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Seanad Éireann debate -
Thursday, 16 Jul 1981

Vol. 95 No. 23

Electricity (Supply) (Amendment) Bill, 1981: Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Tá sé riachtanach go mbeidh Bord Solathar an Leictreachais ullamh chun freastal ar an éileamh fuinnimh. Seachas stad nó laghdú beag anois is arís, bionn an t-éileamh seo ag dul i méid i gcónaí agus ni thiocfadh borradh agus fás san eacnamíocht, ar a bhfuilimíd ag braith chun fostaíocht a sholáthar dár ndaoine óga, gan an t-éileamh sin a shásamh. Braitheann tionsclaíocht agus eacnamaíocht na tíre go mór ar chumas agus éifeacht Bhoird Soláthair an Leictreachais. Ó bhunú an bhoird sin nuair a cuireadh tús le Scéim na Sionainne go luath tar éis bhunú an stáit féin is mór mar a chuir BSL le dul chun cinn na tíre. Is chun deimhin a dhéanamh de go mbeidh sé ar chumas an bhoird leanúint leis an dea obair sin atá an Bille seo á chur ós comhair an tSeanaid agam inniu.

The purpose of the Bill is to raise from £1,200 million to £1,400 million the limit on total expenditure by the ESB for capital purposes. Senators will be aware that the primary function of the ESB, under the Electricity Supply Acts, is to ensure the adequate supply and distribution of electricity throughout the State. The board has a number of other subsidiary functions but we are concerned here with the board's main responsibility to ensure that electricity is at no time in short supply.

The history of electricity generation in Ireland since the ESB was established over 50 years ago shows that although there were periods when demand levelled off, overall there has been a steady increase in electricity consumption over the years. The enormous growth in demand over the past 50 years is illustrated by the following figures: in 1930 the ESB had 50,000 customers and sold 43 million units of electricity. At year ended March 1980 the ESB had one million customers and sold 8,560 million units of electricity. This means that a 20fold increase in customers created sales almost 200 times greater.

In order to keep pace with this demand there has been a continuing capital investment in electricity generating plant and networks. Generating capacity now stands at 3,090MW, compared with something in the region of 85MW when the ESB was in its infancy. This reflects our increasing reliance on electricity in industry, commerce and the home and demonstrates its essential function in the economic and social expansion of the country. Electricity now accounts for about 31 per cent of our energy requirements.

Demand for electricity is closely allied to economic and social development and therefore it is in the nature of things that it can be expected to increase. Planning to meet that demand is very complex requiring a high degree of flexibility. The long lead time of eight years or more required for the construction of base load plant means that we are now building to meet expected electricity demand at the end of the decade. Such long-term planning requires flexibility to allow for factors which are not readily predictable. This is why flexibility is an integral part of the plant programme currently approved in respect of the ESB. The plant programme envisages an additional capacity of 1,435MW, towards the end of the decade but about 32 per cent of this is in the form of combustion turbines. These are intended to meet peak demand. Because of their relatively short lead time of about three years, their construction can be deferred to coincide with any fall off in electricity demand, for whatever reason. This is the flexible element of the plant programme.

Of course increased investment in plant entails expansion and improvement of transmission and distribution networks. A significant proportion of the ESB's capital investment goes into such works. But there is another element in our energy strategy which is of vital importance. We must decrease as much as possible our dependence on oil. At present, generating capacity is about 54 per cent oil-fired. In the knowledge that oil is a rapidly diminishing resource, it is only prudent that we should reduce our reliance on that particular energy source for electricity generation. This is why base load plant recently constructed and currently under construction is intended to be fired by fuels other than oil.

A major diversification away from oil will have been achieved when the 900 MW coal-fired station at Moneypoint is commissioned between 1985 and 1988. Construction of an additional 80 MW of peat-fired plant, some 240 MW of dualfired plant which will accommodate natural gas and the prospect of over 45 MW of plant burning low grade native coal will ensure maximum use of native resources and make a not insignificant contribution to the programme of diversification. Thus, towards the end of the eighties we will have reduced to just over 40 per cent the amount of our generating capacity which is dependent on oil.

