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Seanad Éireann debate -
Friday, 30 Jun 2000

Vol. 163 No. 26

Gas (Amendment) Bill, 2000: Second and Subsequent Stages.

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

I am pleased to introduce the Gas (Amendment) Bill, 2000 to the House. While the Bill deals with four different matters, there is a particular urgency relating to one matter – the scheme to allocate scarce gas capacity to new power stations. I will explain this in detail shortly but I stress that there is a real need to have this legislation adopted before the recess in order that power station developers may proceed with their projects.

The three other issues dealt with in the Bill are provision for the enlargement of the functions of Bord Gáis Éireann to allow it to engage in non-gas related activities; provision for an amendment to the existing Gas Acts to increase the borrowing powers of BGE from £350 million to £550 million; and provision for amendments to the Gas Acts (as amended) to introduce the same consent requirements for all people wishing to build natural gas pipelines. In this respect it will give private pipeline developers the same powers to access and compulsorily purchase rights over land as those currently enjoyed by BGE for the purpose of building pipelines.

Before I explain the detailed provisions of the Bill, I will give the House a brief account of developments in the natural gas industry in Ireland. Since its establishment in 1976, BGE has achieved significant progress in developing the natural gas industry. It built an interconnector with Scotland in 1993 to augment supplies from Kinsale. BGE now supplies natural gas to over 300,000 homes and has over 10,000 industrial and commercial customers. Natural gas now meets around a quarter of our total primary energy requirements.

Natural gas has also come to play an increasingly important role in electricity generation in recent years. Last year over 30% of electricity generating capacity in the State was fuelled by natural gas. This reflects trends at European and global levels. Natural gas is now the fuel of choice for power generation and has significant efficiency and environmental advantages.

The natural gas industry is undergoing a significant period of change, not only at national level but at European level. The EU gas directive, adopted in 1998, requires gas market opening to be introduced on a phased basis over a period of ten years up to 2008.

Ireland already exceeds the market opening requirements of the EU Directive. Under the Energy (Miscellaneous Provisions) Act, 1995, large gas consumers may buy their gas from suppliers other than BGE and have it transported through BGE's network on their behalf. This means that in volume terms more than 75% of Ireland's market is opened. A number of large companies are currently sourcing some of their gas from outside the State and importing it through the interconnector. I am currently reviewing the pricing arrangements for third party access to the gas network and I expect to have this finalised in the near future.

One of the issues being dealt with in this Bill, a scheme to allocate scarce capacity in the natural gas network, is a very pressing matter and I will outline to the House the background to this issue. Existing indigenous reserves of natural gas in Kinsale are declining and the interconnector with Scotland is nearing full capacity some ten years sooner than had been anticipated owing to faster than expected growth in demand. This growth in demand is a function of our economic success and the opening of the electricity market.

Against this background, my Department and BGE undertook a major study – Gas 2025 – to examine future natural gas infrastructural requirements. This study made a number of recommendations regarding future gas supply options and considered that the optimal solution would be to construct a second natural gas interconnector, parallel to the existing interconnector with Scotland. This option was endorsed by independent economic consultants. They recommended, however, that we wait and see the outcome of the exploration of the Corrib gas field off the west coast before deciding on future gas supply infrastructure. The Corrib partners will make a decision later this year on the commercial development of the field.

There are also other parties interested in building gas supply pipes, one from Belfast and one from Wales.

It is expected that the capacity in the natural gas network will be sufficient to meet final demand until 2003. If one or other of the private developers is not committed to building the necessary infrastructure by the end of this year at the very latest, to cater for demand beyond 2003, I will approve the building of a second interconnector by BGE. This will allow sufficient time for new supply infrastructure to be in place to meet anticipated demand.

I want to turn briefly to developments in the newly opened electricity market, which are impacting on the gas market. In anticipation of the opening of the electricity market to competition in February this year, a number of companies wishing to enter the market approached BGE last year to book capacity in the network to carry gas to fuel their proposed power plants. The applications for capacity, which were received by BGE, exceed to a significant extent the capacity that will be available in the network in the medium term.

Forecasts for future electricity demand show that an increase in power production capacity of 600 megawatts will be necessary by winter 2004. In order to ensure that the electricity needs of the State can be met over the next few years, I decided that available capacity in the natural gas network would be reserved specifically for the purpose of fuelling up to 800 megawatts of new gas-fired power stations. While this will meet the electricity needs of the country, it is insufficient to satisfy the demands of all the prospective power producers who applied to BGE for network capacity. Consequently, I decided that a scheme for the advance selection of power producers, to whom network capacity would be allocated, was necessary, and that the allocation scheme should have particular regard to the need to ensure that new power plants were commissioned as soon as possible. Having regard to the provisions of the EU gas and electricity directives, the Attorney General advised that any allocation scheme devised should be put on a statutory footing.

I want to clarify why it is necessary for gas capacity to be allocated now, rather than when new capacity becomes available for purchasing. Certainty about gas capacity is necessary in order for large-scale power projects to commit investment. There is a 24 month lead-in time from the commitment of investment to the production of electricity. This means that a delay in the allocation of gas capacity until the end of the year, when there will be certainty about new supply infrastructure, could lead to electricity problems in about two years' time.

My Department consulted widely with interested parties on the process to be employed in allocating capacity to prospective power producers. In light of the outcome of that consultation, I decided that the best interests of electricity consumers would be served by allocating capacity on a "first-to-market" basis. A further issue which I also considered was the question of who would be responsible for conducting the allocation scheme. BGE normally allocates capacity as part of its transportation business. However, as BGE has declared its intention of entering the electricity market, it obviously would not be desirable to have a situation where they would be responsible for allocating capacity to potential competitors. In order to prevent any possible suggestion of discrimination, I decided that responsibility for allocating capacity to prospective power producers should be given to an independent agency. Accordingly, I decided that the allocation scheme should be conducted by the Commission for Electricity Regulation.

I now turn to the provisions of the Bill. Section 1 is a standard provision in legislation where the relevant terms used in the Bill are defined. Sections 2 to 16 of the Bill are the relevant sections relating to the capacity allocation scheme and the conduct of that scheme by the Commission for Electricity Regulation. Section 2 empowers the Minister, after consultation with the Commission for Electricity Regulation, to make regulations authorising the commission to allocate a specific amount of natural gas capacity in any one year to the power producers who will be selected by the commission under the scheme provided for in the Bill, and any regulations made under the Bill when enacted.

Sections 3 to 5 set out the details of the procedure to be provided for in regulations which will be employed by the commission to select power producers to whom capacity will be made available. Essentially, this procedure entails the power producers making an application for capacity in the network. The commission will then rank these applications in order of precedence, on the basis of the estimated commissioning dates for the proposed power plants. The commission may make alterations in the ranking of applications to preclude the selection of an applicant where, in the opinion of the commission, the selection of that applicant would adversely affect the promotion of competition in the electricity market, provided this alteration in ranking would not jeopardise continuity of electricity supply.

Section 6 provides that the commission shall determine and publish the criteria to which it proposes to have regard, in deciding the date on which it estimates a proposed power station will be commissioned. These criteria must be published by the commission at least one month before the selection is made.

Section 7 gives the commission the power to require BGE or the ESB to provide certain information to it for the purpose of selecting power producers to whom capacity will be made available, or for the performance of any of its functions. It also obliges BGE and the ESB to comply with any request for information.

