This is a Seanad Bill which has been amended by the Dáil. In accordance with Standing Order 103, it is deemed to have passed its First, Second and Third Stages in the Seanad and is placed on the Order Paper for Report Stage. On the question "That the Bill be received for final consideration", the Minister may explain the purpose of the amendments made by the Dáil. This is looked upon as the report of the Dáil amendments to the Seanad. The only matters, therefore, which may be discussed are the amendments made by the Dáil. For Senators' convenience, I have arranged for the printing and circulation of the amendments. Senators may speak only once on Report Stage.
Sustainable Energy Bill, 2001 [ Seanad Bill amended by the Dáil ] : Report and Final Stages.
Question proposed: "That the Bill be received for final consideration."
My apologies if we have held up proceedings, but there was a vote in the other House. At the outset, I express my gratitude to the Cathaoirleach and the House for being able to take this Bill so soon after its passage through the Dáil. I have made arrangements for copies of this statement to be distributed to Senators so I will be as brief as possible.
I know from our earlier discussion in this House that Senators share my concern to have the Bill enacted as soon as possible so that the new authority can begin its important work. For ease of consideration, I will discuss some of the amendments in a number of groupings.
The purpose of amendment No. 1 is to amend the Long Title of the Bill to take account of the fact that amendments were made in Dáil Éireann which necessitated that change, namely, amendments to the Electricity Regulation Act, 1999, and the Gas Act, 1976. There are a number of amendments which are purely technical in nature. In this category, I place amendments Nos. 2 to 4, inclusive, 10 to 12, inclusive, 16, 17 and 20.
Amendment No. 5 provides for the authority to have the power to establish subsidiaries in order for some of its functions to be performed through a subsidiary, if it so desires. It will be a valuable instrument for the authority in the exercise of its functions and could allow it to establish subsidiaries that could support the development of new services in the marketplace or realise the value of intellectual property accruing from research expenditure. It could establish a new activity of a regulatory, certification or data holding kind, where there is a formal need to establish it on a stand-alone basis because of possible conflicts of interest with any promotional activity such as trading schemes and verification schemes. While the current centre has no immediate plans to establish subsidiaries upon its establishment as the new authority, this section will allow them the freedom to delegate functions, as the need arises in the future, subject to the agreement of the Minister and the Minister for Finance.
Section 7 of the Bill, as passed by this House, provides for possible assignment of additional functions related to the production, supply, including security of supply, and use of energy. However, during the course of the debate in this House, some speakers expressed the view that the provision was too wide in scope and could, if a plethora of additional functions were given to the authority, dilute its main focus.
After further consultations with interested parties, including the Commission for Electricity Regulation, I formed the view that such a precise reference to security of supply in this Bill would be likely to lead to legislative confusion in so far as the mandates of the Commission for Electricity Regulation and the new authority are concerned.
Senators will be aware from the earlier debate that the assignment of additional functions to the authority by the Minister can only be done by positive statutory order. Under section 8, any such order must first be approved by both Houses of the Oireachtas before being made by the Minister, thereby giving the Oireachtas a say in any function to be transferred or given to the authority.
Three of the amendments relate to the board. I am anxious that the responsibilities of the board and the management are clear and not in any way compromised by what we might put into the legislation. Amendment No. 8 is necessary so as to ensure the demarcation between the functions of the board and those of management. The issue of the composition of the board and the competencies and experiences of board members is one to which I have given considerable thought.
Since I was last in this House, similar legislation has been enacted, namely, the Transport (Railway Infrastructure) Act, 2001. This included a section on various competencies and experiences, which board members of that agency should have. That approach has a lot of merit and so, with a few changes, the result is amendment No. 9.
Amendment No. 13 requires the board to meet at least once every quarter. I will impress on the chairman of the new authority that I expect board meetings to be held more frequently than that specified in the proposal and that I consider the provision to be the minimum required for the proper execution of its duties. The interim board, which I appointed in December 2000 to oversee the transition of the centre to the new authority, has met on a monthly basis since then, which is what it deemed necessary to properly execute its functions. It has done excellent work in a comparatively short time.
