Deputy Gino Kenny is the next speaker. As he has not yet arrived, I call Deputy Thomas P. Broughan.
Energy Bill 2016 [Seanad]: Second Stage (Resumed)
I am grateful for the opportunity to contribute on the Energy Bill 2016, which has its origins in an earlier Energy (Miscellaneous Provisions) Bill. I have long called for the reform of the Commission for Energy Regulation, CER, but I am strongly opposed to the inclusion of water in the CER's remit and believe the additional powers being given to it, while welcome, may do little to improve competition in the energy sector. In recent Dáil terms I have been an outspoken critic of the weakness of the CER and its lack of action over many years on price transparency and market concentration in energy. The renaming of the CER as the Commission for Regulation of Utilities, CRU, provided for in this Bill, seems just an administrative step purely due to the inclusion of the regulation of water services in its remit. Apart from the name change, what will the Bill do to actually strengthen the CER's market regulatory power? There is no provision to include, for example, motor and heating oil in the remit of the CER, despite the fact many of the complaints made by our constituents over the years relate to the failure of oil companies to promptly pass on falling oil and gas wholesale prices to consumers while, of course, any higher spikes in the prices of these fuels were immediately passed on to drivers and households.
The neoliberal model of privatising essential services and turning citizens into customers for those services, pioneered in the United States and the United Kingdom from the early 1980s, is reflected in section 4, or Part 2, of this Bill. The Water Services Act 2013, which I fiercely opposed, expanded the CER's remit to include the so-called "economic regulation of water services". Section 4 now reiterates that change in the alteration to the new title of Commission of Regulation of Utilities, CRU. Like the Water Services Act, this change of role is predicated on the future privatisation of water supplies. The fact the Fine Gael-Fianna Fáil Administration, which we now have in this Dáil, has strongly retained the Irish Water company model shows that, despite their protestations, these parties both have future plans to privatise domestic and commercial water supplies. The experience of the gas, electricity and oil markets is clearly to be replicated in water, in the first instance through Irish Water.
We recall how the Fine Gael and Labour Party Government sold Bord Gáis Eireann at the earliest opportunity and retained only the pipework with Ervia, and how the same Government ended our last foothold in a national airline with the sale of Aer Lingus.
I welcome section 5 in Part 3 covering the power to carry out investigations and impose administrative sanction whereby the powers of the commission will be enhanced. The Commission for Energy Regulation, CER, may revoke a licence and the Bill provides for further administrative sanctions, such as the seeking of High Court compliance orders and the imposition of fines. Our constituents will ask why the powers are only enhanced to extend to administrative sanctions and why clear criminal sanctions for company principals are not applied where market fixing or price gouging is occurring.
The new sections 56 and 58, also under Part 3, amend the 1999 Act and allow for the provision of the appointment of inspectors and their powers. The new sections 59 through to 66 provide for the action which must be undertaken by these inspectors once they have completed their investigations, as well as the action arising therefrom. Section 59 provides for the completion of the draft investigation report, on which the body being investigated will have the opportunity to make submissions. The inspector, of course, cannot make any recommendations on the imposition of sanctions. The subsequent sections provide for oral hearings, court procedures and appeals, and the new section 66 provides for the power to impose administrative sanctions. Again, I wonder why these are only administrative. If there is clear evidence of price fixing or other interference with energy markets, why is there not provision for sanctions under criminal law?
We must ask whether the CER has ever been fit for purpose. When the Minister was on the Opposition side of the House, he sometimes questioned some of the decisions made by the CER. On the positive side for the CER, particularly since critical contributions have been made by the Minister and me over the years, more information is being provided to us regularly with regard to how decisions are made. The CER has failed to regulate price gouging and in the previous Dáil I called for its abolition and to start again. At the very least, the regulation of the energy sector requires a total relaunch and rebranding. Now the CER has been given a totally unnecessary role in the disastrous mismanagement of Irish Water.
Irish consumers have had to endure huge increases in electricity and gas prices during the years, and a recent EUROSTAT report showed we had the third highest energy prices in the European Union. I believe the Minister has said it is the second highest in some areas of energy, because when EU taxes and levies are disregarded in the EU-wide country comparison, Ireland comes out at second highest. While our lack of indigenous energy and the burdensome public service obligation, PSO, levy to stimulate production of renewable energy have played significant roles in our high energy prices, the existing regulator has simply failed in its primary function of invigilating Irish energy markets. As a result, Ireland continues to have a significant cohort of citizens suffering energy poverty each winter. When I was an energy spokesperson for another party in the House-----
We were all in that situation.
The Minister and I have a lot in common. At that time, I drew attention to the levels of energy poverty and constituents I knew who put on their top coat at night and would not put on the gas, desperately trying to keep the price down. We are all familiar with this and it is something we need to attack. There were some very cold months in the winter gone by and this is something we need to address. When I was energy spokesperson previously, the figure for the population suffering in this way was approximately 10%. When we have instances of seniors wearing their coats indoors to keep warm in December, January and February, we as a nation have a serious problem.
While there has been a 37% decrease in wholesale gas prices since May 2015, the CER has now called for a 32% increase in the PSO levy. I read its report closely. I realise there is public consultation on this proposal, but this proposed increase will completely counteract all the recent falls in energy prices across the market. The CER has estimated the PSO levy pot will need to rise from €325.3 million to €440.9 million to ensure security of supply, but the PSO has skyrocketed since 2011, and if the proposed new levy of €441 million is approved, it will have increased by nearly 400% since 2011-2012 when the levy raised approximately €92 million. Domestic consumers will be hard hit individually, with the annual amount in their bills jumping from €60 to just under €80 per customer. This is a very significant part of each hard-pressed householder’s annual bills.
Section 15 of Part 5 covers the wholesale energy market and transparency and provides for the increase of penalties for breaches of REMIT, the EU regulation on energy market integrity and transparency. These provisions seem very welcome, but I worry they are just administrative sanctions and will not be a sufficient deterrent for bad practice or even criminal malpractice. The Minister might say this would be covered under company law and other areas of our legislation, but given the price gouging that has happened in recent years, we need to send a very strong message directly in energy legislation. This section also refers to the possibility of forum shopping and market manipulators. How will this be policed having regard to the all-Ireland and EU wholesale market?
There are a number of miscellaneous amendments to various Acts provided for in the Bill. Part 6 covers amendments to the Sustainable Energy Act 2002. Section 17 provides for amendments to the 2002 Act regarding appointments to the Sustainable Energy Authority of Ireland, SEAl, board. Section 20 of Part 7 covers amendments to the National Oil Reserves Agency, NORA, Act 2007 and inserts a new subsection 43A, which provides for the exchange of information on oil data and payment of NORA levies. Section 22 of Part 7 discusses biofuel obligation account holders, certification and the publication of determinations on NORA's website. Section 24 provides for an increase to the deadline for NORA issuing notices to 75 days from 35 days, therefore increasing flexibility. Most of these changes seem welcome enough.
An important element of the Energy Bill 2016 is the reference to our cross-Border trade in electricity as per Regulation (EC) No. 714/2009 regarding such exchanges. Part 4 of the Bill amends the Act of 1999 to provide for such changes to the single electricity market in the Republic and the North. Of course, in March 2009, we had an historic moment when EirGrid purchased System Operator for Northern Ireland, SONI, which is the transmission system operator, TSO, in the North. This is something many of us interested in energy during the 2000s thought might happen, and this was ultimately good for energy security on the entire island. Together, they operate as the single electricity market operator, SEMO, throughout the whole island. The question must be asked as to whether the Department has been tasked with examining what impact Brexit might have on this. This is something we will have to watch very closely because there have been many important initiatives to increase energy transfers between North and South and between the two islands. Quite clearly, it is a core concern that we retain the security we have at present. What impact will Brexit have on the single electricity market for the island of Ireland?
I welcome the inclusion of section 16 in Part 4 relating to an energy strategy statement. This provides for the submission of a three-year energy strategy statement to the Minister, which must be laid before the Houses of the Oireachtas and subsequently published on the commission's website. The area of energy is something in which most citizens have quite a strong interest. It is a very interesting portfolio. The former Minister, Deputy Eamon Ryan, is sitting behind me. Constituents have drawn to my attention the achievement of Portugal in running on its own power for a particular period and how it had joined other EU countries in having had its major power grid powered by domestic renewable energy. I believe other countries have passed this milestone. This will be a big challenge for the Minister with regard to his climate change designation.