Section 8 enables the commission to give directions to BGE regarding the use and management of the natural gas network, where it considers that it is necessary to do so in order to ensure that the capacity rights of the power producers who are selected under this scheme are protected. The commission must consult with BGE before giving such directions.

Section 9 allows BGE, subject to the prior written consent of the commission, to enter into contracts with power stations, commissioned after the passing of this Bill into law, which have not acquired capacity rights under the Bill. In addition, the Minister may by order remove the requirement on BGE to obtain the prior consent of the commission in relation to contracts for capacity, if the Minister is satisfied that such contracts would not jeopardise power stations selected for capacity rights under the Bill.

Section 10 imposes an obligation on BGE to make capacity in the natural gas network available to the power producers selected by the commission under the scheme provided for in this Bill when enacted, or under regulations. The section sets out in detail the procedures to be followed in the contractual negotiations between BGE and the selected power producers, and the time limits to apply to each part of the process. It also contains a dispute settlement mechanism and allows the commission to alter the time limits if it deems it proper and specifies the new time limit in writing.

Section 11 provides that regulations to be made under the Bill when enacted may include provisions for bonds and levies. A requirement may be imposed on the power producers selected by the commission to effect a bond providing for the payment to the Minister of a specific amount which is calculated on the basis of the generating capacity of their proposed power plant, if the plant is not capable of sending out electricity to the transmission or distribution system on its estimated commissioning date.

Regulations may also provide for the imposition of a levy on selected power producers to defray the costs incurred by the commission in carrying out the selection procedure, and to recoup funds expended by the Minister to facilitate the commission in preparing to carry out its functions under this Bill or under the regulations. Regulations may include incidental, supplementary and consequential provisions as appear to the Minister to be necessary or expedient.

Sections 12 and 13 contain amendments to sections 11 and 12 of the Electricity Regulation Act, 1999. This will provide for the appointment by the commission of authorised officers to assist it in carrying out the selection process provided for in this Bill, and for the obtaining of search warrants where it considers it necessary.

Section 14 amends section 13 of the Electricity Regulation Act, 1999, and provides for a prohibition on unauthorised disclosure of information obtained by the commission in the performance of its functions under this Bill.

Section 15 contains an amendment of section 32 of the Electricity Regulation Act, 1999. The effect of section 15 is that any decision made by the commission under this Bill when enacted, or regulations made under this Bill, can only be challenged by way of judicial review proceedings. It precludes any person from questioning the validity of such decisions, save by way of judicial review initiated within two months of the date on which the decision to be reviewed is given. Provision is made for the courts, in specified circumstances, to vary this time limit.

Section 16 provides for the indemnification of the commission by the Minister out of moneys to be provided by the Oireachtas in relation to the performance of its functions under this Bill, or regulations made under the Bill.

I now wish to deal with the other elements of the Bill. Sections 17 and 18 relate specifically to BGE. Section 17 allows BGE, with the approval of the Minister, given with the consent of the Minister for Finance, to engage in any business activity that it considers advantageous, whether energy-related or otherwise. This amplifies the existing functions of BGE which are limited to the energy sector. Section 18 provides for the amendment of section 23 of the Gas Act, 1976, to increase the borrowing powers of the board from £350 million to £550 million.

Sections 19 and 20 amend sections of the Gas Act, 1976, to create a level playing field between BGE and private operators. The amendments introduce a consent requirement for all operators wishing to construct natural gas pipelines. Under existing legislation, only BGE is subject to a formal consent requirement. The amendments also give private operators the same rights of access to, and acquisition of, land currently enjoyed by BGE for the purpose of constructing pipelines. Naturally, the extension of these rights is subject to the payment of compensation and operation of a comprehensive set of procedures in relation to the exercise of compulsory purchase powers. The sections also contain a number of technical amendments consequential on the introduction of a level playing field. The combined effect of sections 19 and 20 is to place private operators and BGE on the same footing.

Section 21 contains two technical amendments to the 1976 Act consequential on the provisions in sections 19 and 20. Section 22 contains an amendment to the Registration of Titles Act, 1964, to place private operators on the same footing as BGE in relation to the 1964 Act. Section 23 provides for an amendment to section 8 of the 1976 Act which will enable me to attach similar conditions in relation to pricing to a consent for a pipeline constructed by persons other than BGE to those attached to pipelines constructed by BGE.

The remaining sections of the Bill contain provisions that are standard in legislation. Section 24 provides for the laying of regulations or orders under this Bill, when enacted, before each House of the Oireachtas. Section 25 provides that the expenses incurred by the Minister in the administration of the Bill shall be paid out of moneys provided by the Oireachtas to such an extent as may be sanctioned by the Minister for Finance. Section 26 contains standard provisions relating to the Short Title of the Bill and provision for collective citation, etc., of the Acts amended by it.

This concludes my introduction of the provisions of the Bill and I look forward to hearing the contributions of Members. I commend this Bill to the House.

I also wish to express my sincere thanks for comments made earlier in the House. Senators O'Dowd, Coghlan, Liam Fitzgerald and others made complimentary remarks about the outcome of the recent discussions on the OSPAR Convention on the marine environment and the substantial achievement that emanated from those discussions. I appreciate the support that has been forthcoming from and the consensus that has emerged over the past year among colleagues in this House, such as Senator O'Dowd, and the other House. I have no difficulty acknowledging that and it has been the main plank in the hugely elevated campaign that is now ongoing against Sellafield.

Senator Quinn had some concerns and I wish to explain the position to him. He asked why I was not present and he suggested that there may have been a good reason for my absence. There was a good reason and I favoured a ministerial segment in this important session of the OSPAR commission. I spoke with the Danish Minister when he visited me in Dublin to that effect. I also travelled to meet and speak to all the Ministers in the Nordic countries in an effort to gain support for our motion. However, it was decided to stick to the rules and protocol attached to the OSPAR commission and to leave the matter at official level. We maintained a hot line to our officials throughout the four days of negotiations. Massive preparatory work was done. I travelled to meet all the Minister in the OSPAR signatory states to try personally to bring them along.

Senator Quinn said it was a pity that our draft decision did not reach the floor. However, it reached the floor and it was there up to the final moments. Ireland took a strong line in the negotiations and the potent and tough Irish motion and the Danish motion were catalytic in creating a revised motion that was signed by eight countries, including Germany, which was significant. Another four countries were eventually brought along. A total of 12 countries, a qualified majority, demanded, in effect, the cessation of reprocessing of nuclear material in Sellafield and elsewhere.

It is a huge move forward and an escalation of the campaign against Sellafield. Today's newspapers positively reflect that situation. I again offer my sincere thanks to Senator O'Dowd and others with whom I am happy to work hand in hand over the coming period. I thank the Chair for its co-operation and indulgence in allowing me to make these points.

In relation to the Minister of State's comments, when we were in Government and in the short time we have been in Opposition – which will change soon – this side has always considered Sellafield and nuclear processing a national issue. It should not be a divisive issue; we must work together on it. It is important that organisations such as Greenpeace also support the Government's actions.

From my contacts in the nuclear industry in Ireland and America, I am aware of the significance of the pressure mounted by Ireland on the British authorities, particularly the British Government and British Nuclear Fuels, and the securing of the support of the combination of other northern European countries, as the Minister of State and his Department achieved. The countries have acted and focused on the issue together.

