There are four general areas covered by this Bill. The first and most substantive area is the ESB's powers and duties in relation to financial matters, and, specifically, expenditure and borrowing for general or capital purposes. There is a limit on capital expenditure by the board under the legislation as it stands. This is extended, by amending Acts, from time to time. The present limit, which was set in the Act of 1981, is fixed at £1,400 million.
This limitation will be reached in the latter part of this year on the basis of expenditure on approved capital projects now in hands. An increase in the statutory limit is, therefore, necessary. However, I am proposing also in the Bill to change the nature of the limit from one based on expenditure to one based on borrowings.
There are a number of reasons for doing this. A large proportion of the board's capital expenditure must now be financed by borrowings. Currently, the proportion stands at about 80 per cent. A change to a borrowings limit will, therefore, more accurately reflect this commercial reality. In the same way as an increase in the expenditure limits came before the Oireachtas as a Bill, so will any change in borrowing limits, thus continuing the practice of a regular review of the ESB in both Houses. The change to a borrowing limit will also bring the ESB legislation into line with more recent legislation affecting other semi-State bodies such as the Gas Act, 1976 which covers Bord Gáis Éireann.
The limit which is specified in the Bill is £1,600 million, in aggregate, of borrowings which have not been repaid by the board. At present the level of the board's unrepaid borrowings stands at £840 million. After taking account of money, which can be allocated from internal resources, it is estimated that the amount of new borrowings required to meet the capital programme up to 1985 will be £735 million which will bring the total to just under £1,600 million.
The board's capital operations up to the early part of 1985 will be provided for in the limit set by the Bill. At that stage it will be necessary to review again the financial requirements of the board and, if necessary, to seek the approval of the Oireachtas for a further increase in the limitation on borrowings.
The statutory requirements relating to guarantee of ESB borrowings by the Minister for Finance are also being updated in the Bill. Again, the objective is to bring them into line with more modern practice. A limitation of £1,600 million is proposed to the total amount of such guarantees to coincide with the limitation on the board's total borrowings.
Even with the foregoing provisions on borrowing limits, I consider it is desirable to formalise the arrangements for ministerial control over the capital expenditure programmes of the board. It has been the administrative practice that the board submit for ministerial approval their proposals for the construction of new generating capacity and the estimated capital outlay thereon. In the annual budgetary context, the annual capital programme of the ESB is included in the capital budget. The capital expenditure programmes of the ESB are very substantial indeed and they impact on the economy both in specific and general ways. Therefore, I believe the principle of ministerial review of such programmes should be formally covered in the statutes governing the board's operations.
Senators may feel that the provision proposed in subsection (1) of section 2 of the Bill is too all-embracing. However, the provision as it stands has the merit of simplicity. Senators will be aware that the capital expenditure programmes of the board in relation to new generating plant cover a period of many years. In certain cases it may be necessary to give broad approval in principle tied to a provision for a review of the project in the light of changes in demand for electricity. A substantial element of flexibility would, therefore, be necessary in relation to the giving of ministerial approvals. It will also be necessary to look at the board's capital expenditure proposals on an annual basis, and in the context of general economic policy. Furthermore, there may be relatively short-term proposals for capital expenditure by the board which would need to be considered on an ad hoc basis. Senators will appreciate that if an attempt were made to draft legislation which would comprehend the variety of circumstances which I have mentioned the result would be unduly complex.
I have discussed the matter with the ESB and we are satisfied that arrangements can be settled between us and with the Minister for Finance which will enable the provision in the Bill to be operated satisfactorily without inhibiting in any significant way the day-to-day activities of the board in regard to capital projects and expenditures.
These are the principal elements in the financial provisions of the Bill. In addition a number of minor, technical financial amendments to existing legislation are also proposed. These will improve administrative efficiency, from the viewpoint of both the board and the Minister for Finance. For instance, the requirement on the board, under the Act of 1954, to create a "form of security" when borrowing is being removed. Delays in the negotiation of loan agreements have been caused by differences of legal opinion over the interpretation of this obligation on the board. It is proposed to remove the obligation on the board to create a form of security, although the option of doing so will remain open to the board if lenders insist on it.
