The purpose of the Bill is to authorise the increase to £160 million of the existing statutory limit of £135 million on the capital expenditure which the Electricity Supply Board may incur for general purposes, that is to say, exclusive of capital expenditure on the electrification of rural areas.
At the 31st March, 1963, the actual capital expenditure of the Electricity Supply Board for general purposes was about £97 million. In addition, the Board had entered into commitments for the same purposes amounting to approximately £37 million. The total of £134 million covers expenditure already incurred and expenditure likely to be incurred on foot of present commitments up to 1968-69. It includes provision for 470 Megawatts of generating plant yet to be commissioned. It is expected that all this additional plant will have been commissioned by 1969 and the Board's generating capacity will then be 1289.5 Megawatts, of which 219 Megawatts will be hydro, 407.5 Megawatts peat-fired, 15 Megawatts fired by native coal and the remainder of 648 Megawatts fired by imported coal or oil.
The Board must plan system extensions well in advance, especially generating plant extensions. The Board must, in fact, be in a position to enter into commitments in the immediate future in respect of additional plant and equipment which will be required after 1969. As the total of the Board's expenditure and commitments is now approaching the limit of £135 million set by the Electricity (Supply) (Amendment) Act, 1962, which was passed in July, 1962, the authority of the Oireachtas to the raising of this limit to £160 million is now being sought.
It will be recalled that I said when moving the second reading of the 1962 Bill that the limit of £135 million was expected to cover the commitments likely to be entered into for the next two years or so. At that time the ESB were assuming an 8 per cent per annum rate of growth in the demand for electricity. The board are still working on an annual growth figure of 8 per cent long term but they have found that they must be equipped to deal in the short term with annual growth rates exceeding 10 per cent. For example, in the year to November, 1962, i.e. before the onset of the very bad weather, the growth rate was 10 per cent. To meet the load situation which would develop with an accelerated growth rate of that order the board have decided that three instead of two extra 60 megawatt generating sets must be installed at Ringsend thus bringing the capacity of that station in 1966-67 to 270 megawatts. Commitments in respect of the extra 60 megawatt set at that station, which must be entered into immediately, practically exhaust the board's authority to incur capital expenditure for general purposes and this explains why it is necessary to seek the approval of the Oireachtas to increase the limit at least a year earlier than had been expected.
On the basis of their forecast of a long-term rate of growth in the demand for electricity of 8 per cent per annum, the board expect that further capital investment amounting to about £27 million will arise for approval in the next three years. The construction of about 200 megawatts of additional generating capacity and large extensions of the transmission and distribution system are envisaged.
It is expected that all bogs suitable for economic development by present methods for power station fuel will be in production by about 1970. Power stations have already been sited on all the rivers capable of being developed economically for hydro electricity generation, and, while the collection of data on other water power resources is continuing, no significant additions to generating capacity can be expected from them. The possibility of using the indicated reserves of high ash coal, known as Crow Coal, in the Arigna area as fuel for an extension of the Arigna generating station is still under investigation but, in any event, the amount of additional generating capacity which could be based on the Arigna coalfield is insignificant in relation to future generating plant requirements. Unless, therefore, we should have the good fortune that adequate and economically workable reserves of oil or natural gas are discovered in the country, we must rely on imported conventional fuel or nuclear energy when that becomes economic to supply energy for new generating stations commissioned after 1970.
The ESB continue to watch developments in the application of nuclear power for electricity production, but so far conventional methods of generation are cheaper.
The unprecedentedly heavy demand for electricity experienced during the prolonged spell of severe weather last winter taxed the Board's generating system to the limit. It was only by calling on every available generating unit including the stand-by plant at the Pigeon House, which had to be worked well beyond its rated output, that the Board were able to maintain supply throughout this period. Early in February the peak load reached a high record level of 632 MW. The difficulty of maintaining supply was accentuated by the widespread damage to transmission and distribution lines caused by blizzards during this period. The extent to which the Board succeeded in maintaining the supply of electricity during this period was really an outstanding achievement and I am sure that Senators will agree that the Board's staff concerned are deserving of heartiest congratulations for the excellent services rendered by them.