The recent clear statement, in which the signatories to the convention say that they want an end to reprocessing, is most significant. It would not have happened five or even three years ago. However, it is happening now. Companies such as British Nuclear Fuels are considering ways out of the situation and I hope they will cease their activities. This type of pressure and countries combining and working together ensures significant progress.

The Bill is most important, although it is technical legislation. I was looking through old school books some years ago and I came across a book about the geography of Ireland. I am sure Senator Fitzgerald also read it when he was in school. The book, which was probably published 20 or 30 years ago, mentioned the resources in Ireland and it effectively said that Ireland had no natural resources. It said there were bogs and peat but little else in terms of industry.

In the past 30 or 40 years the economy has moved from being the slow coach of Europe to the cutting edge of change, improvement and technology. One of the changes, which is due to the major improvements in society, is the increased demand for energy. In that context, the Kinsale gas find in the 1970s was a major boost to the economy. There have been reports of potential oil finds off the west coast, with consequent speculation in shares. The fact we have further added to the significance of our gas reserves recently is important.

Our energy demands are increasing rapidly and it is important to have competition for consumers. Domestic households and businesses must have the option of buying energy from whatever source they wish. Approximately 10,000 companies get their energy from gas supplies and more than 300,000 domestic households benefit from natural gas. Gas is used for more than 23% of our total primary energy requirements. It is the fuel of choice.

Senator Liam Fitzgerald and I recently attended a conference on alternative and renewable energy sources. Gas is a finite resource and it is the way forward. It makes sense to move to natural gas and away from other fossil fuels. It is environmentally friendly and the reduction in carbondioxide in our environment will lead to beneficial changes in the future.

I welcome the report of the Department of Public Enterprise on renewable energy. I do not know if we debated it in the House but we must look at it again. There is a move throughout Europe to encourage and support the use of renewable energy. It is a significant area which we must develop. The Government must adopt a positive and progressive policy towards communities and companies who wish to do research on producing energy by alternative means. We should look at introducing major tax incentives to encourage people to use alternative sources of energy. I am impressed with the reports on wave energy. We could use our underwater sources to supply us with energy. This is the way forward in the future.

I welcome this Bill. I read what Deputies Sargent and Yates said on this Bill in the other House. Most of Deputy Sargent's contribution was as Gaeilge and I did not have sufficient time to translate it all. I was interested in his comments on and support for certain sections of the Bill.

One of the issues Deputy Yates raised, and perhaps the Minister of State might address it, was that we are using the "first to market" principle in the allocation of capacity to prospective power producers. He made the point that the UK had an auction system for allocating mobile telephone licences. Why can we not use that system? If people submit a tender and come fourth or fifth, they may take a case to court to find out why they were not selected. That could cause delays and negativity. There should be an auction so that the biggest bidder is given the privilege of supplying energy. Competition is good and there are major players in this field. I hope the growth in our economy will mean more people will be interested in providing our energy needs.

The Minister of State said he wants this Bill passed before the end of the session. I understand we are taking all Stages today and I do not have a difficulty with that.

There is a proposal to build a gas plant in Platten in County Meath, which is adjacent to where I live in Drogheda. I have no problem with this project in principle. However, water from the River Boyne will be used in the plant and then put back in the river at a temperature of one or two degrees higher. I am concerned about the impact that will have on the environment and on plant and animal life. Someone told me the animals in the water are cold blooded, somewhat like politicians. People are concerned about the effect on the environment. If water is taken out of the River Boyne for the power station and put back in again at a higher temperature, it will have a significant impact. I do not know what proposals are envisaged in the rest of the country. There are signs near Athlumney in County Meath opposing the power plant. This is an important environmental issue for the people concerned and it should be addressed.

This Bill will increase competition for consumers. It will help to supply them with an acceptable form of energy which is environmen tally friendly. It is a good Bill which we support. I look forward to the Minister of State's reply.

Cuirim fáilte roimh an Aire Stáit. Bille an-thábhachtach é seo a bhaineann le pleanáil don tionscail gáis. De bharr an dul chun cinn seo beidh pobail na hÉireann in ann usáid a bhaint as na háiseanna iontacha seo. Tá struchtúr an-éifeachtach curtha i bhfeidhm ag an Aire Stáit, ag an Rialtas agus ag an Oireachtas ar son mhuintir na hÉireann. Beidh deis acu a bheith go maith as ins na blianta atá romhainn.

This Bill is being introduced to ensure that people and businesses receive natural gas and electricity at the best prices. It underpins the introduction of competition and fair play in a transparent and open way to ensure we have a choice in terms of our energy utilisation, which the Minister of State emphasised. The Bill is a classic example of the Minister of State and the public service ensuring that business operates in this industry to the benefit of the only constituency which matters, the people.

Many people use natural gas to heat their homes, while businesses use it to fuel their energy requirements. However, that was not always the case. Approximately one third of electricity is now generated using natural gas. That was not always the case either. Natural gas is becoming such a fundamental part of Irish life that we are in danger of taking it for granted.

It is appropriate to reflect on the background of a wonderful natural resource and the reason it has become popular. Bord Gáis Éireann has been responsible for developing the natural gas industry in Ireland. It is a monopoly supplier of this resource. Until now, the industry had to be organised in this way because it was a relatively young industry and we needed to ensure the natural gas infrastructure was built and used in an orderly way to deliver this resource as efficiently as possible throughout the country. I would not say that is the perfect way to do things but who among us, apart from myself, can claim to be perfect?

Prior to discovering natural gas in the early 1970s in the Kinsale Head field off the south coast, there were a number of gas companies throughout Ireland. Natural gas was not recognised at the time as an important energy supply. The establishment of Bord Gáis Éireann in 1976 changed that. Natural gas is now supplied to more than 300,000 homes and more than 100,000 industrial and commercial consumers. Approximately one million people are using natural gas to heat their homes.

One of the most fundamental and significant features of the Bill is that it has, as one of its primary purposes, the regulation of the allocation of scarce capacity in the natural gas infrastructure. My reading of the Bill, and this was confirmed by the Minister in his elaboration of the different sections, suggests that the Minister is telling the industry we need a new interconnector as a matter of urgency. If a company is chosen to build that plant, it will be given two years or so to do it and at the commencement it will be given a commitment that it will have access to the infrastructure. What the Minister is saying, and I hope I understood him correctly, is that if private industry is not prepared to take this on, he will then be in a position to offer the challenge to BGE, and rightly so. I fully support him in that. What is being created is a level playing pitch to ensure, both domestically and industrially, that scarce capacity in the natural gas infrastructure is managed with the highest efficiency.

I laud the Minister – and I waited for the publication of the Bill with much interest on this point – for the manner in which he has decided to empower in this legislation the Commission for Electricity Regulation to be responsible for conducting the allocation scheme. He said he considered greatly the question of who would be responsible for conducting the allocation scheme. We all know that BGE normally allocates capacity as part of its transportation business. However, as BGE has declared its intention of entering the electricity market, the Minister rightly considered that it would not be desirable to have a situation where BGE would be responsible for allocating capacity to potential customers. A serious problem of discrimination could potentially arise and the Minister wisely decided that the responsibility for allocating capacity to prospective power producers should be taken out of BGE's hands.