The second area covered by the Bill relates to annual payments to be made by the board to the Minister for the Environment in lieu of rates on the board's generation and distribution plant. The board are exempt from the payment of rates on such plant under existing legislation. In their consideration last year of departmental Estimates for 1982, the previous Government decided that the ESB should pay £10 million this year as a contribution in lieu of rates. Accordingly, provision for the receipt of this sum was made in the Estimates for the Department of the Environment. This was to be regarded as a temporary arrangement for 1982, pending official valuation and rating of the board's exempted property.
The Government have, however, decided that in the special circumstances of the ESB there are arguments in favour of the concept of a payment, fixed by the Government, to be paid annually by the board in lieu of rates. This Bill provides accordingly.
The third area covered by the Bill relates to amendment of certain provisions in the Electricity Supply Board (Superannuation) Act, 1942. The objectives here are two fold — firstly to remove any doubts which might exist about the powers of the trustees of the board's superannuation committee to invest in real or personal property and, secondly, to provide for the removal of the existing requirement on the board to consult with the Minister for Finance before investing funds in securities already authorised by law. This brings the relevant ESB superannuation provisions into line with those applicable to other State bodies.
The final area dealt with in the Bill is the involvement of the board in fisheries activities. These activities stem directly from the generation of electricity from hydro-electric stations on rivers which are the habitat of migratory fish such as salmon and eels. Legislation in the past has given the board the authority and responsibility to acquire, manage and preserve fisheries affected by their hydro-electric schemes.
At first, the ESB carried out this responsibility by the construction of salmon hatcheries. At present the ESB produce over 80 per cent of artificially reared young salmon in the country. At the beginning of last year in response to a Government request the board agreed to increase their overall salmon smolt production with the aim of producing two million smolts annually. These fish will be released into salmon rivers in need of restocking on an annual basis and will contribute significantly to the salmon catch. To do this the ESB require the freedom provided in the legislation, and the Minister for Fisheries and Forestry, encouraged by the success of the ESB to date in their fishery activities, supports the Bill.
The board operate two salmon hatcheries, one at Parteen on the River Shannon and the other at Carrigadrohid on the River Lee. These two hatcheries are being expanded and a further hatchery is being constructed on the River Erne. This development on the River Erne follows a recommendation of the Erne Catchment Study on Cross-Border Cooperation and is receiving financial support from the EEC.
It has been recognised for some years that farming of salmon in the sea would be of benefit nationally. Work to date has shown the need for a breeding programme, disease control and integration of fresh-water hatchery activity with the rearing of the caged fish in the sea. This important work is carried out in conjunction with the Department of Fisheries and Forestry, NBST and the universities.
In addition, the ESB intend to support the mariculture industry around the coast by making salmon smolts available to the industry in order to boost salmon production. Currently the ESB are supplying salmon smolts to Bradán Mara for their commercial salmon farming in Connemara and on an experimental basis to Comhar Cumann na nOileán in Lettermore and to a private fish farmer in Kilmacillogue, County Kerry.
The board propose to bring their own farmed salmon production initially to 100 tons per annum. This will be done as rapidly as possible giving direct employent to ten people with a revenue, principally in foreign currency, of over £300,000. The main outlets for this salmon are France and Britain. Other markets are being explored. The success of this operation will be followed by further expansion by the ESB in their own right and/or in conjunction with co-operatives and other salmon farming interests. Of course, these developments would be subject to the consent of the Minister for Fisheries and Forestry.
The ESB are the prime eel exporter of the country assisting the State and other eel fishery owners in marketing their catches with their own. The board, in the last season themselves produced 41 tons of eels and exported almost 80 tons to Germany and Holland. The total value of these exports was £¼ million. There are eight full-time employees of the board involved in eel fishing. An intensive study on the use of warm water from power stations in eel culture is being carried out. The objective of this study is to develop a profitable eel farming enterprise by shortening the time taken to bring the eels to maturity.