Although the plant programme which I have outlined is the mainstay of our strategy in relation to diversification for electricity generation, we would be lacking in responsibility if we did not assess the prospects of alternative energy sources in the face of finite and shrinking conventional resources. The ESB are playing their role in this regard. A practical example of this is the board's current windpower programme. Four medium-sized wind turbines will be sited in four different locations to again first-hand knowledge of the economics, efficiency, reliability and availability of wind energy in the Irish environment. The programme will cost an estimated £630,000. The ESB have also been examining the possibilities of biomass as an energy source. This project is EEC supported and is being carried out in conjunction with Bord na Móna and the Forestry and Wildlife Service. The ESB have, in fact, been successfully using wood waste and thinnings combined with slack in their smaller stations.

In the field of wave energy, the board participate in tests being carried out in Japan and Britain and monitors developments world wide. While practically all of the major hydro sources have been developed a number of rivers have been surveyed for small hydro potential and work on a project for the Ballisodare river is continuing. The board also provide an advisory service to the public in regard to private development of small hydro resources. My Department are at present examining the possibility of making funds available for such development.

For almost a decade the ESB have been interested in the prospects of district heating. A project demonstrating the commercial use of residual heat derived from electricity generation is now well advanced at the Lanesboro power stain tion. District heating studies are being undertaken in the Dublin inner city areas and the Mahon Peninsula near Cork city. The ESB have been commissioned by Dublin Corporation to study the possibility of incinerating refuse to fuel the Ballymun district heating system. This system at present uses oil.

In the past few years, the ESB have played an important role in energy conservation in the domestic and industrial sectors. Since 1974 the ESB's advisory service for industry has been helping industry to achieve economies in energy usage through conservation and efficient usage.

In the domestic sector, the board have launched publicity campaigns with various conservation themes, including the issue of leaflets and booklets on the efficient use of energy. It is interesting to note that many of the applications for grants under my Department's attic insulation scheme are the result of promotional activity by the board.

Within the next couple of years there is the prospect that natural gas will be piped to Dublin and other centres of high population density. All these developments taken together should contribute towards bringing down the level of peak demand for electricity. This, in turn, should contribute to a reduction in capital investment on new plant in the long term.

On the question of nuclear energy as a source of electricity in Ireland I would emphasise that the Government's policy is quite clear. No final decision will be taken until such time as a thorough examination of all relevant aspects, including safety, economic and environmental considerations, has been completed.

It is a matter of considerable regret that the electricity inter-connector with the North has been out of action since 1975. The interconnector proved its value when it was in operation in the early seventies. If it had remained undamaged it would have enhanced our security of electricity supply, provided considerable savings in fuel consumption, created the prospect of significant savings in capital investment in plant and provided profitable opportunities for trading of electricity. I am sure it is the will of this House and of the people as a whole that those responsible should realise the immeasurable damage to the economy their actions have caused. The Government are determined to pursue their efforts to achieve maximum security of supply and efficiency of operation which interconnection with other electricity grids can provide.

Senators will be aware of the capital and labour intensive nature of the electricity supply industry. For example the capital budget of the ESB in 1981 is expected to be about £209 million. The bulk of this is for construction of plant but some £70 million will be spent on improvement of networks. The number of new jobs arising out of that expenditure is expected to be in the region of 1,350. The expected breakdown of capital expenditure in the period 1982 to 1985 is as follows: generation projects — £700 million; transmission — £150 million; distribution — £200 million; premises and general — £50 million.

The existing statutory limit on capital expenditure by the ESB was increased by £500 million to £1,200 million under the Electricity (Supply) (Amendment) Act, 1979. This was sufficient to meet the ESB's requirements for about two years and the stage has been reached where capital expenditure by the ESB in excess of the present limit is unavoidable. It is necessary, therefore, that the limit should be raised to £1,400 million to enable the ESB to get on with their capital programme. The increase now proposed will meet the ESB's requirements for only about a year.

However, the ESB have put proposals to my Department that future statutory limits should be expressed as a borrowing limit as in the case of other State bodies such as Bord na Móna and Bord Gáis Éireann and not as an expenditure limit. The proposed increase in the expenditure limit is therefore an interim measure until my Department, in consultation with the Department of Finance, have considered the ESB's alternative proposals.