The Minister made the point strongly, and I support him fully on this because he and I have debated it here previously, that there was no implication of impropriety of any kind to be drawn from what he said about the manner in which BGE has managed to discharge its affairs up to now. It has done so with the highest professionalism and integrity. He correctly identified, however, the potential for a conflict of interest arising and the obvious need for transparency in the process. I agree with him that these were sufficient grounds for the allocation process to be conducted on an independent basis, and I laud that decision.

There is a commission in place which is working very well. It has gained a lot of experience and there is no doubt that experience will be invaluable in the process of allocating capacity in the gas network because the two industries will now move much closer together. In a sense they will be more interconnected, if the House will excuse the pun. The Minister of State's decision is all the more laudable when one considers that a party in a previous Government had to take on personal advisers, at taxpayers' expense. This Minister already has enough experience and effective structures are in place. He has full trust in them. They are working well and there is no need, in this particular case, for any further bureaucracies or personal consultants.

A number of State bodies are set up to ensure that infrastructure is utilised in the best interest of the consumer, for example, the Commission for Electricity Regulation, the Commission for Telecommunications Regulation, etc. These bodies, and this is State intervention, are in a market to create a level playing field, and indeed by EU directive as well. The Commission for Electricity Regulation, for example, is being charged in this Bill with responsibility to allocate capacity in the gas network and ensure that similar objectives are met in delivering natural gas to consumers.

It is a small leap in understanding and logic from the principle of establishing committees for monitoring and ensuring that infrastructure is developed and utilised for the maximum benefit of the people. That is why we are all here. I have in mind the establishment of a commission for the acquisition of development land, agricultural land, pre-development or pre-serviced land or serviced land to ensure that this vital infrastructure for normal living and everyday life is maximised and utilised to the maximum benefit of Irish consumers, along the lines of the models the Minister has brought before us and which are working well.

This is by no means a huge leap into the dark. In fact, we have taken such leaps already with the commissions I have mentioned. I have referred to the Director of Telecommunications Regulation, Etain Doyle, and the electricity commission and the way the Minister is proposing to interface with them. We are learning fast from our recent developments and we are learning to confront what previously we considered were impossible dreams, some called them sacred cows. We have to confront those sacred cows, whether it is in the gas or electricity markets or energy supply generally. We have done so effectively and the Minister is doing it very effectively here today. We should do it also in the housing market. In case anybody misinterprets me, I am not taking a sideswipe at the Minister for Finance, Deputy McCreevy. I admire greatly and laud the measures he has taken from the Bacon report so let nobody come back at me and say that is my motive. I have great admiration and tremendous support—

The measures are very unsuccessful.

Senator Costello should not presume to interrupt me.

I am not interrupting the Senator. I am just complimenting what—

If Senator Costello interrupts me, a Leas-Chathaoirligh, I will bury him on the floor, metaphorically speaking. Senator Costello should let me speak and then he can speak and I will not have the bad manners to interrupt him.

This is a personal view I began to generate when Deputy Quinn, as a former Minister for Finance, was asked by Richard Crowley on "Morning Ireland" about the PriceWaterhouse report and how to solve the housing problem, and his reply was the "orderly release of thousands of acres of land onto the market". That is in the RTÉ transcript. I tried to get on the programme that morning but I was not allowed. I was going to agree with him and ask him to elaborate on it. I am elaborating on it for him now; he did not do it at that time.

So the Senator is supporting Deputy Quinn?

A Leas-Chathaoirligh, I will not be interrupted.

An Leas-Chathaoirleach

Senator Costello, I will call you shortly.

I was merely complimenting Senator Fitzgerald on his support for Deputy Quinn's—

An Leas-Chathaoirleach

You can compliment him further when you get your opportunity to contribute.

I referred this matter recently to the Minister, Deputy McCreevy, for his consideration. I am merely throwing my tuppence ha'penny worth into the political forum for a national debate on it. It may come to nothing. I may be proved to be indulging in an exercise of folly but so be it. I am well able to take that criticism.

If such a commission for land servicing or for the purchase of already serviced land was in place, the competition I referred to would automatically follow and the builders and auctioneers who are gazumping young couples on the market day in day out would face a house market environment where roles would be reversed, for the first time in years, because the competition would no longer be among the exploited buyers, the young couples, but among the builders themselves.

When the financial services centre was being considered, it was identified that a lot of red tape had to be removed before such a highly imaginative scheme could be properly established. This necessitated the changing of company law, contract law, taxation law and planning law to ensure that it could be set up in the docklands area as quickly as possible, and potential and actual logjams to the effective operation of the financial services centre were removed as quickly as possible. The State was intervening in the international financial services market and did so effectively, with some hiccups that may still exist, but the system by and large is working well. That is a model from which we can draw the good points and discard the bad ones.

The Taoiseach at the time set up a small group of individuals to discuss the difficulties as they arose and who would have access at the highest level of Government and the Civil Service to introduce legislation at very short notice to ensure that difficulties were removed as efficiently and swiftly as possible.

To learn from this example, we could now establish a commission or grouping of similarly powerful individuals, a team of various disciplines, with access to Government at the highest level to ensure that serviced land or unserviced land was identified and developed as quickly as possible. It takes time to introduce plans like this but with the right will and the right structure this could be fast-tracked and one of the best ways to do that is a small group of people, a multi-disciplinary team of the highest calibre and integrity, charged with responsibility to plan and acquire the land in accordance with Government policy.

I use that as an example to illustrate the significance of what the Minister of State, Deputy Jacob, is doing here today, which is hugely significant. He is taking the existing model, which is working well – in plain language it is State intervention into the market – and he is now saying we have to move on further.

We have urgent infrastructural requirements to meet a rapidly growing demand and the Minister of State said he will use this model because, having studied it, he is satisfied it is the right model. This model is independent, transparent and works well. It has the capacity to facilitate quick intervention and we need fast action. I believe the Minister of State will get that.

I commend the Bill. Further generations will laud the Minister of State because he will have passed on to them, through this legislation and the Electricity Regulation Act, legal structures that will ensure fair play in the price and availability and security of supply will obtain for the people who most matter to all of us here, the ordinary people of Ireland.

I welcome the Minister of State to the House. I thank him for what he said at the end of his contribution. He will be pleased to note that what I said on the Order of Business was aimed to elicit that information. What I said may have sounded like a criticism, but I added that there may have been a satisfactory explanation as to why he was not in Copenhagen yesterday. The Minister of State has admirably explained why he was not there. The other explanation he gave resulted from a vote of 12 to two, which is clearly a win. Any veiled criticism I appeared to make was to elicit the information I sought. I congratulate the Minister of State on that vote.

I also congratulate him on the solo run he has made on the issue of Sellafield recently. I was highly critical about the operation of Sellafield over the years. I believed various Governments were almost shy of upsetting the British in case it upset the relationship in regard to Northern Ireland. I stand by that view I held in the past. However, that position has changed. I used the term "solo run", and with the match being played in Thurles on Sunday, I am sure that if the Minister of State came from Cork or Kerry, he would be make a solo run similar to that which he has made recently.

I also congratulate him on introducing this Bill and on the explanation he gave for its introduction, as I had a number of queries about aspects of it that had not been explained. I am conscious of limited time allocated to this matter. Normally, I would be critical of taking all Stages of a Bill in one day but, as Senator Dardis said, there is an explanation for that, and I accept it.

