This process is a fact. Senator Costello mentioned the apparent beginning of a trend in the United States back towards public ownership of certain utilities on the grounds that they provide security of supply. Let us not let ideology, whether it is on the left or the right, drive us in the opposite direction to where common sense would dictate we should go. Pragmatism was the mark of the Minister's party for most of its existence and I hope it retains that.
We have an ideology of competition yet where it has applied, it is difficult to quantify savings to the customer, with one exception. If one reads comparisons between Esat and Eircell on which is cheaper, nobody, not even the most sophisticated analyst, could tell a customer which is better. We are tied into an enormous mess of marketing strategies, short-term subsidies and costings that only an accountant with considerable sophistication could work out.
Competition may be good fun and perhaps the argument is that it keeps prices down. I am not too concerned about mobile telephone customers, including myself, and whether they are charged over or under the odds, but I have considerable doubts about whether one, two or three organisations in the market will make an enor mous difference. It is also obvious that nobody can say with certainty whether BUPA or VHI is more or less expensive. It appears that both are putting up their charges at similar rates or are adjusting the increases in different ways or coverages. To suggest there is a wonderful magic wand called competition which produces spectacular savings to consumers is nonsense. Anyone who has dealt with car insurance knows that no matter how many participants are in the marketplace, the cost of motor insurance keeps increasing.
We should not get carried away with competition as an ideology. It is an interesting idea and it works in certain areas but only under certain circumstances. The classic example is Ryanair and airfares. Nobody would argue in defence of the scandalous cartel which used to exist on the Dublin-London route between Aer Lingus and British Airways. This was a joint conspiracy by Mrs. Thatcher to beef up British Airways prior to privatisation and Aer Lingus to suit itself and it abused Irish consumers. Ryanair was the beneficiary of the ending of the cartel, not the cause of it. The first thing British Airways did once the cartel was ended was to get off the route. It has now returned via a private contractor.
I am a great believer in certain things in terms of quasi-monopolies. The first is transparency, the second is the use of benchmarking in which performance is measured against other equivalent organisations around the world and the third is an audit of efficiency – I do not mean a cash audit but an audit in terms of technology which can be done by peer group review. In that way, large inefficient organisations can be made more efficient.
It is ridiculous, for example, to suggest that competition makes pharmaceutical firms more efficient because each, by definition, has a separate niche in the market and makes its money from a product which is a monopoly. Every pharmaceutical company makes the most of its profits with pharmaceuticals which are in patent and is therefore a monopoly. To suggest that competition regulates price is nonsense. We should not let ideology get in the way of reality.
I am interested in the comments made by the regulator designate about what people love to call rebalancing, which means that domestic consumers will have to pay more so the ESB can withstand the competition for the provision of electricity to large consumers who represent 28 per cent of the market. Why it should be a good thing for the domestic consumer to provide yet another dollop of corporate welfare is beyond me. It is not that domestic electricity is being subsidised – it is not an unprofitable sector – but that the distribution of cost and the margin regarded as acceptable will be squeezed where there is competition and will, therefore, be rebalanced in the direction of domestic consumption. We will go from having spectacularly low domestic charges, by international standards, to what is more or less the norm in the UK. We would want to be careful because many of the privatisations and competition exercises in the United States have been far from wonderful successes. They are moving towards an oligopoly in the UK, where three or four organisations will own not just electricity but gas as well. One of the existing natural forms of competition in this State is that the provider of electricity is in competition with the provider of an alternative source of energy, particularly in domestic services. Essentially we will have almost a private sector monopoly. I do not know what benefit that will be. I would be interested to learn the provisions the Minister has to ensure that we do not have a gradual quasi duopoly between one private sector operator and the ESB, with a regulator.
From my experience, the regulator of the telecommunications services is far more concerned about the industry than about the consumer. I was in correspondence with the regulator of telecommunication affairs about the appalling performance of the cable television service provider in Cork, which is the dearest in the country for reasons that have nothing to do with current reality and provides an appalling service with a deliberate provision of service in a way that means it was impossible to use a modern video recorder and preprogramme it. The telecommunication regulator agreed that this was terrible but the company had promised her it would do better in the future and therefore she did not propose to do anything about it. What that means is that consumers come second.
If this whole process has any purpose, it is supposed to protect consumers and if it does the opposite and the regulator simply makes sure that the big companies behave themselves, it is of no benefit. The Minister knows better than I that the ESB unions have a very forward looking vision of how electricity should be generated, but I am concerned that we will lose sight of reality in the move to innovative methods. I agree it was never a sensible idea to have the ESB as thede facto regulator of electricity generation, and similarly it was never sensible to have Aer Lingus as the regulator of air travel. I am very glad we have moved away from that.
Wearing my engineer's hat, I am worried by the precedent being set by inserting in legislation a technical definition on something as technologically variable as CHP. I am not claiming to be an expert on it. I know there are reasons to do with politics, but it is very dodgy territory. I am unhappy with the phrase "thermodynamic" and I would have much preferred "energy transformation from an integrated thermodynamic process."