Amendments Nos. 14 and 15 concern the chief executive. The first of these defines the responsibility of the chief executive to the board. While the thrust of the amendments is clearly implied in the Bill, I have been persuaded to spell it out in view of its importance. I brought forward amendment No. 15 on Report Stage in the Dáil in response to an Opposition proposal. I will deal first with the situation where the post is vacant, following the retirement, resignation, dismissal or death of the last chief executive. Pending the appointment of a successor, the board may wish to designate someone to carry out the functions of chief executive and I have provided for that in section 14(9)(a) of the Bill.
The second situation is the most difficult to provide for, such as when a chief executive is hospitalised for some unforeseen reason such as a heart attack or an accident. In such circumstances, the chief executive would be unable to designate someone to carry out his or her duties. However, if the absence is likely to be prolonged, the board might wish to appoint someone to carry out those functions until the chief executive returns. Amendment No. 15 is designed to meet the circumstances of a vacancy and the unforeseen absence of the chief executive. It also avoids the dangers of cutting across the contract of employment between the chief executive and the authority.
There was some concern in relation to the lack of a definition of "household" in the Bill. This is a very difficult issue to provide for and, in conjunction with the parliamentary counsel's office, we have given the question much consideration and examined many other items of legislation resulting in amendments Nos. 18 and 19. Rather than use the concept of "household", I proposed that we amend the Bill to instead refer to "connected relative", a concept used in other Acts, most recently the Transport (Railway Infrastructure) Act, 2001. To do that, it was necessary to amend section 17(2)(a) to (d) so as to refer to connected relative instead of household. It was also necessary to insert a new subsection (7) to define “connected relative”.
Ensuring that the authority is subject to the freedom of information legislation was an issue of concern in both this House and in Dáil Éireann. It had always been my intention that the new authority would be so subject. I had originally intended that this would be done by ministerial order amending the First Schedule to the Freedom of Information Act, 1997. However, I have been advised that, because the Irish Energy Centre is subject to the Act, the best way to ensure that it continues to be so subject is to amend the First Schedule to that Act in this Bill. That is the purpose of amendment No. 21.
Amendment No. 22 provides for an increase in the borrowing limit of Bord Gáis Éireann. This increase is an integral component in ensuring the completion of the ongoing major infrastructural development being progressed by the company, including the pipeline to the west and the second Scotland-Ireland interconnector. Over the next two years the majority of the capital expenditure involved in this huge investment programme will be utilised as materials are ordered and construction begins.
This increase in the statutory borrowing limit of the company is essential at this point as it will provide BGE with the flexibility required to best schedule its borrowings to obtain the best value in terms of interest rates and allow the board the resources it requires to schedule the debt effectively and successfully complete the projects.
During the course of the passage of this Bill through the Dáil, I found it necessary to bring forward certain technical amendments to section 39 of the Electricity Regulation Act, 1999. That section enables the Minister to make a public service obligation order, PSO order, requiring the ESB to purchase the output of certain peat and renewable electricity generating stations in the interests of security of supply and environmental protection respectively.
The PSO order needs to be made as soon as possible – many colleagues in this House have been calling for it – to facilitate the rapidly narrowing timeframe for the construction by the ESB of the two new peat-fired stations at Shannonbridge, County Offaly, and Lanesboro, County Longford, and the orderly closure of the existing antiquated peat stations. The amendment is also urgently needed to pave the way for the issuing of contracts to the successful bidders in the most recent alternative energy requirement, AER, competition. In that regard I am pleased to inform Senators that renewable energy projects to a total capacity of 370 MW have qualified for power purchase agreements under AER V. The making of a PSO order is also necessary to enable the generators concerned to sign power purchase contracts with the ESB.
The principle of public service obligations was debated in detail and accepted at the time of the passing of the Electricity Regulation Act, 1999. I stress that amendments Nos. 23, 24 and 25 are purely technical in nature. They have been deemed necessary by the Office of the Attorney General to ensure that the enabling power for the PSO order and the introduction of the PSO levy to compensate for the extra-competitive costs incurred in complying with public service obligations complies with European Commission requirements in so far as the PSO funding mechanism is concerned. The Commission approved the PSO arrangements for peat and renewable and sustainable generation on 30 October 2001 and 15 January 2002 respectively.