I remember my father pointing out to me in the 1950s that the enemies of the people in the coal business were their competitors in the oil business. The people in the coal business stayed in that business and fought against the oil business, but they were fighting a losing battle. Those who won were those who said, "We are in the fuel business." They got into both businesses and they said, "Whatever way the market goes, we are in that business." My father likened that to those who were in the horse and carriage business at the turn of the century who said they were in the horse and carriage business and they would fight against those in the motor car business, as against those who said there were in the transport business and would stay in that business.

That reflects what the Minister of State has done in this Bill. He has said, in effect, that this matter is the fuel business – it is not concerned only with gas, electricity or nuclear energy. Therefore, the decision to encourage and to enthuse Bord Gáis to diversify into the provision of electricity or other fuels must be commended.

I also compliment the far-sightedness of this Bill. A book entitled 2020 was published by the IMI in 1995 with the object of predicting what Ireland would be like in 2020. A question that arose at that time was whether we would be able to handle the challenges that faced us. In the past five years we have not even realised how quickly we have moved forward. I was impressed by what the Minister of State said about our ability to foresee the capacity requirements that are needed. My criticism about the wait and see approach adopted to the Corrib oil field was answered well by the Minister of State.

With regard to the alternatives to nuclear energy, it may be that we will use nuclear energy in the future, therefore, we should not condemn it. However, we condemn reprocessing of nuclear fuels and the manner in which that takes place.

I wish to refer to a point Senator Liam Fitzgerald made about the State's involvement in this area and the extent to which it should be involved. The Minister of State answered that point reasonably well. The State should be involved if there is no one else to do the job, but the objective should be to encourage others to do the job.

I remember Eleanor Butler's geography book, which Senator Liam Fitzgerald is probably too young to remember, from which we learned that Ireland had no natural resources other than agriculture.

Senator O'Dowd is too young to remember it.

Perhaps I am older than the Members present who remember it. In those days we assumed we did not have natural resources. I will have to give credit to the former Minister for Finance, Charles Haughey, who does not get too many compliments nowadays, because in the 1960s he contributed to our discovering we had natural resources by giving tax incentives to encourage people to establish whether or not we had. Through giving such tax incentives our natural resources, such as lead and zinc, were discovered. Similar tax incentives are being used to discover further natural resources, whether the gas field off Kinsale or the oil field off the west coast. That is critical for our future, which is threatened by inflation and is threatened in the long term if we do not manage to maintain the low cost of fuels.

Those of my relatives who are in the tomato business found it almost impossible to compete with their competitors in Holland because the Dutch always had a low fuel cost and they were able to grow products such as tomatoes indoors when we did not have a low fuel cost.

I note from a Northern Ireland television programme broadcast this morning that traders in Northern Ireland have allocated 1 August as an anti-petrol day to protest against the cost of petrol in the North. Traders there who are close to the Border find it difficult to compete with traders in the South where the price of fuel is lower. We will not be able to compete in the long term unless we have low cost fuel. The steps the Minister of State is taking gives us an opportunity to do something about that. Therefore, the Bill deserves our support.

With regard to deregulation and encouraging non-Government agencies to enter this market, we must be proactive. This Bill gives the Minister of State the ability to actively encourage the participation of such agencies in this market. I am not sure that commitment will exist in the future unless it is pursued very actively. I welcome the Bill and the Minister of State's enthusiasm for it. It is well worthy of support.

I wish to share my time with Senator Chambers.

An Leas-Chathaoirleach

That is agreed.

I welcome the Minister of State to the House. I compliment him on the work he has been doing for our people to secure the closure of Sellafield.

This Bill is timely. I have had meetings with representatives of Bord Gáis. I do not know why many areas of the country were excluded when the plan was drawn up for the gas pipeline. Every citizen is entitled to access to the same type of fuels and to pay the same price for such fuels. I do not understand why people in cities can obtain fuel at a cheaper price than those living in rural areas.

Our strong buoyant economy presents an opportunity to extend the supply of gas throughout the country. I speak in particular about my side of the country. The gas pipeline extends to Limerick and, from meetings I had with representatives of Bord Gáis, I understand it is intended to extend the pipeline to the Aughinish Alumina plant and to the Moneypoint power station, along the Shannon directly across from County Kerry. There is an oil powered station in my own village of Tarbert which may possibly be converted to gas. If so, I cannot understand why the gas line cannot be extended to Tarbert and into Kerry.

Some years ago a smelter was to be provided on a landbank of over 600 acres situated in north Kerry in the ownership of the State for the past 25 years but it did not materialise. Other industries were also mentioned for that area but did not materialise. The land which is lying idle is situated on the deepest and most natural waterway in Europe and has been crying out for development for a long time. If gas were extended to that region it would be an additional attraction for foreign investors.

I feel strongly about the development of the west. Various Bills dealing with the west have provided for development in Mayo and Galway. Were it not for Deputy Carey's efforts Clare would not have been included. From a geographic point of view I do not know where Kerry fits in but it is deeply imbedded in the west, or the south-west. In every programme that has been introduced, Kerry has been forgotten so far as any type of development is concerned. Kerry is crying out for development. North Kerry has had no new industry for the past 25 years. There is a Kerry group which could use gas and Listowel is badly in need of it. Tralee, which has a huge population, and Killarney would also benefit from it.

If the Tarbert power station is to be converted from oil to gas this is an ideal opportunity to extend gas into Kerry. If the funds were not available and the economy was not doing well there would be an excuse but that is not the case. The people of Kerry should be treated in exactly the same way as those in Dublin and should get their fuel at the same price. Gas is a clean fuel and is the way forward for the future. I am pleased at the gas find off the Corrib and I hope it can be put to use for all the people.

I welcome the Bill and compliment the Minister.

I join with previous speakers in welcoming the Minister. When the Minister of State was appointed to this portfolio I did appreciate his portfolio but I compliment him on its importance to the economy. I commend him on the manner in which he has handled all aspects of his responsibility in relation to dealing with Sellafield. I join with previous speakers in complimenting him on the way he has handled his minis terial brief, brought matters forward and fought from a small premise and raised international awareness on some of the environmental issues affecting the country.

I welcome the Bill. It recognises the achievements of and supports Bord Gáis Éireann. It takes on board the EU directives and national directives in relation to competition. It opens up the industry to the private sector. Its puts a legal framework on energy business and gas, in particular. The future development of Bord Gáis Éireann is welcome in that it intends to bring an extra 250,000 houses into the national gas framework. Its expansion programme will be a great investment and will benefit the economy as a whole.

I watched the debate in the Dáil last night which was worthwhile, and heard the compliments paid to the Minister by Deputies Stagg and Yates, and to some of the proposals and amendments put forward to the Minister. The Minister should maintain a strong responsibility in the overall development of the gas framework while at the same time allowing the private sector and Bord Gáis Éireann to get on with the development programme. However, he should have a strong input into the general outline of development in the State.

Coming from the Objective One area I welcome the proposed development to inter-connect into the Galway area and the western region. It is important to ensure a balance and that those areas have the benefit of reasonably costed fuel which is environmentally friendly.

On a previous occasion I raised the issue of Bord na Móna and the ESB power station at Bellacorick. There are serious concerns in regard to its proposed closure in 2005. While the Corrib field has not yet been declared commercial and Bord Gáis Éireann has not entered into any negotiations, it is important that the western region receives some benefit. I understand it is a private development and that Enterprise Oil is a private company. Nevertheless, it is important that if a pipeline is established and it is commercial that the Objective One region should have the opportunity to avail of reasonably costed fuel. In view of the proposed closure of Bord na Móna and the ESB power station it is important the Minister have a serious look at this given that over 200 people are employed there and when part-time workers and others are included the number increases to 350. The Government has a responsibility to outline its future plans. There should be some plans for the future of that area and a structure set down as to how it will be dealt with.