Although it does not arise directly on this Bill, I should like to say a few words about the progress of rural electrification. The 1962 Act authorised an increase in the capital subsidy for the connection of rural houses to the electricity supply to 75 per cent of the capital cost, subject to a maximum of £75 for any one house, and authorised the Board to spend an extra £5 million on the scheme, bringing the total permitted expenditure on it to £37 million. A special grant of £90,000 was provided for "backbone" distribution lines in certain rural areas which it would otherwise be quite uneconomic to connect. The Board are now pressing forward with the completion of the initial scheme and expect that the development of all areas will be completed by June, 1964.
At the same time, the Board are putting into operation a further programme under which all, or nearly all, houses still without supply will be re-canvassed over the next few years and local post-development schemes to bring supply to all those now requiring it will be drawn up. It is a feature of the rural programme in its final phase that some houses now prepared to take supply, may have to wait awhile until the post-development scheme for their locality comes to be carried through, but this is inescapable if orderly progress, rather than haphazard individual connections, is to prevail and thus ensure the minimum capital expenditure on the work and, consequently, lower special service charges for those who have to pay them. It is expected that comparatively few people will have to be asked to pay special service charges of more than half their normal fixed charge.
The total number of consumers connected under the rural electrification scheme at a recent date was 271,763 which together with 14,370 consumers who had been connected before the rural areas were developed gives a total of 286,133 or approximately 72 per cent of all rural dwellings. The total capital cost of rural electrification to date is about £32 millions. On the basis of the present subsidy arrangements the Board can offer supply on reasonable terms to some 100,000 rural dwellings still unconnected. The Board expects that about 64,000 of these will accept supply during the next four years and that in due course some 96,000 will be connected bringing the total rural connections to about 96 per cent of all rural dwellings. This achievement compares very favourably with what has been achieved in many better-off European countries. The total estimated capital cost of connecting the 96,000 houses is £7 million or, on average, about £75 per house.
There are, however, some 12,000 houses or about 3 per cent of all rural dwellings which because of their isolated locations would be hopelessly uneconomic to connect. The total estimated capital cost of connecting these houses is £2½ million or an average of over £200 per house. While a subsidy of £75 per house is available in these cases very heavy special service charges cannot be avoided because of the inordinately high capital cost of connection. It will be appreciated that the cost of connecting these houses would be altogether out of proportion to any benefits to be conferred. The vast majority of these houses would be connected mainly if not wholly for lighting and cooking. These needs could in these cases be met in a reasonable way by alternative fuels and the initial cost would be insignificant compared to what it would cost to connect with the electricity supply. With this end in view the Government have made available a grant of £10 per house towards the installation of bottled gas for these houses.
Senators will, no doubt, have been struck by the magnitude of the capital investment in the electricity industry which will be required in the future, and by the rate at which it has increased. The maximum expenditure of the ESB for general purposes, i.e. excluding expenditure on the electrification of rural areas was set at £100 million by the Electricity (Supply) (Amendment) Act, 1954. In 1961, the figure was raised to £120 million, in 1962, to £135 million and it is expected that in three years' time the limit of £160 million now proposed will have to be raised again. The foregoing figures are exclusive of expenditure on the electrification of rural areas, which has to date cost between £32 million and £33 million. Increasing capital investment in the electricity industry is common to all countries and, indeed, the consumption of electricity in any country is a good measure of the degree to which that country has been economically developed. Of course, as I have already indicated, the Board's cash requirements lag considerably behind their commitments.
Re-investment of their depreciation funds at present provides about half the Board's annual capital requirements. For a number of years past, apart from rural subsidy totalling £5 million and minor receipts from other sources, the Board have obtained the remainder of their capital requirements direct from the public by the issue of stock guaranteed as to principal and interest by the Minister for Finance. Stock to a total of £27 million has been issued to date, including the successful issue of £7 million in March last. The eagerness with which the Board's capital issues have been taken up by the public is a measure of the public confidence in the organisation, a confidence which I feel sure is shared by this House.
I recommend the Bill to the House.