The ESB have ownership of extensive areas of freshwater, including fishing rights. They are aware of the social benefits in making these available as amenities to the public in general and anglers in particular. They have, apart from providing other amenities, successfully carried out cage culture of brown trout in reservoirs for release for angling, greatly enhancing the quality of the fishing. Some 120,000 fish up to one lb. in weight were released in Pollaphuca in the last year. The board currently employ 50 fisheries staff and envisage employing 12 extra staff in the next year as a result of the development programme already outlined.
The legislation which I an now moving is intended to enable the ESB to carry on and expand their work in aquaculture. It also takes cognisance of the ESB's decision to expand, with Government support, their production of young salmon by threefold over the next few years. This will benefit national salmon stocks, the netting industry, salmon angling, and assist the emerging salmon farming industry.
The ESB occupy a position of very considerable importance among public sector institutions. Their operations and the service they provide affect the entire economy and every citizen. They are a major source of employment and their expenditure budgets are very substantial by any standards. For example, in 1982 the total expected capital expenditure by the board is estimated at over £230 million of which some £125 millions will be spent on generating plant and about £87 million on transmission and distribution networks.
It is, therefore, right and reasonable that this House, and I as responsible Minister, should be concerned with reviewing the overall activities and the trend of policies of the ESB, without inhibiting the board's freedom to pursue their day-to-day business. Before concluding, I should like to refer to two broad policy issues which are related and which I know are of as much concern to Senators as they are certainly to me. Firstly, the fuel mix of the ESB's generating capacity is of vital importance because it affects our balance of payments and the use of certain valuable indigenous resources. It also has a major effect in the second area to which I would like to refer, namely, the level of ESB charges to consumers.
A main element of strategy on ESB fuel use must be to diversify away from oil as a primary energy source. Apart from the volatility of oil costs, the risk of major disruption of international markets is always present. In this context the coming on stream of the new coal burning facility at Moneypoint will be a major diversification. The proportion of our installed generating capacity that depends on oil has been decreasing in recent years. This trend will be maintained. The oil generating capacity, which stood at 54 per cent a year ago, now stands at 51 per cent. By the end of the decade it will be about 35 per cent.
The other element of our fuel strategy is to maximise the proportion of native fuel used by the ESB. 1,362 megawatt capacity has been approved for commissioning between now and the end of the decade. Of this 88 megawatt will be fired by peat, including extensions to Shannonbridge and Lanesboro generating stations. A further 45 megawatt station will be constructed at Arigna using local low grade coal. Native natural gas is already being used by the ESB in some of their power stations and while the premium domestic market is building up for natural gas its use by the ESB is helping to stabilise electricity prices to the consumer. It is also creating savings on oil imports which assist the balance of payments.
Electricity tariffs have been in the news lately. Over the past two years or so these have increased quite substantially. These increases were granted on the basis of allowable cost increases incurred by the board, including fuels, salaries and other unavoidable increases in overheads. However, the level of increases has been disturbing, not only for domestic consumers but also, and especially, for industry. The most recent increase granted to the board has been limited to 5 per cent which is the most moderate for some years. I was also glad to announce that, while allowing this increase for general purposes, there would be a reduction in the night-time electricity tariffs which would be of benefit to industry. Furthermore, the fuel variation charge on ESB bills, which had become a source of confusion — and, indeed, some annoyance — to electricity consumers, has been removed.
I will be concentrating my efforts to ensure that this desirable moderation in electricity increases will be maintained in the immediate future at least. Recently the Government decided that the position on electricity prices generally should be fully reviewed. The proposals for this review are well advanced in my Department. The outcome of the review will, it is hoped, help to throw light on recent allegations that our electricity prices compare unfavourably with prices elsewhere.
Finally I should like to take this opportunity to state clearly that I have a high regard for the professional and technical competence of the ESB which has served the nation well over the years. I would emphasise, however, that I consider the broad policy objectives of the board and the means of achieving these as major areas of direct concern to me. I have a very satisfactory working relationship with the board and senior executives of the ESB and have every confidence that I will have their full co-operation in seeking to achieve the paramount objective of providing all consumers with a safe and continuous supply of electricity at the absolute minimum cost to them and to the economy.
I recommend this Bill to the House.