Another issue which has been raised, and to which the Minister might refer, is when he will become the Minister for bins. As somebody said, he has been given a hospital pass by the Government scrum-half, the Minister, Deputy Simon Coveney. That rugby ball is now heading across to his hands. I was asked by the Department today to refer issues to the Minister, Deputy Simon Coveney. Perhaps the Minister might give us an indication as to when he will catch the ball.
I prefer the round ball.
Okay. The three-year energy statement is very welcome and will be very interesting and helpful for Deputies and citizens. It documents objectives, outputs and resources. These statements must also include reviews of the effectiveness of the previous strategy. This will provide an opportunity to engage in reflection and seek improvement, if implemented correctly.
It is heartening, as I mentioned, to learn of developments in renewable energy provision, especially in northern Europe, and the manner in which several states and major cities have become independent of fossil fuel imports. Clearly, the invigilation and regulation of wider energy markets across Ireland, Britain and the European Union are critical to energy independence and security. I hope the Minister will be able to address this challenge closely in his period in government. He said earlier this month at the launch of Engineers Ireland's report, The State of Ireland 2016, that "the over-dependence on fossil fuels challenges all of us to work together to find a balanced and sustainable energy mix." Climate change and sourcing alternative, sustainable energy supplies is a huge challenge facing the country and the planet. Not only do we have targets to meet under the European Union's renewable energy directive and the United Nations COP 21 agreement, but we also have the reality of dealing with more extreme weather events that climate change is bringing to our daily lives. Citizens around the country suffered horrendous flooding a few months ago.
Engineers Ireland's report helpfully had a focus on energy and made some useful recommendations, including implementation of the recently published energy White Paper, the retrofit programmes for homes and public buildings and conversion of the national bus fleet and Ministers' cars to hybrid, electric or compressed natural gas, CNG, energy vehicles. Significant investment is required to tackle the impact of our energy usage on climate change, but it is now a matter of proactive investment to lessen the possibility of reactive costs such as fines and clean-up costs after increased severe weather events. I hope the Minister will have in his period of office and with the redirection and renaming of the Department a tremendous focus on the challenge posed by climate change.
Sustainable Energy Ireland has stated €35 billion is required in the coming 35 years to reduce the levels of carbon consumption in dwellings. Targets set for Irish hospitals to halve their carbon emissions by 2020 simply will not be met without significant investment. I ask the Minister to take this example on board. I believe he will soon be publishing the energy research strategy. Does he agree that the time has come for action and implementation of best practice in reducing carbon emissions and energy consumption? The Government can have any number of White Papers and research strategies it wants, but without key political leadership and action, there will be no change. We will continue to miss our targets. Climate change does not wait for any one of us or the nation. We clearly need to link this action with the budgetary process and restore the practice of carbon-proofing annual budgets. The Minister knows that a number of us are involved in the Committee on Arrangements for Budgetary Scrutiny. I think other Deputies agree that one practice to which we should go back is the carbon-proofing of budgets. I know that I have been highly critical of the Green Party's involvement in Fianna Fáil-led Governments in the past, but it was interesting to see the former Minister, Mr. John Gormley, and Deputy Eamon Ryan coming in with a statement on carbon-proofing. Perhaps that is something the Minister might try to do in the case of budget 2017. As I said, one of the few benefits in 2007 was the addition of a carbon-proofed budget.
I am strongly opposed to the inclusion of water services in the Bill, which suggests the Fianna Fáil-Fine Gael agenda remains to privatise the domestic water supply. The administrative sanctions and fines included in Parts 3 to 5, inclusive, while welcome, do not go far enough to combat and stamp out market manipulation and malpractice. I sincerely hope this Energy Bill marks a significant improvement in energy regulation and will inform our conversations on renewable energy and the changes we need to make urgently.
I apologise for the mix-up earlier.
That is fine.
The lasagne in the canteen put me off.
I hope the Deputy means that in a positive rather than a negative sense.
Positive. The food is very good.
I have a few issues with this Energy Bill. First, regarding the duration of membership of the board of the Sustainable Energy Authority of Ireland, it must be kept in mind that the mission of the authority is to play a leading role in transforming Ireland into a society based on sustainable energy. Given this, I would have hoped the board would comprise a mix of people from different backgrounds, including communities and environmentalists involved in the sustainable energy sector. In fact, the Minister will find it is made up overwhelmingly of people with a background in government, consultancy and law firms and especially from the world of business, including, for example, consultancy firms working for gas and oil exploration companies such as Veolia in the energy sector of Ireland. A board member of Veolia stated in the past:
In an increasingly environmentally sensitive marketplace, water is seen as a strategic asset which needs to be managed appropriately. This reality has prompted Veolia to develop a new metric [system] to help industry and local authority [areas] alike to grasp the obvious and hidden cost of water so they can make sustainable business decisions while ensuring long-term profitability.
Why does this board have no environmental campaigners or persons outside academic circles with expertise in the area of promoting sustainability?
I am also concerned about the proposed name change for the CER to reflect the economical management of water. The CER facilitates competition in the energy industry; I argue that it seeks to limit the role of State companies and help the private sector in the interests of competition. Would its role in the water sector be similar in theory? Is this to facilitate its role in encouraging future charges and private companies to enter the water industry?
Considering the very strong opposition in this country to any attempt to introduce water charges or the prospect of water services privatisation and the attempts to make a commodity of a precious resource like water, can the Minister understand these small, slight changes ring alarm bells for people that the SEAI is full of businesspeople who in past lives were concerned with making money from water services or oil exploration? Also of concern is the idea that an energy regulator that in the past facilitated private interests in making money from energy generation will now be tasked with encouraging the same competition and profit-making in water services.
I also want to comment on the biofuels obligation levy and what seems to be, again, a minor accountancy change in how the National Oil Reserves Agency, NORA, deals with the companies under the scheme. It is worth pointing to how the scheme, despite its supposed green credentials, actually wiped out many of the small indigenous firms involved in the biofuels sector in Ireland. It was introduced in 2011 by my colleague, Deputy Eamon Ryan, who claimed it would allow "the market ... to find the most efficient way of delivering the volumes of bio-fuel to the market, minimising the effect on consumers and the Exchequer." The market found the most efficient way to deliver profits for some firms, but it did little to put it on the road towards the sustainable and indigenous use of biofuels. The scheme favoured big industry and the importation of biofuels by larger companies and firms. Some 78% of liquid biofuels were imported in 2013. Nothing in the Bill will help to change this or see us invest in a serious manner to produce biofuels locally. Despite some guarantees, the switch to biofuels internationally is having a huge impact on the developing world's poorest, resulting in land grabs and rising food prices in commodities on which poor people depend. Even with a large proportion of transport fuels now comprising biofuels, it has not seen any decline in the overall volume of oil, etc., used; therefore, there has been no reduction in CO2 levels in Ireland. Ireland is still not on target to decarbonise or reduce CO2 emissions. We are already woefully behind in meeting the targets we need to reach to decarbonise the economy in terms of the investment in renewable energy sources and power generation and to hit our commitments under the Paris Declaration.
Is the Minister not concerned about the lack of ambition or vision in the Bill which proposes changes to the energy sector in this country? It is amazing that an energy Bill is brought to the Dáil that does not hint at the serious, catastrophic consequences of climate change and shows no real innovation in how we should tackle this issue, other than making slight changes to the board of the SEAI and the manner in which we audit biofuel use.
On the public service obligation, an issue on which Deputy Thomas P. Broughan touched, it is quite extraordinary that in 2011 the levy was €19.33, excluding VAT. It currently stands at €60 which the commission wants to hike to €90, including VAT.
There has been an increase of 40% in the past four years. John-Mark McCafferty, head of social justice and policy with the Society of St. Vincent de Paul, said:
With VAT added domestic customers are effectively paying a tax on a tax. In the interest of social justice and fairness, we urge a review of the PSO application for low income and struggling energy customers.
The PSO levy is a tax with which the Government orchestrates its energy policy and amounts to €40 million per year which goes to subsidise many private companies in the industry. I hope the Minister will take this on board.