I commend this Bill to the House.

I would like to welcome the Minister and wish him well in his very responsible position in charge of our energy policies on which so much of our future prosperity depends. I am very glad to be able to support this Bill because for 13 years I had the satisfaction of participating in the deliberations on forward planning as a member of the board to which I had the honour of being reappointed by different Governments. I had, therefore, first-hand experience of the conscientious commitment of the directors and management to the objectives of the board which are to serve the community to the best of their ability and to ensure the availability of electricity in parallel with our economic growth and at minimum cost to the Irish consumer.

In retrospect, however, we must admit that plans to achieve these objectives were taken rather in isolation and the setting up of the Department of Energy has been a major step forward, and I must compliment the former Minister, Deputy Colley, for the personal flair and dedication which he gave to the initial co-ordination of our sources of energy and to the development of the Department.

As the Minister has said, the ESB are a highly complex and technical organisation and as a member of the board, although I might have been qualified to talk on finance and marketing, industrial relations, economic affairs and changes in structure according to the rapidly changing circumstances, I often found it difficult to question specialised or technical assumptions concerning proposals relating to the new generating stations or distribution networks as put forward by the executives. I was delighted to read in the Official Report that the Minister stated in the Dáil that those in the Department of Energy are well qualified to forecast energy needs and are well equipped from the point of view of manpower and technology to monitor the energy needs of the economy. These are factors which I consider vital in order to complement the contributions made by part-time members of State boards.

In my time, over four years ago, I recollect that we were more than 70 per cent dependent on oil and I am glad to read that this was down to 64 per cent at the end of March 1980 and 54 or 55 per cent at the end of March 1981. Deputy Colley, in conjunction with the board, is to be congratulated on this quite dramatic achievement and I have no doubt that the target of 40 per cent at the end of the eighties will be achieved given the continuity of the exemplary co-operation and co-ordination there is between the board and the Department of Energy. Because of the long lead time of eight years or more required for the construction of a generating station, the ESB, I found, were more conscious of forward planning than any of the other State enterprises and in the debate on the science budget — which sadly was never concluded in this session of the Seanad — the only criticism I had was that Government Departments were required to prepare expenditure projections only up to the year 1983. It should be for at least ten years. I reckon that is why we are hearing now in so many reports on the various State bodies that one of the major problems is under-investment because of the lack of adequate forward projections in the past ten years.

Another illuminating proof of the success of the Department of Energy has been the forward planning of alternative sources which the Minister has illustrated in his opening statement. The urgency to make a decision on nuclear energy has receded. The magnitude of such a decision was brought home to me as a member of the board some years ago when the estimate was £600 million, which in today's terms could probably be trebled and in ten years' time, God knows what the estimate might be. I just mention this to illustrate the fact that what we are asking for today, the increase in the total expenditure from £1.2 to £1.4 million, is minimal and obviously only of a temporary nature.

I have said it before and I will say it again: it is important to make it clear to the public at large that the ESB must raise capital through internal resources and by borrowing on the home and foreign markets at the going rate of interest. It is a measure of the ESB standing with the financial institutions here and abroad that they have been successful in raising capital in the past for their developing programme. It is essential therefore that the financial soundness of the operation is sustained and thus the ability of the ESB to borrow externally should not be prejudiced by the demands from other State bodies without a full knowledge of the total facts concerning our total national borrowing requirements and powers projected forward on an annual basis for the next ten years.

My point is that as members of the EMS our external capital borrowing powers are restricted and that some of the projects which we have in mind at the moment may have to take their place in a list of priorities. In other words, where such projects cannot be funded either from internal resources of the public body in question or from borrowings within the country, it is obvious that with the restricted ability under the EMS to borrow externally, then questions of nuclear stations, jumbo jets, CIE subsidies, rail and road networks and other infrastructural proposals must be looked at in the context of our total potential national borrowing programme. While I have been a Member of the Oireachtas I do not consider that I have been alerted sufficiently to the enormity of future borrowings from capital projects which face us so that priorities may be debated in time with more realistic appraisal.