I welcome the Bill. It is well structured from the point of view that it seeks to protect competition within the industry, it opens up new opportunities and it allows the private sector to participate in the development of the gas framework. The Bill is to be commended to the House.

I welcome the Minister of State to the House and congratulate him on Sellafield and his success in the European context. While we have decided to go the road of non-nuclear power in terms of generating power capacity, this Bill is silent on any link-up with Northern Ireland. Much of its power capacity comes from nuclear power whether from Scotland or further south. In terms of the Electricity Supply Board and any injection into our own power capacity here, has the Department considered any such link-up and the implications of a link-up with power that has been generated through a nuclear capacity? Perhaps the Minister will respond.

The background to this legislation is the economic boom the country has been experiencing over the past years. There is a huge increase in house construction and more houses are needed. The economy is far ahead of what was believed would be the required capacity in terms of the generation of electricity, power for industry and so forth. The percentage of our power needs supplied by traditional forms of power generation has been reducing as well. The Arigna coalmines closed down in 1990 or 1991 bringing an end to our indigenous coal supply. Hydro-electric activity has also decreased enormously in percentage terms.

The mainstay of our supply at present is the coal generating plant at Moneypoint, the oil generation plant at Portadoyle and the increasing use of natural gas. The latter is now reaching capacity in terms of the expiration of the supply at Kinsale and the use of the interconnector from Scotland. Progress is being made in generating power from wind farms. Perhaps the Minister of State would elaborate on the proportion of capacity wind power might supply in the future. What work is being done on generating power from waves or from solar energy? Has the Department carried out any work in this area and is it relevant to this legislation? Will it contribute to the capacity we are likely to have or feed into the national grid?

I commend the Minister of State on the forward thinking in the legislation. I have a number of questions however. The national development plan for the period 2000-06 covers many areas, including power generation. Power generation should be looked at as an integrated process. One cannot look at the generation of power for industry without looking at the power needs for the construction of homes and the fact that the same type of power generation will be used in both sectors. Look at what happened to the Kinsale gas. There was an interconnector to Dublin with a spur to Limerick but the entire western region was ignored. The pipeline was directed there and there was no service to that hinterland. How can one seek Objective One status for that region when there is no integrated power supply to it?

Any sources of power that come on stream, particularly beneficial ones such as natural gas, should be automatically connected to the areas of the country most in need of development. Fuel is needed to boost industry and to develop the country. Clearly, we must think in terms of an extra supply, network and capacity that would benefit the areas of the country which have been neglected to date.

There was no information in the Minister of State's contribution about the Corrib gas field, its capacity and how it will be distributed on the mainland when it is taken on shore. Where will it be taken on shore? Will it be Ballina or Sligo or will it be directed to Galway? What are the plans for a network of pipes to cover the north western and western areas? There is a crucial decision to be made about the future of this country, particularly the west. The legislation is silent on this. The Minister of State might say this is not the appropriate Bill for this matter but I believe it is – we are planning for the future and if it is not dealt with in this legislation, when will it be dealt with?

The most critical issue to be addressed is the integrated nature of the network that will provide fuel capacity not only for central heating for homes but also for industry and other development. This is also relevant to Northern Ireland. What is capacity in Northern Ireland? Does it have a surplus of capacity which would enable an interconnector to be built into the Republic? Such an interconnector would cover Donegal, Sligo, Leitrim and Border areas. With the Good Friday Agreement reasonably stable, there will be more emphasis on interconnection in terms of cultural, economic and industrial projects and schemes. There is a capacity there which should be explored and which could be beneficial to areas which are currently underdeveloped.

My final point relates to the private sector. I have no problem with private operators coming into the market but I am concerned about the private sector having the same power as the State in relation to the compulsory purchase of land. Sections 19 and 20 give private operators the same rights of access to an acquisition of land currently enjoyed by Bord Gáis Éireann for the purpose of constructing pipelines. The extension of these rights is subject to the payment of compensation and the operation of a comprehensive set of procedures in relation to the exercise of compulsory purchase order powers.

Compulsory purchase powers are not given generously. This argument has arisen in relation to the construction of houses. It has proven to be difficult to compulsorily purchase land to build more homes. We have not been able to do that even though the State is trying to do it in the interest of providing people with shelter. In this Bill, however, that power is being given out willy-nilly. It is not being given to just one private operator but to a plethora of operators. Obviously, there will be a temptation to compulsorily purchase land which might not be required immediately and to create landbanks to provide for further capacity in the future. Once the land is acquired, what will happen? How will we ensure that the land is used for the purpose for which it was compulsorily acquired? The only require ment is that compensation be given and the compensation will certainly not be equivalent to the value of land that is zoned for residential or industrial development.

Hitherto, generating capacity has been provided by the State, whether through the ESB or Bord Gáis Éireann. Power stations are to be built now by private operators. The Exchequer's coffers are overflowing but all the Minister for Finance can think of doing is locking the funds away. This year £3 billion was put aside for pensions which are not yet a problem. It will be at least 2020 before we begin to experience problems in that regard. There is loads of money available which could be usefully utilised. We do not need to borrow.

Rather than tying that money up in non-productive ways, should we not think in terms of providing a network of power stations throughout the country? This is the obvious area for State investment. I have no problem with private investment. However, where the State does not require it and where traditionally the State has done the job, why should it not continue to do that job when it has the funds? Let us seek private investment where there is a shortage of funds. I am concerned about the extent to which we are introducing private interests into this sector, particularly in relation to compulsory purchase orders.

I welcome the Bill and the far-sighted approach of the Minister, which is extremely important if our economic success is to continue. I welcome the fact that Bord Gáis Éireann is given extra powers to engage in non-gas related activities. I welcome also its increase in borrowing power from £350 million to £550 million, although I would increase it to £1 billion which would be appropriate at this time.

I am concerned about the extensive powers being granted for the first time to private contractors. I would like to have had an opportunity to tease out the possible implications of these powers and how their implementation might impinge on other matters. That is why it is a pity we are dealing with all Stages of the Bill today.

I welcome the Minister of State, Deputy Jacob, to the House. He is one of the few Ministers to be complimented and congratulated here. I am not aware that he has ever been the subject of major criticism or investigation of any type.

This is a very well thought out Bill to prepare for the future in anticipating energy demand and making proper provision for its supply. It is prudent that the legislation is currently being put through the Oireachtas so that work can commence and the Minister can proceed to make the necessary preparations to meet energy demands. We are at full potential as far as the supply of electricity is concerned. Supply and demand are literally neck and neck and we are now facing a rather critical situation. Therefore, it is important to provide additional supplies.

I am particularly pleased that the Bill proposes extending gas supply throughout the country. I welcome the Minister of State's proposal to build an interconnector within the next few years if private operators do not do so. This is a wise and prudent decision on which I congratulate him.