I congratulate Deputy Denis Naughten on his appointment as Minister for Communications, Energy and Natural Resources. It is an extensive Department with responsibilities that extend into many aspects of our daily lives. I am confident that he will provide an extremely capable and decisive ministry and facilitate development, while balancing regulation and control with the practical needs of communities, particularly in rural Ireland. The Energy Bill 2016 is primarily concerned with updating the regulatory system, including the renaming of the CER as the Commission for the Regulation of Utilities, CRU. It is envisaged that it will provide, in primary legislation, more robust penalty provisions for breaches of EU rules on wholesale energy market integrity and transparency. The Electricity Regulation Act 1999 will be amended to increase the commission's powers in a number of respects, particularly in enforcement.
As a Deputy for County Clare, I have a great interest in energy generation, particularly electricity generation. The hydroelectric station at Ardnacrusha and the coal burning station at Moneypoint are located in my constituency. My primary concern lies with the future of the Moneypoint plant. It is the only coal-fired electricity station in the country and, given that coal is relatively cheap, it gives us correspondingly cheap electricity. The ESB has stated the station saves the customer up to €200 million per year in electricity bills.
Not only is generating electricity from coal very good value for money, it is also a major employer in County Clare. The station at Moneypoint employs 190 workers and up to 250 are employed by various subcontractors. Employment in County Clare must be set in the context of the anticipated loss of 240 jobs at Roche Pharmaceuticals in Clarecastle and the failure of the Industrial Development Authority, IDA, to attract significant foreign direct investment to the county. Besides the station at Moneypoint, there is only one significant employer in west Clare, namely, Trump International Golf Links and Hotel in Doonbeg.
The recent Government White Paper on energy, Ireland's Transition to a Low Carbon Energy Future 2015-2030, warned that key decisions must be taken on the station at Moneypoint by 2020. By 2025 the station will be approaching the end of its operating life in its current configuration. One of the major challenges facing the Government is the future of the station. It must have a viable, long-term future. Closing it is not an option.
The Climate Action and Low Carbon Development Act 2015 requires the new Government to produce a national low-carbon transition and mitigation plan, Ireland's first statutory low-carbon strategy for the period to 2050. A programme for a Partnership Government states, "The first national mitigation plan will be published within six months of the new Government forming." It will focus on a number of key areas, including electricity generation. The plan will examine specific measures to reduce emissions from electricity generation and outline how new technologies can be ready for incorporation into Ireland's electricity system and how the cost of existing renewable technologies can be lowered. A Programme for a Partnership Government promises a "national dialogue on climate change that will involve extensive public consultation". The programme states that in anticipation of the station at Moneypoint coming to the end of its operating life in its current configuration, the national dialogue on climate change will identify, as soon as possible, the most suitable replacement low-carbon generation technology.
The ESB has stated, "Any future decision on Moneypoint needs to be considered against the backdrop of the station’s economic benefits, impact on the environment, possible conversion to biomass firing, and emergence of new technologies, such as carbon capture, which may enable low carbon coal burn in the future". The ESB will have a major role to play in deciding on the best way forward in fuelling the station. One of the most publicised suggested alternatives is the conversion of the station from coal burning to biomass. One international expert has claimed that the conversion from coal to biomass could create 200 jobs and extend the life of the station at Moneypoint by 30 years. Even if the plant were available, sufficient acreage in Ireland would not be available to grow the amount of biomass required and much of the biomass would have to be imported.
While these issues are to be teased out by experts, time is not on our side. The decision to be made on the station at Moneypoint can no longer be put on the long finger. The decision to be made is how best to convert, adapt or modify the station to accommodate the most suitable replacement low-carbon technology. I invite the Minister to visit Moneypoint. It will give him the opportunity to meet the management and staff and a cross-section of the community and business interests in west Clare. I hope such a visit can be arranged in the near future. While experts have a key role to play in deciding the future of the station at Moneypoint, the voice of west Clare must be heard.
Regarding Brexit and the sustainability of Ireland's energy sector, 85% of our energy raw material or requirements are imported from abroad, much of it from the United Kingdom. We import gas and electricity via the interconnectors between the United Kingdom and Ireland, while 90% of our oil reserves are stored there. The European Union will have to make very special arrangements for Ireland in terms of its access to energy supplies via the United Kingdom.
I congratulate the Minister, Deputy Denis Naughten, on his appointment as Minister for Communication, Energy and Natural Resources. I have no doubt that he will be an excellent Minister.
While the Energy Bill makes some positive advancements, I worry that it fails to make any mark on energy generation in Ireland. It should have included provisions to ensure the wholesale purchasers of energy would be liable to pass on savings to domestic customers. While Vayu Energy which supplies gas to over 20% of Ireland's industrial and commercial market has stated businesses benefit from falling gas prices, this is not being mirrored at domestic customer level. Suppliers state they cannot pass on the benefit of price falls, given that they buy so far in advance; however, they can be very quick to pass on price increases. I call on the Minister to consider putting in place legislation to ensure all energy companies operating in the domestic market will be obliged to pass on energy savings to their customers. The impacts of climate change are devastating for millions of men, women and children who are living in poverty in developing countries. Livelihoods and lives are being lost to more frequent droughts and floods. As the Minister is aware, the impact of increasingly unpredictable weather conditions is also being felt at home. As one of the highest emitters of carbon dioxide per capita among our industrialised peers, Ireland cannot turn a blind eye to the fact that we are fuelling the crisis.
Moneypoint coal-fired power station is Ireland's largest single source of carbon emissions, burning 2.5 million tonnes of American coal per year. I urge the Minister to consider converting it to a sustainable biomass plant. That would help to deliver on Ireland's 2020 renewable electricity targets cheaply with only limited modifications required to the existing plant. By switching to sustainable biomass, Ireland's major potential to supply cost competitiveness and sustainable biomass could be unlocked. The move would guarantee a secure, long-term demand for Irish biomass which would create a more stable income for farmers and foresters. Making the change would offer a more positive investment in the rural economy and be an incredible economy and an effective strategy for Irish agriculture to fight climate change.
Broadband and mobile phone coverage are within the Minister's brief. As he is aware, the importance of the digital economy cannot be underestimated. Broadband is a major resource for businesses and there are significant growth opportunities for businesses and online trade.
It opens up a global market to rural tourism interests and small artisan producers. It is also a huge resource for schools, private homes and organisations. Without broadband, expensive electronic equipment such as white boards bought by primary schools is undermined, while efforts by Age Action to promote computer literacy among the elderly are thwarted. Irish Rural Network estimates that up to 10,000 jobs are lost in rural areas every year because there is a poor broadband service or none at all. Our cities have world class Internet speeds and distribution but rural areas rank among the worst served regions of Europe. Rural broadband is no longer a luxury but an economic necessity. There is no more important issue in terms of economic infrastructure and the future prospects of rural Ireland. Broadband will make rural Ireland sustainable into the future. Since 2004 there have been four Government initiatives to improve broadband, all of which have worked to a point, but major problems remain. Broadband has become faster and more places than ever are served, but 40% of the population and, geographically, 95% of the Republic still lacks commercial coverage. Ireland has some of the most pronounced two tier coverage in Europe. High speeds in urban areas have obscured poor coverage elsewhere.
The Deputy is taking advantage of my generous nature-----
I know, but it is a hugely important issue.
-----by exploring an area that is not really within the remit of the Bill.
Perhaps the Deputy is talking about smart metering.
We will let the Deputy continue if he does not go too far.
That is appreciated. Only 35% of Irish premises have broadband speeds of 10 Mbps or higher. More significantly, only 69% of Irish homes have broadband faster than a modest 4 Mbps. Ireland ranks No. 42 in the world in the distribution of fast broadband services. Commercial companies advertise broadband speeds of 240 Mbps in cities and towns, while those in rural areas subsist on speeds of 1 Mbps to 2 Mbps. The digital divide has become a chasm. Some areas of west Cork have never had a broadband service. In areas such as Ballylicken and Skibbereen, subsequent to the merger of 3 and O2, many who had a broadband service have been left without one. To have a bad broadband service is one thing, but to be left without a service is absolutely unacceptable in this day and age. For some, having been a customer of 3 for five years, their Internet service was taken and they were told they would no longer have a service within the scope required to pick up 3G broadband. These are very important issues which have huge consequences for affected businesses and individuals who are unable to work from home. People have been left isolated. The lack of a Internet service makes life extremely difficult. I call on the Minister to ensure a comprehensive investigation by ComReg to examine the reasons behind this and to ensure those who have lost their broadband service will have it reinstated as soon as possible.
