minor amendments to the Electricity Regulation Act 1999 and the Gas (Interim) (Regulation) Act 2002. These amendments relate to the Galway-Mayo pipeline.
I have outlined the main provisions of the Bill and provided additional detail on the sections. I hope that this level of detail and my description of the background to the four particular elements of the Bill will be of some assistance to Deputies in drafting amendments to its provisions. Even reading out the various sections shows that this is complex legislation. As I have told Members privately, my officials are available to them to assist in drafting whatever amendments they may wish to introduce on Committee Stage. I look forward to an informed and meaningful debate and to working constructively with Deputies from all sides of the House. Their input will help in advancing and improving the Bill's individual provisions.