I understand the proposed new pipeline will come down to County Limerick, go out to Aughinish and cross into County Clare at Ballynacally. I suggest there is a gap between Limerick and Ennis; the Shannon area is not included in the maps currently being produced by Bord Gáis. It is absolutely vital that an industrial zone such as Shannon, including the town and airport, should have an opportunity to avail of this gas supply. I ask the Minister of State to raise the matter with Bord Gáis to ensure a connecting line is built from Coonagh on the border of Clare and Limerick right out to Shannon airport and possibly into Sixmilebridge, an area with a large population. One section of the pipeline will come to Ennis but another section will cross from Aughinish underneath the River Shannon to Ballynacally, County Clare. This is just a few miles east of the village of Kildysart. The Shannon Estuary has huge potential for development and this is an ideal opportunity for the Minister and Bord Gáis to direct a pipeline west along the northern side of the Shannon Estuary back to Kilrush and even further on. That area has some of the deepest waters on the estuary or indeed in Europe, particularly outside Cahercon and outside Moneypoint.

The Minister of State referred to the generation of electricity. There is currently a coal burning electricity generating station at Moneypoint. There was mention some years ago of installing a fourth generator but that has not happened. Given that a generating plant is in place in Moneypoint – granted the infrastructure is a coal burning facility – this is an ideal opportunity for the ESB to introduce a gas interconnector to generate electricity. It would be very unwise if the Department did not consider that option and proceed along that route.

By making the connection from Ballynacally west to Moneypoint and on into Kilrush, one would be putting in place the infrastructure to enable substantial industry to be set up in that part of County Clare. Given that the Minister of State got his foundation in the town of Kilrush and is here in such a solid capacity, we must lay claim to the fact that some of the sound common sense emanates from that town. He will appreciate fully what I am talking about and will respond positively to what is a very sound and common sense proposal.

I am pleased the Minister of State gave an explanation in his Second Stage speech as to why he considers it necessary for the gas capacity to be allocated now rather than when the new capacity becomes available for purchase. It was a wise decision to put that on the record.

On the Corrib find, I am concerned about what we as a nation own because I believe the gas finds in our territorial waters belong to the Irish people. I would like to think the people and the Government get a proper monetary return for gas, oil or any other finds. Given that we are traditionally a country with an agricultural background, we have not much expertise in the field of energy exploration other than the expertise within the Minister of State's Department. I hope proper monetary arrangements are in place and that the people receive a proper return from these finds.

I am interested in what the Minister of State had to say about making a decision later this year on the commercial development of the Corrib field. Perhaps he will elaborate further on the capacity of that field. I welcome the fact that he will approve the building of a second interconnector by BGE before 2003 if private developers do not do so. This is a wise and prudent decision on his part.

The supply of natural gas to 10,000 industrial and commercial customers and over 300,000 homes is interesting. I am sure there is huge potential for supplying additional homes. I concur with previous speakers, including Senator Chambers who comes from County Mayo, that people throughout the country should have an equal opportunity to obtain energy at prices similar to those in the Dublin area. People in the west should not be discriminated against because of the isolation of the area.

Supply and demand for electricity are neck and neck at present. The Minister of State said forecasts for future electricity demand show that an increase in power production capacity of 600 megawatts will be necessary by the winter of 2004. That is not too far off and it is vital that the necessary infrastructure is put in place and that the generation of electricity to that capacity will take place. He went on to say he has decided that available capacity in the natural gas network should be reserved specifically for the purpose of fuelling up to 800 megawatts of new gas-fired power stations. This is extremely welcome. He also said he has decided on a scheme for the advance selection of power producers. I would like him to elaborate in more detail on how he intends to go ahead with that advanced selection of power producers. It is vital that the infrastructure is put in place to prevent us from falling between two stools. People have suggested that this will go ahead but there are no guarantees. We need those assurances. I would like the Minister to explain this matter further.

With regard to the gas pipeline, I am a little concerned about the extension of the compulsory purchase power to private developers. I appreciate that this scheme must comply with EU directives on equality and equal opportunities but I am still concerned. We know the difficulties county councils must face if they want to acquire properties. We also know the problems connected with compulsory purchase orders and State agencies. I would, however, hate to think that ordinary people, farmers, landholders, householders or whatever would be put in a position where they would not have much choice but the great big powers could ruthlessly charge through them and buy land using compulsory purchase orders. I would not like to think that the big man could do that and that the interests of the ordinary private citizen would not be adequately protected.

I know that other operators do not require consent and that the Minister can impose the same requirements on them as he did on BGE. It is imperative that he does that because some operators can be cowboys and ruthless. I would like to think that the ordinary person who would not have the money, the financial backing or the ability to fight these people would be protected by him, the Government and the State. This is very important. I hope he will re-examine this situation and impose the same conditions he imposed on BGE on other operators.

I thank the Members for their contributions. I also thank them for their kind remarks about the nuclear campaign. Together – I am not interested in solo runs on this issue – Deputies and Senators will continue to escalate this campaign and we will be successful.

I will endeavour to give a brief but comprehensive response to the points raised by Senators O'Dowd, Liam Fitzgerald, Quinn, Dan Kiely, Chambers, Costello and Taylor-Quinn. In bringing forward the Bill I am seeking to address four issues, two of which require immediate attention. The first most pressing issue is to provide for a scheme to allocate scarce capacities in the national gas network to ensure that additional power generating capacity will be made available in the State to meet expected increases in demand for electricity.

The scarcity of capacity in the national gas network is a short-term problem. My Department has consulted extensively with interested parties on the question of an appropriate mechanism for allocating capacity in the gas network. The scheme provided for in the Bill is a transparent mechanism to select power producers and only capacity available in the network will be allocated. It will select those producers who will be capable of bringing additional electricity generating capacity onstream at the soonest possible date.

I want to emphasise that there is no threat of disruption to existing gas customers. There is sufficient capacity in the system to meet forecast gas demand until 2003. Neither is it the case that BGE will be constrained in connecting and supplying new customers. Sufficient capacity to fuel approximately 800 megawatts of electricity generating capacity is available in the gas network. I have decided that this will be reserved specifically for the purpose of fuelling new power plants to meet the expected increase in demand for electricity in the next couple of years.

There is a set of converging circumstances which has resulted in there being limited capacity available in a natural gas network in the short term. Demand for natural gas and electricity has been increasing at a greater rate than expected. This is directly related to the unprecedented levels of economic growth that we have experienced in recent years and which hopefully will continue in the coming years.

The gas interconnector with Scotland is nearing full capacity ten years sooner than had been anticipated due to the greater than expected growth in demand. In addition, the demand for natural gas has been boosted further by the opening of the electricity market.

The second pressing issue the Bill addresses relates to the construction of natural gas pipelines and is concerned with the question of right to access and acquire land for the purpose of constructing these pipelines. Anomalies exist in our current legislation in relation to the construction of pipelines. BGE must obtain my consent to construct a natural gas pipeline while private developers must give previous and reasonable notice to me of their intention to build a pipeline. In both cases I can require that the pipeline be built in accordance with certain criteria relating to environmental, safety and efficiency considerations. BGE has powers to access and acquire land for the purpose of building a pipeline. Private developers do not have these rights.

As I said in my opening address, a number of parties are interested in building pipelines both within and to the State. The EU Gas Directive has been in force since 1978 and it requires that all natural gas undertakings be treated on similar terms. Therefore, I could not approve any proposal from BGE or a private developer to construct a pipeline where BGE and private developers do not enjoy the same rights by virtues of the reasons Senator Taylor-Quinn mentioned. She referred to the competition constraints imposed on us by the directive and European law.