I was glad to hear the contributions of Deputies Michael Harty and Michael Collins. This is a subject close to my heart. It is hugely important and complex and requires time and consideration. My interest stems from the belief the electrification of the economy will be one of the main ways in which we can meet the climate change challenge we face. There is not a wide understanding among the public of the nature and scale of that challenge. What we committed to in Paris, which is what we need to do according to the scientists, requires us as a developed country to completely decarbonise the energy system by the middle of this century, not by the end of the century, as the previous Government's White Paper indicated as the timeline. That will not meet what the scientific analysis states we need to do. There will be challenges in the areas of food production, industrial production and waste management. In the energy sector it is an opportunity. I will set out why we should grab it and how the Bill fits into that overall picture.
One is always taught that energy policy is a trilogue, that one has to balance the three competing interests of a competitive energy supply, security of supply and looking after environmental objectives. Some people add a fourth consideration - the balance of payments and developing the economy. Such is the scale of the challenge that the environmental considerations trumps all. We have to guide our development of energy sources towards decarbonisation. To a certain extent, that comes ahead of competitiveness and security of supply because the science is certain. The issue of competitiveness can be addressed in a variety of ways. We could become much more efficient in order that we do not need as much energy or we could turn to other energy sources. There is a variety of approaches to take. It is the same with security of supply. There are no choices on the decarbonisation path, but there are choices between various decarbonisation systems. We have to do it if we are to avoid the planet tripping onto a very dangerous runaway of climate change that will affect all of us, our children and grandchildren in an incredibly adverse way.
It is uncertain exactly which technologies will work. We should acknowledge this. We have to do it in an iterative way. No one knew ten years ago that shale gas in the United States would provide a major technological breakthrough. No one knew that the cost of photovoltaics would fall by 50% in the past five years. We should admit to uncertainty. Things change and we will learn by doing. The best analysis of what energy transition will involve recognises that electricity generation will play a central part in the transition we need to make. Some might say there are hydrogen fuelled vehicles that could be developed. In that regard, we would probably be creating hydrogen from electricity through electrolysis. In moving away from fossil fuels, electricity generation will be the way to go. Increasingly, it seems that renewable energy sources will play a central part globally. Some argue that it will be nuclear energy, but that is not happening globally; the investment is being made in renewables. In Ireland our market is small; we have little expertise in the area of nuclear energy and there are still risks in terms of security of supply and waste problems. Therefore, it makes more sense for us to go with renewables. This is happening all over the world and far more quickly than we thought. The transition will be about electricity generation and renewable energy sources which will give us a competitive advantage. The amazing opportunity we have as a country is that we are actually good at this and we could be really good at it. We need to be ahead of the game because it will allow us to sell our capability to the rest of the world. Only yesterday the US Government, with the Mexican and Canadian Governments, committed to ramping up the scale of their ambitions in order that by 2025 half of their energy supplies will come from a new clean low carbon system. We can sell into these countries. In China, if one looks at the statistics, it has overtaken the European Union and America in terms of the investment made.
I will be sharing my time with Deputy Catherine Murphy which will stop me in my tracks. Therefore, I had better hurry up. I was really warming to my task and the prospect of entering endless fields of figures.
There is an opportunity for this country. As I said, we are good at this and can excel at it. We can sell our expertise to the rest of the world and it will make us secure. It is our power supply. No one will ever go to war over a solar panel or a wind energy source. There is security in the fact that it belongs to everyone and there is a source everywhere. We just need to switch it on. It is far more secure than having to rely on imported Russian or Saudi Arabian gas; therefore, we need to make the switch and we can do it competitively. It is already happening.
People are rightly concerned about domestic prices. We have to address that issue. The biggest electricity consumers in the world are data centres. They are coming here in numbers because they know that we have a competitive, clean pitch. They cannot have a high cost carbon fuel supply. We cannot burn coal. If we claim leadership in this area and want to be competitive and secure, we cannot keep burning coal and adding wood to it will not work. Let us go to Kilrush in County Clare and have a good debate on it and look at the facts, but we cannot keep burning fossil fuels. It is as simple as that. The alternative can be clean. It will be a combination of renewable power sources and gas as an interim technology because we have more than enough gas plants which are sitting idle. They are much more efficient than the coal burning ones. We need to use them as interim technology to balance the variable supply. We also need interconnection.
The big investors know that there is a competitive ten to 20 year prospect in this country. That is the reason they are coming here and investing in those large data centres. They know they can get lower carbon and a relatively competitive supply because our wind power is cheap. It is probably the cheapest renewable energy in the world and we have a huge amount of wind resources. We must be careful how we manage it. We need to step back and try to win back the public on this and to get an understanding of that. We need to bring the power ownership back to the people. However, we should not turn our back on it because if we were to do that, what would we be doing to the secure supply and where would be the competitive advantage? Where would we get the digital jobs which would come in tandem with having this low cost electricity supply?
The European Union has been falling behind in this area. It was leading but because of a lack of confidence as a result of the financial crisis and because there were concerns about the competitive advantage of its shale gas resources, we lost our confidence in Europe with respect to climate change. We stepped back and said that we would not set such ambitious targets for 2030. The Commissioner may be getting it right in one way in the sense that Europe is saying let us piece the jigsaw together. That is what it is doing and it wants to apply the targets in 2017-18. Therefore, we must get our piece of the jigsaw right. We need to get the market mechanisms right more than anything else, which is what this Bill seeks to address.
I would make a broad point on the nature of the transition. We are going to make a 100% transition and most countries, including Ireland, have made a quarter of that. We are up there among the leaders. We are better than Denmark. We integrate renewables better than it does. We can be better than Denmark at this. We can sell our technology to the rest of the world. The first quarter of the transition was done by inserting renewables into the existing market system. The next quarter will be done by changing the entire system. Everyone know this. All the electricity markets in Europe are changing in recognition that this is the way we are going. Germany, in particular, is moving this way and that will drive the European approach. Therefore, we must make sure that we are in tandem with that. The system is not going to develop in the way that Germany did it for the first 25 years, which was the first quarter of the transition, with big subsidies for renewable power because already wind, solar or photovoltaic, pv, energy now generate lower costs than any of the other alternatives. However, we need to design the market system to make sure that providers can get access and that we use them in an efficient way. That is what we need our regulator to do.
The target market model system that the European Union has been relying on up to this point will not work because it still assumes that fossil fuels are the dominant fuel supply but everyone recognises that energy resource is gone and no one sees it as the future. We need to create a place in which investment can be made in the high capital renewable alternatives and we need to design our markets system around that. That requires us to do various things. It is a change from the old model, where we had big base-load plants such as Moneypoint chasing ever-increasing demand, towards a system where we have a variety of variable power supplies or a market based around an assumption of most power coming from variable supply sources. That will be matched with balancing that with variable demand and a range of payments to give investment certainty for the provision of power, the provision voltage frequency and stability on the system and flexibility with respect to energy services that come in this market system. That is how the market will have to be designed. It is complex. That is what our regulator has to do to make sure we are integrated with this new approach.
We have a difficulty because the UK was moving in a different way. It is not clear what is its energy policy. It has been led by the Treasury in recent years as much as by its energy department. They are backing nuclear and Drax coal-based power plants, which are incredibly expensive and, in the case of Drax, are not clean. We have a difficulty with the way that the UK is going and that is something we have to manage, particularly in terms of Brexit. There are a number of things that we know will work, whether it will be with the UK or whether we will integrate more with the rest of Europe at the same time.
The demand management component is the key critical element in this. Efficiency must come first in everything we do in the clean energy area. When we come to deal with Committee Stage, I hope the Minister will be able to give Ireland an economic advantage in incentivising demand management because it is the key. This is what everyone is seeking to be good at. No one has excelled in this yet. As a State, we have all the leading technology companies here, we have a single owner of our distributed grid, North and South, we are good already in terms of the balancing of this electricity system and we have a good regulatory system. I listened to colleagues who spoke earlier and they are always giving out about the Irish saying that we are the worst at this and at that. We are not bad at regulation. Our top regulators have moved on. Why is it that several of our regulators have been taken up by some of our European colleagues? The UK competition regulator is a former Irish communications regulator. The UK regulator of energy is a former Irish energy regulator. We are good at this. We have an independent system. We are good at implementing European regulations in the energy space. We have a good grid operator. EirGrid is a very talented company in this space. We have a good distribution company. We have all the conditions in place to be a world leader at the integration of energy demand management efficiency flexible systems. This is a prize we should grab. It guarantees our wealth and our jobs for the future in the west and in the midlands more than anywhere else. Let us grab it as the economic opportunity of our time, which it is.