These amendments essentially constitute a technical modification to section 39 to ensure that the PSO funding mechanism relates to the maximum import capacity of various categories of electricity accounts held by final customers rather than the actual consumption of electricity by final customers, as had been provided for in section 39 of the 1999 Act. In the case of the levy based on consumption, the European Commission would have insisted that imports of electricity be exempted from the levy and this would have had an extremely distorting impact on the Irish electricity market.
The 1999 Act anticipated that the levy would be chargeable on the basis of consumption. Amendment No. 23 provides, inter alia, for the deletion of the reference in section 39(5)(a) of the 1999 Act, to “electricity provided to such customers”, or consumption of electricity, and provides for the insertion of a new section 39(5A) in the 1999 Act, which allows the charging of the PSO levy to final customers on the basis of maximum import capacity of three categories of electricity accounts. The other subsections of amendment No. 23 are minor modifications designed to facilitate the smooth operation of the PSO levy mechanism. Given the technical nature of the funding mechanism, it was decided to place the fine detail regarding the apportionment and computation of the levy payable in a separate Schedule to the 1999 Act. Amendment No. 24 provides for this.
Amendment No. 25 contains the new Schedule 2, which defines the three categories of electricity accounts. They will be "domestic", "small" and "medium-large" accounts, among which the PSO levy will be allocated on an annual basis by the Commission for Electricity Regulation. It also provides for the precise computation of the amount of PSO levy payable by the individual account holders in these three categories. The revised PSO funding mechanism will not result in an unfair burden on any category of customer and will not distort the market. While these amendments will not have any material impact on public service obligations, they are, nevertheless, necessary from a technical perspective. These provisions will be consolidated in the forthcoming electricity Bill which will shortly be sent to the parliamentary counsel for drafting and is due to be introduced in 2003.
I welcome the Minister of State to the House. This legislation has been teased out extensively and comprehensively by the Committee of Public Accounts and by the Dáil and Seanad. There is, therefore, very little to be said of it. I thank the Minister for agreeing to many of the Opposition's amendments and for agreeing to look afresh at many aspects of the Bill. I see in it something to which I referred during the early stages of the debate. There was a possibility of confusion in the demarcation lines between the Commission for Electricity Regulation and the new authority. I am glad the Minister has looked at that and that no confusion will exist in that area. We certainly will not improve the Bill at this juncture. It has been examined thoroughly in both Houses. Though small, yet very effective, this Bill has had the maximum input from the Oireachtas. I will agree to the passing of the Bill and am glad to accept the amendments that have been made to it.
I welcome the Minister of State who has returned to the House with the Bill. I reiterate the sentiments expressed by my colleague opposite. There is no doubt that we have acknowledged the significance of the Bill in the wide-ranging debate that took place here on Second Stage and Committee Stage. I too welcome the open manner in which the Minister has approached this important legislation. We all realise its importance in a rapidly growing economy with a need for sustainability and renewability in energy production and a requirement of strategies to abate or diminish greenhouse gas emissions. This Bill is consistent with overall Government policy, following the Green Paper on sustainable energy and the strategy to address climate change.
There is no doubt that the Minister, through the amendments he has made and accepted, has shown an openness in perfecting the Bill and allowing it to evolve through the debates into its most effective form as a vital cog in the overall strategy to address our energy problems. I welcome that. The Bill has been enhanced and improved significantly through the debates of both Houses and I commend the Minister on seeing it through the Oireachtas.
Question put and agreed to.
Question proposed: "That the Bill do now pass."
I thank the Seanad, particularly Senators Caffrey and Liam Fitzgerald, for co-operating in finalising the Bill tonight. I thank the Senators for their contributions during the early stages of debate in this House, as I thank my colleagues in the Dáil for theirs. Those contributions have resulted in a very fine Bill. The Sustainable Energy Authority of Ireland will soon have full statutory standing and can get on with its very important work.
Question put and agreed to.
When is it proposed to sit again?
At 10.30 a.m. tomorrow.