I cannot let the opportunity pass without paying tribute to the late Jimmy Kelly with whom I had the privilege of working whilst a member of the board. Because he was a humble man his contribution to the progress to our largest State enterprise will be under-estimated. He served us well during a time of great expansion and unprecedented social change. He was a man who was totally immersed in the affairs and progress of the ESB. He bore his great responsibility with calm and fortitude and he was an inspiration to all both within and outside the ESB. We are fortunate now to have a man of Paddy Moriarty's ability and qualifications to succeed him but I should like to say that we must also be grateful to Jimmy Kelly for choosing and training his successor — this could be an example to other State enterprises — in advance of his early retirement and sad demise.

I hope the comprehensive agreement under discussion will come to fruition because it is difficult to understand how in a well-structured and efficient organisation like the ESB which has improved its communication system with the staff enormously and has shown internally deep concern and continual research into all aspects of industrial relations any small pockets of dissatisfaction could block such a goal. We need more than ever the removal of any threat to the community by a stoppage to electricity supply.

A comprehensive agreement would provide the proof that we need that the appointment of four worker seats on the board has brought new hope in the direction of finding a logical solution to the national problem of unofficial disputes. Proof that the advancement of worker participation towards more stable industrial relations in this and other State bodies will be an encouragement to the private sector. We hear reports that electricity costs are amongst the highest in the world and I am not quite clear how much of this is due to the fact that the ESB does not receive Government subsidy like other State bodies. I am, however, satisfied that the past performance of the ESB now co-ordinated with the assistance of the Department of Energy will ensure that electricity costs are moderated in the future so that Irish industry can remain competitive. In supporting the Bill I wish the Minister well in his efforts to achieve these goals.

Ba mhaith liom treaslú leis an Aire as a ainmniú don Roinn Fuinnimh agus tá siúl agam go n-eireoidh go geal leis san oifig sin. Ba mhaith liom chomh maith le sin focal molta a rá don bhord seo leictreachais. Mar a dúirt an tAire féin i nGaeilge, tá sé riachtanach go mbeidh an bord ullamh chun freastal ar an t-éileamh fuinnimh. Is féidir a rá i dtaobh an tionscail seo gur féidir gach céim ar aghaidh i dtionscail na tíre a fheiceáil le méadú an bhoird féin, le méadú cur amach fuinnimh leictreacais ón mbord féin agus ar shlí chuirfeadh sé eagla ar dhuine tabhairt faoi deara an méid ina bhfuil fostaíocht i dtionsclaíocht sa tír seo ag brath ar an soláthar leictreachais féin. Tá sé sin, mar a dearfá, i ngluaiseacht an tsaoil féin, mar 40 blain ó shin is mó tionscail ag feidhmiú sa tír seo a bhí ag brath ar obair láimhe agus is beag ceann atá fágtha anois. Tá gach rud á dhéanamh tré usáid fuinnimh.

All Members will give support to this Bill and I do not propose to delay its passing. I commend the work of the board, directors, executives and workers of the Electricity Supply Board on the initiatives taken by the board as outlined by the Minister. It is extraordinary the degree to which we are now dependent on the success of the energy-producing ESB. I welcome their proposals, which, I hope will be successful, to reduce the dependence of the Electricity Supply Board on oil, as set out by the Minister. Indeed, the whole area of energy production is one that is fascinating and vital.

I welcome the idea of giving support to any private interest that may be able to provide additional water power. I welcome the experiments that are taking place in the use of wind as an energy producer and the experiments that are taking place in the production of biomass. At a later stage if the biomass development is found to be successful can any encouragement be given in this area to private interests to engage in the private production of electricity for the ESB? I understand that the problem in the biomass areas is that of centralisation, that the efficient means of production of energy through the use of biomass involves having to centre the plant in the area where the timber is grown. There are a couple of questions that occurred to me which are of some interest. One is, to ask the Minister the extent of involvement of the board in overseas development, particularly in the Third World. I should also like to know the extent of borrowing by the board outside of borrowing from the State. Finally, I should like to know the cost of the free electricity scheme to old age pensioners. What is the Exchequer contribution to the board for that free scheme? I welcome the Bill and support it.