President Obama does not spend all his time thinking about this. The US Energy Secretary, Steven Chu, came over here a few years ago. He spent four hours in EirGrid control centre because he knew what we were doing was ahead of the game. If we get very good at it, we can sell elsewhere.
The Minister needs to send a message to the regulator that in this process of dealing with this Bill we should look to be the best at demand management aggregations and should be pushing energy efficiency in everything we do. It is not easy to do that. No one has got it right. The European Commission is looking for countries to step up to the plate and provide this piece of the jigsaw, an example of demand manage aggregation using efficiency first in everything we do, and in the market signals that we create. Let us create 15-minute market opportunities where we put in scarcity pricing and integrate storage demand management heat integrated solutions. All this smart management on the demand side is what we need to be good at. The attractiveness of it is that it does not run into any of the obstacles about a big grid or big wind; it is managing that as we pause and work out what we will do next. As we push solar energy, let us work on the demand side and be world leaders at it and in doing that we will create security and competitive jobs by the tens of thousands for this country. That is the prize we should go for. We should use this Bill as a vehicle to send a signal to the regulator to go for that. Those concerned are well able to turn it into a reality.
We need to do this on an all-island basis. It makes no sense for us to have two electricity markets on this island. We made a great step forward when the single electricity market was set up nine years ago. It has worked and it was transparent and sophisticated. We need to evolve it and change it, which is what this Bill will do. We need to build interconnection between the North and South. As unpopular as that may be, I keep saying to my Sinn Féin colleagues seated on the lower benches and my Fine Gael colleagues on the opposite side that if we believe in an all-island approach, we have to build a grid. If we do not connect the North to the South, the North will separate from us. Forget about the politics, it will be the physics that will lead it.
We have a choice. We can say goodbye to Northern Ireland and the hope of a united Ireland, an all-island electricity market and all the benefits that would bring, savings to the South as well as the North, but it is that choice that we will have in the next year or two.
At what cost?
It will save us money-----
That is the answer the Deputy would give to the people.
Deputy Ryan, please do not engage in argument.
-----and it will create jobs and a united Ireland. This is not a cost, it is a gain.
It will not be easy as we go up through the various counties involved but from my perspective, if we do not do this, we will say goodbye to the North in terms of an integrated electricity market because the physics demand that we connect and we would be much better off. Does Deputy Cassells disagree, as he is shaking his head?
It is a scandal.
I beg your pardon.
This is not a committee meeting. The Deputy is addressing the Chamber.
It is scandalous.
Apologies, I will leave it to my colleague, Deputy Catherine Murphy, to continue the argument. I look forward to Committee Stage when we will get into the details. I hope the Minister is willing in this context. It is important that we send out a signal to the North that we are still in the business of having an all-island market, but it is important for us to get the economic opportunity right and give a signal to the regulator that efficiency and demand management is what we need to do. We can be good at this. We can create a great deal of employment with this and get cheaper power which would help all our people.
Thank you, Deputy. It is great to have such a passionate debate.
I do not know about continuing the debate where the Deputy left off but there was a proposal at one point for a ring main, which would have been offshore. I wonder why that was not taken up as it would have provided the prospect of a North-South arrangement. However, the onshore option was proceeded with.
The Bill sets out to provide enhanced enforcement powers to the Commission for Energy Regulation, including enhanced powers to carry out investigations in addition to the ultimate sanction, which is the revocation of the licence.
The Bill will allow the CER to issue directions and determinations to licenceholders and, if necessary, seek High Court orders and impose fines. I do not know what the extent of those fines will be. It is interesting to note that these enhanced powers are to enable the Commission for Energy Regulation to deal with licensed energy providers who engage in improper conduct. What constitutes improper conduct in a market? That may well be something which is subjective. When one takes into account the effect of taxes and levies, we have the highest basic cost of energy in the entire EU. I am concerned about the monopoly of the big providers of whom there is a really small number in the mainstream market in Ireland. The only genuine form of competition in the market is switching for customers, which is not all that straightforward. It can be offputting for many people, involving as it does direct debits and many other things. It is also interesting to note that we had the largest switching rate in the EU last year. That was probably prompted by the very high energy prices. However, people tend to switch between the big providers who already dominate the market. We have seen smaller providers begin to gain a foothold but it has not been enough to challenge the dominance of the main players. In that context, I am concerned about the issue of improper conduct to which the CER refers. It depends on what spectrum one is using.
While 56% the price of electricity in this country is accounted for by taxes, 44% is decided by the industry. Generally, it is the small householder or company who foots the bill because larger enterprises have a better chance of being able to negotiate their energy costs. They are bigger players and may well be able to negotiate price reductions based on wholesale prices. The average household is not able to do that. The energy companies pay dividends to Government and I wonder if that affects the decisions which are made. Indeed, the bigger the bills, the more VAT is brought in. I would hate to think that would have an impact on the decisions that are made. At the end of the day, energy is one of the main costs a household faces. Another interesting facet of this is the relationship we have between the main players. One does not have to look very far to see sponsorship and advertising and one wonders if that has a bearing on the level of proper analysis of this sector. The media must analyse companies and hold them to account given the extent to which prices in Ireland are such an outlier in respect of the prices in other countries.
According to a reply I received some time ago to a parliamentary question, the CER ceased to regulate electricity prices in 2011 and gas prices in 2014 on the basis that both markets are commercial, liberalised and operate within national and European regulations and that prices are set supposedly through competition among suppliers. If switching is the only means, one has to question that. Why are our energy prices so high and in whose interest is the Commission for Energy Regulation really working? There is a very clear focus on reducing prices, but regulating industry rather than regulating prices is really the point. The cost of living in Ireland is among the highest in Europe and our energy costs are a significant factor in that. People struggle with energy bills, and indeed the Society of St. Vincent de Paul has come to the aid of many, including some I know myself, who were not able to pay. To pick up on a point Deputy Eamon Ryan made, the then CEO of the CER, Mr. Dermot Nolan, left the commission in 2013 to take up the role of chief executive of Ofgem, the UK equivalent. Within weeks of assuming the position he had launched an unprecedented inquiry into energy prices and referred the entire sector for investigation by the Competition and Markets Authority. Interestingly, the inquiry, which went on for 18 months, found that most households in the UK were paying too much for energy to the biggest suppliers. There is a point in that. One wonders how our system would allow the CER to refer a matter it could not deal with itself for investigation given the impact of the UK inquiry. It is worth picking up on that point.
High energy costs in Ireland are not just a factor for households but for the economy as a whole. For example, we have an ideal climate for the location of data centres, yet many locate to places with far less ideal climates, perhaps because of high energy costs. Obviously, they are a key factor. An important factor in any inquiry into energy prices has to be the consequences of overcharging. If companies are found to be overcharging, customers who have been adversely affected by being cut off or whatever should be compensated. It changes behaviour if there are consequences. As such, consequences must be built in because that might well produce a result. The CER's remit no longer includes the regulation of energy and gas prices. If it does not have that power, we should look at another mechanism to ensure there is good regulation rather than simply leaving it to supposed market competition. Similarly, we must look closely at the PSO levy to ensure we get a return from it. If we are not using the contributions from the levy to create clean energy, our energy prices will continue to rise. As such, it is very important that the levy is properly managed.
When considering how to cut energy costs, we must also look at the money we are spending on old plants which cost more than they should by virtue of their age. Tarbert in County Kerry, for example, has cost between €250 million and €260 million despite the fact that it is a backup plant. Clearly, situations like that require one to look at alternative jobs for the workers. We need to manage some of those plants. While we obviously need backup, those plants will only last for so long, as well as which other forms of energy will come into the market. One must look at where people who work in those plants will go if the plants are closed. That is so in respect of some of the old peat-burning stations. Very often, they were the only places local people could get work. As such, there is a balance to be struck in navigating out of that situation.