The aim of the Bill is to remove existing anomalies. The provisions of the Bill would make all pipeline developers, both BGE and private developers, subject to the same consent conditions. They also extend the rights currently enjoyed by BGE relating to access and acquisition of land to private developers. These rights are extended to private developers subject to the same obligations to pay compensation that apply to BGE.

Senators raised specific items. Senator O'Dowd suggested that we should auction the scarce capacity that exists. My Department did seriously consider an auction as one of the possible methods for allocating our scarce capacity. We held a widespread public consultation on possible options. As I said earlier, I formed the view that the first to market principle was the best choice in these particular circumstances. I can see the benefits of an auction arrangement but I had to be sure that the mechanism chosen would ensure the early completion of new power stations so that there would be no danger to the continuity and security of electricity supply. That is the kernel of this legislation.

Senator O'Dowd proposed the establishment of a new power plant in Drogheda. He also talked about pumping hot water into the river Boyne. All new power plants must obtain a series of authorisations and licences before they can operate, for example, from the Commission for Electricity Regulation, the planning authorities and the Environmental Protection Agency. There are very stringent processes in place and they are designed to ensure that the construction and operation of power plants is carried out to the very highest standards.

Senators O'Dowd, Liam Fitzgerald and others talked about renewable sustainable energy and the need to debate it in this House. This subject is close to the hearts of the Senators who raised it and it is very close to my heart. I will be only too delighted, if Senators deem it appropriate, to come here and debate this very important area. Senator Fitzgerald also called for a debate on renewables.

Senator Quinn exhorted BGE to expand its role. We are facilitating that in this legislation. He referred to the practice in the past of using tax incentives to encourage the search for and location of our natural resources which has been wonderfully successful. In my era at school, we were told that we were essentially an agricultural country and we had no natural resources. The way this has evolved is marvellous. We have natural resources, we are making the very best use of them and will continue to do.

Senators Kiely, Chambers and Taylor-Quinn all aspired to have the gas grid extended particularly into their own constituencies, which I endorse. We would like to see our natural resources spread as much as possible countrywide and made available to all of the people. Gas is a hugely important resource. It is a catalyst which has the ability to bring industry to an area, for instance. BGE's function is to do what the Senators aspire to. The main criterion thus far has been commercial and financial viability. That will still play a major role in the expansion and extension of the gas grid.

Senator Chambers referred to Bellacorick station. I deputised for my senior colleague when the Senator raised this in the past on the Adjournment in relation to electricity provision. The ESB has no proposal currently relating to a gas-fired station in Bellacorick or its environs. The peat-fired power station at Bellacorick comprises two 20 megawatt units which were commissioned in 1962 and 1963. For some time, this plant has been scheduled for closure in 2004, at which stage the station will have been well over 40 years in operation. That was agreed in a tripartite agreement between the Department of Public Enterprise and the ESB management and unions, signed on 17 February last.

Senator Chambers has raised several times the matter of a task force for his area in the context of the matter being discussed today. While such an initiative would be more appropriate to bodies such as the county councils or the Department of Enterprise, Trade and Employment, I will bear his exhortations and his message to the appropriate Minister or Ministers.

In her efforts to bring this resource to her own shores, Senator Madeleine Taylor-Quinn mentioned Kilrush, the town of my birth. I would gladly see it move there.

Will the Minister assist it to move?

I note the Senator's comments on gas infrastructure in the Shannon region and Kilrush. I reiterate that responsibility for deciding which areas are served by gas is and will be a matter for BGE, which is required to operate on the basis of commercial criteria. I fully understand the Deputy's concerns and aspirations. She can be assured, as can Senators Chambers and Kiely, that I will bring to the attention of BGE the aspirations they articulated today, and the very strong resolve they have shown on the matter, to see what can be done in that regard within the constraints.

Senator Joe Costello raised the matter of windfarms. I published the Green Paper on Sustainable Energy last September, which has been very useful for getting this matter off the ground and I was very pleased it was so well received. One of its recommendations was to establish an expert group to examine renewables. I was fortunate to get excellent expertise and knowledge in a group examining that matter currently under the chairmanship of a very eminent and knowledgeable person, Professor John Fitzgerald. The matter has not been long-fingered. I expect that report from them within the next two weeks.

As the Senator knows, in the Green Paper we set the targets for electricity production via renewables at 500 megawatts. Some would say that is a very ambitious target. I say it is an achievable one. The first technology that this group will examine at my request is wind technology. I have asked them to look at the constraints and how we might overcome them. I expect that report will be available in mid-July. We will take the matter from there.

Senator Costello also referred to where Corrib gas would be landed ashore and how it will link into the network. Other Senators have been very interested in that also. The business of bringing gas ashore from Corrib is entirely a matter for the developers. As I mentioned earlier, BGE and the Corrib partners are in detailed negotiations as to the building or the creation of a spur from source as it comes ashore to join the line which will be in place from Dublin to Galway and down to Limerick. That is a matter for the players involved, but both the decisions and the construction of this important infrastructure need to be expedited. We will do everything possible to have that implemented.

Senator Costello and Senator Taylor-Quinn raised the question of giving compulsory purchase rights to private operators. CPO rights are not given automatically to private operators. An applicant will avail of these powers only after I have given my consent to the construction of the pipeline, in other words, after there has been full public consultation on the application and environmental impact statements. I will license only bona fide applicants. There is a measure of protection in that process against the potential hazards raised by Senator Costello and Senator Quinn.

Senator Madeleine Taylor-Quinn specifically asked for assurances that these power stations would go ahead. I assure her that the Bill contains significant penalties in the form of a bond for which developers will be liable if they do not proceed with the stations. This fund will be an appropriate incentive to ensure that they are built and if not the forfeiture of the bond to the State will provide the funding to undertake contingency measures to ensure security of supply. I fully agree with Senators who have raised this issue. I hope I have at least touched on matters which have been raised.

Question put and agreed to.
Bill put through Committee, reported without amendment and received for final consideration.
Question proposed: "That the Bill do now pass."

The debate was enlightening and interesting. I learned a great deal from the queries which were raised, which I as Government spokesperson on public enterprise, have taken on board for future debates. I pay special tribute to the Minister of State on this historic occasion. The Bill plans for the future and will present an inheritance to future generations in terms of security of energy supply. I commend him for the wise and enlightened manner in which he formulated the legislation and, above all, I commend him for his clarity in explaining our doubts and queries. It is a special day and a special Bill, which the Minister of State presented in an effective manner.

I thank the Minster of State and his officials for their courtesy and help during the debate. Senator Liam Fitzgerald referred to today as an historic occasion. It may be historic for a different reason as it could be the last time this Seanad meets before the general election. However, I wish everybody well during the recess.

I wish to be associated with the comments of my colleagues and the compliments they paid. I congratulate the Minister of State, who is always welcome in the House. He has probably received more compliments than most Ministers who appear in the House and we are glad to compliment him again. I also congratulate his staff.

I thank you, a Chathaoirligh, and all colleagues who have contributed to this debate. It was hugely important that this legislation passed through the Houses of the Oireachtas before the end of the session. We have made it and I appreciate the co-operation I received in both Houses from all parties. I also thank my officials. We used to refer to this legislation as the little gas Bill but it became complex. Much midnight oil was burned by my team of officials and I appreciate that very much. Our efforts will ensure that we will not be in the dark a few years down the road.

Question put and agreed to.