Déanaim comhghairdeas chomh maith leis an Aire agus treasláim a ghradam nua leis agus guím gach rath ar a shaothar. It is a welcome change to be discussing the ESB rather than the hapless CIE. It just goes to show how different semi-State companies are. The business of transport is a much more mundane and more loss-making business than a productive, imaginative and creative enterprise such as the Electricity Supply Board and I join with the other Senators in paying tribute to the board. I think Senator Brugha's question about their activities in the Third World is relevant. In the past there were many genuine people and organisations who were concerned about the operations of the ESB in the Philippines: I do not know if they are still concerned.

To the extent that the ESB are suffering financial embarrassment at the moment, some of that is due to the sheer political expediency of the previous Government, in artificially avoiding price increases and, consequently, inflation costs, by refusing the ESB's application for a price increase.

I agree fully with what the Minister said about the electricity inter-connector with the North. He said that if it had remained undamaged it would have enhanced our security of electricity supply, provided considerable savings in fuel consumption, created the prospect of significant savings in capital investment in plant and provided profitable opportunities for trading of electricity. Indeed it would. Not only would the inter-connector have utilised the resources in this island and have resulted in considerable savings, but there would also be the enormous psychological advantage of co-operation between public corporations in neighbouring jurisdictions in this island. The inter-connector would have fostered this psychological awareness: in short, the inter-connector was a mechanism for a unifying exercise.

The Minister said that those responsible for destroying the inter-connector should realise the immeasurable damage to the economy their actions have caused. Of course, they realise the immeasurable damage they are causing; that is precisely why they do it. In this connection, those who are now deluded or who deceive themselves into support for subversive fronts, might care to reflect on the obscene strategy of seeking a united Ireland by repeatedly destroying energy and travel links between North and South.

I wish to thank the Senators who have contributed to the debate and in the first instance for their kind words of congratulation on my appointment to office.

Senator Lambert raised a number of points. From his first-hand experience as a member of the board, he appreciates the highly technical nature of the board's activities. I, too, welcomed the establishment of the Department of Energy. I share his opinion of the contribution which Deputy Colley made as Minister for Energy to the development of the Department and, indeed, I stated this in the Dáil in the debate there. I support his words of tribute to Deputy Colley.

The officials in the Department whom I have met and with whom I have had consultations have impressed me very much, as has their understanding of the situation, their commitment to the development of the Department and to forward planning in relation to national energy requirements. They are a very professional Department and are very necessary in a period of inflation and in a period in which we must cost our energy needs at all times. We must be aware of the cost of energy, whether it is the cost in financial terms, in current terms or, indeed, more important, in capital terms. It is there that the expenditure can be extremely heavy.

As I stated in my introductory speech, there is a mechanism in the expenditure planning by the board. The gas turbines which are used to meet the peak demand have a lead time of only three years. If there is a rapid growth, expenditure can be put immediately into these gas turbines to meet a rapid increase in usage of electricity and if the growth rate of national production is slow the same mechanism can be used to slow down the capital expenditure. It is significant that electricity produced by oil has fallen substantially from 70 per cent some years ago to the present percentage of approximately 54 per cent. It is intended to continue to reduce our national dependance on oil. We intend to move to a situation that by the end of the eighties electricity generated by oil will amount to 40 per cent of the total electricity generated. That requires a lot of planning and quite a lot of study and this has been carried on by the Department and, of course, by the ESB. The need for forward projection is so vital and we are all so aware of it that, perhaps, there is no need to mention it. The cost to the country of oil and the real cost of increases in oil prices that this country has had to face in the past six years have done great damage to our economy and, indeed, to the prospects of growth in our economy and in the economies of other western countries as well.

Both Senator Lambert and Senator Brugha emphasised the need for seeking alternative sources of energy. There are experiments, and one can only call them experiments in relation to the possibility of hydro-power, wind-power and the use of biomass. These are only in the experimental stage. As I stated in my speech, the ESB examined every possible hydro-power source and they feel they have exhausted their possibility in industry here. The Department are prepared to help by grant aid work on micro-hydro-power plants. But we must be sure that any projects are soundly based. It is our intention to examine them very closely.