While offshore wind and wave energy generation may be very expensive to invest in currently, it was clearly identified by the ESRI in advance of the publication of the Climate Action and Low Carbon Development Bill as having real potential and presenting a real opportunity for energy exports. Even where money was invested, the investment ceased and the information and investment we put in ended up in Scotland. Wavebob was one example where €10 million was invested. We should not be losing those kinds of initiatives. Wave and offshore wind energy generation has the potential to be the new oil because it is not subject to the same limitations as onshore wind generation. Onshore wind is problematic where there are large windfarms with large turbines in close proximity to homes. That has to be managed and the community must have buy-in if it is to accept it.
Regulations on distances and so forth will make an important contribution to people feeling more comfortable. Areas where there have been community initiatives have had much better experiences than those where lands have been bought, neighbours have found out what was happening and projects were suddenly on the verge of radically changing living environments. I support a move to clean and renewable energy, but it must be done sensitively. There will be significant resistance.
I take the well-made point on efficiency. We must build efficiency into everything. We are now starting to see various devices that people can use to manage demand in their homes. The more of this we see, the better. It will have an impact on the cost of energy, one of the major factors in every household's budget. We must do more about the cost of energy. Why should it be so much more expensive in this country than in other European countries? We must drill down, discover the reasons and eliminate them. This issue affects not just households but the entire economy.
Deputy Browne is among the last group of speakers, with 20 minutes. With whom does he propose to share his time?
My colleagues, depending on time.
I welcome the opportunity to contribute on the Energy Bill 2016. I congratulate the Minister on his appointment. He has settled in, but I have not had the opportunity to congratulate him before now. I broadly support the Bill, particularly the part that gives greater enforcement and sanctioning powers to the Commission for Energy Regulation, CER. To date, private and retail consumers have been ripped off by high retail energy prices. The consumer has not been getting a fair share of wholesale price cuts. Average oil and gas prices are at historical lows, with a 35% decrease in Irish wholesale electricity prices and a 45% decrease in wholesale gas prices, but the consumer has seen only minimal cuts. We need greater enforcement to ensure more fairness for domestic and retail consumers. While some reductions have been announced in recent weeks, they are not sufficient. The energy regulator's recent proposal to increase the public service obligation, PSO, by 36% would effectively wipe out these savings. It would see domestic energy bills increased by as much as €90 per year when VAT is taken into account. The PSO is subject to VAT, which is effectively a tax on a tax. While the original purpose of the PSO was a worthy one, it is a flat tax that lacks fairness and affects struggling families. The proposed increase, added to others, equates to a 400% increase in the PSO levy in just five years.
I support renewable and sustainable energy, but the levy seems to have little relevance any more to green energy and is instead a stealth tax worth €450 million per year to the Exchequer. As a flat tax, it makes a disproportionate contribution to the energy bill, and customers who are use-conscious have little incentive to reduce their usage, as any reduction results in little saving, given the high level of fixed charges. We have the third highest electricity prices in Europe, and the fixed nature of the PSO levy disproportionately affects the poorest. Perhaps it is time to review the levy's effectiveness and, most importantly, fairness.
I welcome the opportunity to contribute on this Bill. I was present when the Minister started this debate some weeks ago. As he stated, the Bill deals with technical legislative updates and revisions to energy legislation. I would like to touch on a related matter, namely, the change to the legal definition of the all-island wholesale electricity market - the single electricity market, SEM - to bring it fully into EU compliance. The coming together of the CER and the Northern Ireland Authority for Utility Regulation in 2007 to act jointly as the SEM committee for the purpose of regulating the wholesale electricity market was an important process in ensuring security of supply in an efficient, cost-reflective market.
During Question Time a number of weeks ago, the Minister told me that the SEM was something that he regarded as vital, but the issue of cross-Border supply has caused major controversy in my constituency of Meath and the neighbouring counties of Cavan and Monaghan due to the planned construction of industrial pylons across their landscapes. The rationale for this project is the potential for power blackouts, as the Minister stated two weeks ago, and threats to security of supply, but at what cost to the lives of the people of those counties? Their lives will be destroyed by the project. The appeals to have the project changed by placing the cables underground fell on deaf ears in the previous Government. The former Minister, Pat Rabbitte, went so far as to say that prices would increase by 3% if the project was undergrounded. This scandalous claim was disputed and verified as being wrong by the North East Pylon Pressure, NEPP, group during deliberations. I fear that people's appeals are falling on deaf ears again. I hope not.
All of this feeds into both Governments' mantra of tasking the SEM with developing new market arrangements for an all-island wholesale electricity market, but at what price? While EirGrid might be happy with the arrangements being discussed by the House, as they further solidify what EirGrid is trying to achieve and provide the basis for pursuing its infrastructural goal of a North-South interconnector, who is speaking out for the thousands of residents who would live in the shadow of these monstrosities? It is certainly not Deputy Eamon Ryan. I am sorry he has left the Chamber, as what he said was scandalous. It verifies what we know from our time in coalition with the Green Party, something that no Fianna Fáil Member reflects on with pride.
The NEPP, spearheaded by Dr. Pádraig O'Reilly and Ms Amy Treacy and supported by thousands of residents, has valiantly led the campaign to stop the pylons and bury the cables. People have collected donations to fight a giant body that has no end to the money that it can throw around in sponsorships in the affected counties, including through newspapers, local radio shows in my county that had the capacity and gumption to challenge it, and the GAA. As a proud GAA man, I am really galled by that. To see players from Meath and Tyrone being used in television adverts to promote the project and the GAA taking EirGrid's money for the under-21 football championship is a sad reflection on how money is ruining the greatest amateur organisation in this country. What about the young kids, including my own, who kick footballs for their clubs in the shadow of these monstrosities on the playing fields of County Meath? It will make the old British army tower at Crossmaglen look like small fry in comparison.
The recent High Court challenge where the community effort was faced down by dozens of high-powered legal teams representing EirGrid and the Minister demonstrated how the arms of the State were working against people. They need the arms of the State to work for and stand up for them. At the recent oral hearing by An Bord Pleanála, EirGrid's tabling of significant changes eight weeks into the process showed contempt for the people and landowners involved. An Bord Pleanála's decision is not due until late September. That notwithstanding, I urge the Minister to intervene, bury the project in its current guise and bury the cables with it. People are not asking for the project to be buried, only for the cables to be buried.
Plenty of officials will welcome the technical changes to the legislation for the SEM, but all these do for the people of County Meath is serve to remind them of how the Government is doing everything it can to allow bodies to achieve whatever they need in order to put their plans in place. No one is standing up for the people. I appeal to the Minister as an intelligent and, importantly, brave man, as he demonstrated in the previous Dáil.
He stood up for the people of Roscommon and was very principled and brave. I am asking him to take the same stand for the people of Meath, Cavan and Monaghan. He should not believe the line that the officials are peddling to him, namely, that there cannot be intervention in this regard. There most certainly can be intervention. A directive can be issued to put the cables underground. I appeal to the Minister one last time to work with the people and ensure that these cables are buried underground. Let the project proceed on that basis. What is being said is not gospel; the Minister should not believe it. He should stand with us and ensure the cables are run underground.
I wish the Minister well in his new role. It is certainly an interesting brief and will attract a lot of political attention, particularly at local level. We are all in favour of green energy but the community needs to be brought along. That has not happened to date.
I agree with everything Deputy Cassells said about the North–South interconnector. When this project was first proposed publicly in 2007, almost nine years ago, we were told that if it were not completed by 2010, the lights could go off in County Meath. That never happened. The project did not go ahead and the lights did not go off. Therefore, I question the rationale for the project. I certainly question the necessity to have the cables above ground. It is worth examining this matter. Numerous studies have been carried out and if the Minister examines the files, he will note we have come from a position in which only overgrounding was technically possible to a position in which undergrounding is technically possible. All of those involved agree on that, even EirGrid. What is not agreed is the cost. EirGrid does not seem to want to put the cables underground.
One of the key factors driving the cost of these projects is the delay in the planning process. The cost is probably unquantifiable in terms of the delay affecting the project because of the uproar among the general public. Under the previous Government, special consideration was given to the west, particularly the Taoiseach’s constituency, and the south. We in the north east, that is, those of us in Meath, Cavan and Monaghan, were not afforded the same treatment. This is because our Deputies at the time simply did not have the clout and did not show they were able to deliver like their counterparts in the west and, in particular, the area towards Kilkenny, where former Minister Phil Hogan was based. The latter Deputies certainly did seem to have the clout to effect change. We in the north east are left with what has been proposed.
Owing to the advent of wind farms, some communities in my constituency will effectively become international energy hubs. This has been foisted upon them. There is a huge amount of hardware of considerable size, including pylons and wind turbines, proposed to be located in certain communities. These are lightly populated areas in the overall scheme of things but there are still very many people affected. The Minister will have to reconsider this, both in respect of the North-South interconnector and the turbines.
I assume the North-South interconnector is at least being considered in the context of Brexit. When the Department considers everything that needs to be to dealt with regarding Brexit, I hope the interconnector will be included. Deputy Eamon Ryan alleged we are trying to stop the formation of a united Ireland in terms of electricity supply; we are not because we want to achieve it. Given that the project is being driven by an EU initiative based on projects of common interest and by funding at EU level, what is its status in the context of Brexit? I do not expect the Minister to have an answer but I do expect that he will be examining this very closely in the coming months. This could be an opportunity for the project to be reconsidered. I reject utterly what Deputy Eamon Ryan said. We want a united Ireland, with the consent of the Unionist people, of course. A united electricity market would be an extremely useful step towards that. Quite a number of practical steps would have to be taken, but that would be one of them. In the context of Brexit, serious doubt must be cast on this project.
Serious doubt must also be cast on all wind farm projects. While it is claimed they are for the purpose of providing electricity to the local market, their scale would suggest they are to provide electricity to the export market. What is the position on wind farms in the context of Brexit?
There is a proliferation of proposals for solar farms in my county, and planning permission is being sought for them. There are no guidelines at national or local level. Work has to be done on this. Solar farms are certainly not as intrusive as wind turbines but there is public concern about them. The idea of solar energy is good and is certainly to be supported but planning applications are being made with little or no community consultation, although there have been a number of public meetings involving some of the interested parties. However, these meetings are not a statutory part of the planning process. They really have no status in the strategic infrastructure process, of which they are not part.
The deadline for the REFIT scheme was extended but it seems to be the case that some are claiming the scheme will apply to a new wind farm project, at Castletownmoor in County Meath, which is a variation of a project in respect of which planning permission was refused. Planning permission has been sought again this year after the deadline, and those concerned believe that because the application is a variation of a previously refused application, it might qualify for planning permission. I would like the Minister to confirm the position regarding applications of that sort. I do not expect him to comment on the individual project. Planning permission was refused for the project in February. The application is now to be resubmitted under a different guise. It has not yet been made but there have been pre-planning consultations with An Bord Pleanála. Can those concerned apply under the REFIT scheme?
I urge the Minister to think about the proposed name for the Commission for Energy Regulation. If it is to cost a significant sum of money to change the name, I suggest that it not be changed. However, if it is to be changed, there must be a more user friendly name than the Commission for the Regulation of Utilities. The United Kingdom has Ofgem, which is a buzzword. Such organisations become known for what they do. The proposed name is dreadful. There must be a more user-friendly form. After all, the regulator is supposed to be acting in the consumer interest. It should be given a better name, a name to which the public can react and in respect of which it can have a sense of belonging. The public should understand the body is on its side and is looking out for it rather than the companies or industry. There has to be better name if the money is to be spent on it. I am not suggesting that the Minister do so.
I wish the Minister, Deputy Naughten, all the best in his role. From having listened to the debate all afternoon, I do not know what sort of role he has been given. I noted the wishes of Deputy Eamon Ryan and those of my three colleagues in front of me, and now I am going to come with my bag of wishes.
It is Knock I should be going to.
Needless to say, this Bill is very technical. I will not comment on the technicalities other than to echo Deputy Thomas Byrne’s point that the proposed name of the regulator is not the most user-friendly. If we are to do something for the consumer, perhaps we should consider a better one.
When I read the Bill, I was struck by the concept of the Galway-Mayo communications duct. It then struck me straight away that Athenry is 1 km from where the ducting is occurring. It has been waiting for some time to gain access to it. Access to Athenry opens up a completely new world involving reduced costs for schools and business development. The railway goes right through the area, and there would be benefits at domestic level. Most of the houses that were built during the boom were kitted out with gas so they are ready to go. If the Minister could consider this matter at some point, the people of Athenry and the surrounding areas would really appreciate it.
I saw the rest of the Minister’s brief. With regard to energy, some 2% of the grid output is from Ardnacrusha. Since we have floodwater from the Shannon in the middle of winter, from 9 December, and the grid gains by only 2%, is there any way in which we can support the ESB, by means of legislation or a directive, in dropping the level of the Shannon a little earlier to help deal with the flooding issues?
Flooding on the River Shannon has caused hardship for families and businesses and prevented infrastructure from operating for many months. I know of homes in Roscommon in the Minister's constituency which are still flooded. The impact is still being felt on the Shannon Callows, in Meelick and Portumna. The ESB should be allowed to lower the level of the River Shannon in September each year. This preventative measure would not affect people in Parteen or elsewhere and would alleviate the current crisis until the works being done by the Office of Public Works are completed and the recommendations of the CFRAM study implemented. It would also have significant benefits from an energy point of view and in terms of local authority manpower and the use of the emergency services. Furthermore, people would no longer worry about the possibility of waking up at night with 12 in. of water in their homes.
This is a good Bill. Any measure that supports consumers, for whom we advocate, and helps them to reduce costs is good. I wish the Minister well.
I welcome the opportunity to respond to some of the issues raised. Before doing so, I thank all Deputies who contributed to the debate in recent days. While some speakers were critical of my Department and questioned its policies, all of them took a constructive approach and I appreciate the general support expressed for the Bill. The number of Deputies who contributed demonstrates the importance and relevance of the issue of energy. While the Bill is technical in nature and does not deal with many of the broader issues raised, it is important to have a debate on energy.
As I stated previously, the Bill has been designed to revise, consolidate, update and expand existing energy legislation in a number of specific and well defined areas. Given this intention, the Bill does not set out to revise or recast the energy regulatory framework in an all-embracing or comprehensive manner. It is perhaps worthwhile restating the three main objectives of the Bill. The first is to establish a new administrative sanctions regime for the Commission for Energy Regulation. The second is to make a change to the legal definition of the all-island wholesale electricity market, the single electricity market known as SEM. The final objective is to rename the Commission for Energy Regulation as the Commission for the Regulation of Utilities or CRU. Consideration of whether wider and more comprehensive reform is required will be addressed in the review of the legal and institutional framework for the regulation of electricity and natural gas markets, including the CER's mandate. The review is the subject of a specific commitment in the White Paper. A much broader debate will take place - I hope later this year - not only on energy but also on the climate change and climate action agenda. I hope Deputies will contribute to that debate and discuss some of the policy issues they have raised in this discussion.
The support of Members for the provisions of the Bill are welcome and I look forward to its early consideration on Committee Stage. I advise the House, as I did at the start of Second Stage, that I propose to introduce a number of amendments on Committee Stage. In this regard, I intend to introduce some further minor amendments to the Electricity Regulation Act 1999 and the Gas (Interim) (Regulation) Act 2002. I ask members of the select committee to table amendments they may have as quickly as possible to allow them to be given full and fair consideration. I am anxious to take amendments from Opposition Deputies, where possible, and will consider all amendments with an open mind. If the Deputies opposite have thoughts on what should be the title of the new utility regulator, I ask them to contact me with their views on the issue. The overall objective is to progress the Bill to the Statute Book as efficiently and collaboratively as possible and I look forward to constructive engagement in that process.
A significant number of issues were raised by Deputies. I will comment on some but not all of them, although my officials and I have taken note of each of them.
Deputy Sean Sherlock referred to the need for engagement with the buyer of the Whitegate refinery site. I am willing to do this. The Deputy asked if the Department would explore possible opportunities following the sale, which is an ongoing process. We will examine the issue. My officials have been in contact with the current owners on numerous occasions and are available to the current owners or any prospective purchaser to provide clarification in the short term.
A number of Deputies asked what implications the United Kingdom leaving the European Union would have for the energy sector. While Brexit has significant implications for it, we do not believe it will have an impact on the all-Ireland electricity market. We want a united Ireland when it comes to electricity provision, as I am sure do all Deputies. While aspects of this issue are being moved on for European regulation purposes and forthcoming directives, the all-Ireland electricity market is the subject of an agreement between Ireland and the United Kingdom. This agreement stands and will remain in place. It is our intention to try to support it every way possible. Nevertheless, certain issues will arise as a result of Brexit, one of which relates to oil reserves. Ireland is supposed to have 90 days of oil reserves available. Approximately 20% of our reserves are held in the United Kingdom and EU rules prescribe that these reserves must be held in member states. If the United Kingdom proceeds with negotiations to leave the European Union, it would mean that some of our reserves will be held outside the European Union. Issues of this nature will need to be addressed.