The extent of the ESB's overseas involvement especially in the Third World was raised by Senator Brugha. Consultancy activities abroad were undertaken by the ESB during the mid-seventies. They are now, in fact, well-established activities. Assignments have been carried out in the USA, Switzerland, Sudan, Nigeria, Lesotho, Malawi, Tanzania, the Philippines, Saudi Arabia and Bahrain. The activity produced a turn-over in 1979 - 1980 of approximimately £4 million and a surplus of £.66 million. That was the information requested by Senator Brugha. In relation to borrowing, the borrowing from the Exchequer is £45 million of the total. The rest was raised by the ESB themselves and of this 65 per cent is foreign borrowing.

Senator Brugha also raised the question of the cost of free electricity for old age pensioners. I have no separate figures. It amounts to 5p per unit for 300 units for two months in a year for all old age pensioners. But, of course, that scheme is administered by the Department of Social Welfare and is not under the aegis of the Department of Energy. That also answers the question in relation to foreign borrowing which Senator Lambert raised. I agree with his comments about the need to recognise the limitation to growth which exists and that our national resources and the nation's capacity to borrow abroad is, in the long term, limited. Any Government have a responsibility to examine in depth the whole question of the direction of foreign borrowing in the short, medium and long term. We must recognise that the balance of payments cannot be allowed to remain in deficit. The level of the balance of payments currently is not acceptable. It would land the country in serious economic trouble and our position within the EMS would be put at risk. The Government cannot allow that to happen.

Senator Lambert mentioned the comprehensive agreement currently being negotiated. As I have not yet received the final result of all the balloting I am not in a position to comment as I do not wish to prejudice the negotiations one way or the other. I am sure the Seanad understands my position in that regard. I hope it can be agreed by all the unions involved and that there will be industrial peace in the ESB which is vital for the economy.

I welcome worker participation at board level. They have much to offer and I hope other State bodies will follow this model. Hopefully, private enterprise will also see the wisdom of having workers participate at board level.

Will we see the results?

Perhaps we could use the German model where there are two levels of participation. I agree with any moves to have worker participation at board level. In these trying economic times they would be far more appreciative of the difficulties facing management, industry and commerce.

I am very conscious of the cost of electricity and have a commitment to ensure that the cost to the comsumer is at the most economic lowest price. That is a complex issue because the board's finances must be kept in balance. Taking one year with another they must not be in a loss making situation. There is also the question of the ESB financing their own capital expenditure to a certain level. The level that should be, whether 40 per cent or whatever, will always be debated. I am committed to ensuring that the board will be properly financed, as it is required to be under the Act.

As regards the question of the science budget which Senator Lambert raised, I would agree to longer periods of planning. It is difficult to plan for the long term. It would be difficult to plan if the rapid rates of inflation, unsatisfactory levels of unemployment and drops in growth of GNP which we had in the seventies were repeated in the eighties. I accept his suggestion that there is need for long term planning and certainly planning in excess of a three-year period.

Senator Murphy mentioned the inter-connector with Northern Ireland. The bombing by terrorists has done great damage to the security of electricity. The damage was done on the northern side and caused the inter-connector to be put out of action. This is a matter which will receive my attention. I should like the Northern Ireland Electricity Board to put it back into action. The security of it must be guaranteed and that primarily is a decision for the Northern Ireland authority. It is a matter to which I will bring my attention to bear and on which I hope to enter into discussions.

As regards inter-connecting with other national grids. I should like to mention the possibility of an east-west inter-connector with England. Discussions have been ongoing and a draft final report has just been received in my office and is under consideration. There would be great economic benefit to us from an inter-connector with Britain or Europe. It would have the benefit of capital savings and security of supply. This is a major problem to which I shall address myself in the coming months.

I thank Senators who contributed to the debate and assure them their comments will be taken seriously by me and my Department officials.

Question put and agreed to.
Agreed to take remaining Stages today.
Bill put through Committee, reported without amendment, received for final consideration and passed.
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