While no issues arise for the energy sector in the short term, challenges will arise in the medium term and we will need to clarify the position on these matters. It is in the interests of everyone on these islands and in continental Europe that these islands achieve unity and a single purpose in the area of energy. Ireland is 85% dependent on energy imports, a large proportion of which are transported via the United Kingdom. The European Union as a whole is also dependent on imports from outside its borders and geopolitical issues on its eastern borders have caused problems. The current political instability in the United Kingdom will not be an issue in the medium to long term. It is important to maintain the good relationship we enjoy with the United Kingdom, which has never been stronger. My first bilateral meeting as Minister was with Lord Bourne, the UK Energy Minister. We will maintain our good relations with Britain and my officials will work closely with their colleagues in Northern Ireland and elsewhere in the United Kingdom. As recently as today, the Secretary General of my Department was in contact with his Northern Ireland counterpart and such contacts will continue. It is important for Ireland, the United Kingdom and the European Union that this connectivity is maintained.
The regulation of water services was one of the main issues raised by Deputies. This legislation does not deal with that issue but merely clarifies current law in this area.
I am a Member with personal experience of the Commission for Energy Regulation. I made two detailed submissions relating to water pricing. Some years ago I stood in the House and argued that people who received a boil water notice should not under any circumstances have to pay for water. That was rejected by the Minister standing where I am standing today. We did not get a chance to fully debate the issue. Irish Water argued that there should be a minimal discount for people if they had a boil water notice in place. In fairness, the regulator took on board a submission I made on the matter and waived the fee. Sometimes, regulators can be useful in listening to people's genuine concerns when a government is not prepared to listen.
Concerns have been raised about the potential privatisation of Irish Water. The current position has been conveniently ignored by some - I accept that some Members were not here before and I would not expect them to remember the debates. However, many Members who have articulated the issue of privatisation tend to forget that the only amendment on water accepted by the then Government from the Opposition benches was an amendment I tabled. It has led to a situation whereby no asset of Irish Water can be privatised without a public vote. That is in black and white in the legislation. Such a vote has to take place before any aspect of Irish Water can be privatised and I do not believe the people would let that happen.
Deputy Broughan mentioned the issue of fuel poverty and I am conscious of it. Many other speakers referred to the cost of energy for families. Deputy Browne spoke about the public service obligation levy. I encourage colleagues to bring representatives of the Commission for Energy Regulation before the committee and ask them to explain the PSO. The objective of the PSO is to support long-term sustainable energy on the island, the vast majority of which is renewable energy, although some of the scheme relates to peat and that arrangement will expire in the not-too-distant future. Deputy Ryan and I do not exactly agree on that point, but it is important.
Deputy Harty raised the issue of Moneypoint. We have challenges with Moneypoint as well as our peat-fired power stations in the midlands. It is true that we have to find alternative fuel sources for those power stations. However, there seems to be an impression that we could simply shut them down tomorrow morning and it would have no impact. The peat-fired power stations in the midlands employ 1,800 people directly and indirectly. Such a move would have a devastating economic impact. It is true that we have to transition, but we need to ensure a transition to a more sustainable future rather than switching off these stations overnight. Whether we like it or not, at the moment the peat-fired power stations are a secure source of electricity. In the current volatile situation we need to think long and hard about it. We have to move away from the fuel sources being used at the moment. Deputy Collins raised the question of converting Moneypoint to biomass and using local sources of biomass. To feed Moneypoint power station would require 300,000 ha of arable land. That is the equivalent of planting half the area of County Cork or, seeing as Deputy Browne is in the Chamber, every inch of County Wexford and every inch of County Carlow as well. Realistically, I do not see that as feasible. Deputy Harty asked whether I would visit Moneypoint. I am perfectly willing to do that.
Deputy Broughan raised the issue of fuel poverty. A number of speakers mentioned this one way or another, whether in the context of fuel prices or otherwise. I am conscious of this issue for several reasons. If we can improve the efficiency of homes, they will use less energy. If they use less energy, then there will be lower emissions. The cheapest barrel of oil is the one that we do not burn. There is a major impact on people's quality of life and health if we have more energy-efficient homes. That is why my Department and the HSE are piloting a warmth and well-being programme. We are going to intensively insulate and make energy-efficient 1,000 homes in west Dublin in the Walkinstown and Tallaght areas in the coming three years. This will be a pilot scheme specifically targeting people with chronic obstructive pulmonary disease. By improving ventilation and heating in homes, we believe we will see a significant fall-off in the number of people presenting to their general practitioners, requiring the facilities of the health service and presenting at accident and emergency departments. On average we will spend €20,000 per home. Not only will we be improving the quality of life and health for those people, reducing their energy consumption and the cost of their energy bills and, in that way, dealing with fuel poverty, but we will also be taking pressure off busy accident and emergency departments in those areas. It will be interesting to see how successful that is.
Deputy Broughan asked when I would officially become the Minister with responsibility for the environment. The memorandum has gone to the Attorney General's office. The responsibilities I will have as Minister for the environment run to 16 pages in the memo. As soon as it has been approved by the Attorney General's office, those responsibilities will formally transfer to me.
Deputy Kenny referred to the membership of the board of the Sustainable Energy Authority of Ireland. I put it to Deputy Kenny and everyone else that we have a good process in place. People can apply to be appointed to State boards. I encourage people, particularly women, to look to apply to State boards because we are keen to see far more women on State boards. However, my appeal does not only apply to women. Deputy Gino Kenny referred to the need for community representatives and environmental campaigners. People should apply and go through the process. I have no bias. Above all, I want good people to serve on boards. I have approximately 20 appointments to make on various State boards between now and the end of the year and I encourage people to go online to the State boards appointment service and apply.
Deputy Ryan spoke about becoming a world leader in demand management. We need to consider new ways. I may not always agree with Deputy Ryan but his heart is in the right place and he is right to put me under pressure. That is his job and the job of everyone else in the House. There is considerable merit in everything that he has said and we should take on board his suggestion.
Deputy Murphy spoke about dealing with issues such as renewable energy sensitively. It has not been dealt with sensitively. Deputy Byrne referred to the lack of guidelines for wind farms and solar farms and associated public concerns.
I was referring to wind farms in particular.
If there are issues with solar farms, I am keen to hear from Deputy Byrne about them. He can come to me with those issues. I am keen to hear the concerns being expressed at the moment. Deputy Byrne referred to delays in the planning process. Deputy Byrne and Deputy Cassells specifically mentioned delays with the North-South interconnector. There is a significant issue with this process across the board. Much of it comes down to the level of engagement that takes place with communities in trying to find sensible solutions to a range of energy projects that are coming on stream or that have come on stream.
Deputy Rabbitte mentioned the Galway-Mayo duct. I do not believe it will form part of this Bill. It is disappointing that there has been a hold-up in the Office of the Attorney General with the drafting of the required amendments we need in this regard. The objective is to try to connect up towns such as Athenry. It does not just affect the ducting but also, as Deputy Collins mentioned, the national broadband plan. We are determined to drive that plan forward to bring high-speed broadband to every home in Ireland.
Regarding Ardnacrusha and the levels of water on the River Shannon, there are two problems in my constituency at the moment, one relating to flooding in a mountain and the other relating to turloughs. There is a particular problem in the far part of Deputy Rabbitte's constituency in south Galway relating to turloughs.
All the Deputies and Senators in the north east have spoken to me about the interconnector. I understand the point of view of Deputy Cassells and others. It is before An Bord Pleanála at the moment and we will get a decision later this year. I am very conscious of what people are saying to me and I am listening to them. We will all keep a very close eye on what happens in the next few months.
We have major challenges in the energy area, as articulated by Deputies Ryan and Dooley and many of the others speakers who contributed to the debate. We all need to try to work constructively together. As I said in the committee meeting earlier today, I feel that my Department is very much a facilitating Department in dealing with many of the issues relating to the climate change and energy agenda. We need to work with other Departments and work with communities rather than against them to drive the kind of change we need. I hope to be able to facilitate that as Minister.