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Seanad Éireann debate -
Tuesday, 28 Nov 2006

Vol. 185 No. 8

Energy (Miscellaneous Provisions) Bill 2006: Second Stage.

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

Molaim an Bille seo don Teach.

I am grateful for this opportunity to present the Energy (Miscellaneous Provisions) Bill 2006 for the consideration of the House. Initiated in March, the Bill is an important component in the Government's progressive energy agenda. In conjunction with the Bill, the Government's proactive approach to energy matters is demonstrated by the recent publication of the Green Paper on Energy Policy, Towards a Sustainable Energy Future for Ireland, with a commitment to its development as a White Paper shortly, the National Oil Reserves Agency Bill 2006, soon to be considered by this House, and the recent publication of the Electricity Regulation (Amendment) (Single Electricity Market) Bill 2006 to give a statutory underpinning to the creation of a single wholesale electricity market.

The last initiative is of particular importance, as it is a concrete expression of what can be achieved on all-island matters through co-operation and mutual respect to the economic benefit of all and in line with EU policy on strengthening market integration for reasons of competitiveness and security of supply.

I wish to take this opportunity to recognise formally Senator O' Rourke's significant contribution in the initiation of the North-South energy project some years ago and I look forward to the support of the Seanad for this important legislation. While the Bill has undergone a number of significant changes since it was initiated, reflecting inter alia a constructive debate in the Dáil, a key objective is to expand the functions of the Commission for Energy Regulation, CER, the independent statutory body responsible for regulating and overseeing the liberalisation of Ireland’s electricity and natural gas sectors. These new responsibilities will include participation in the development of an all-island energy market, authorising and securing the construction of an interconnector, the regulation of the activities of electricity and gas installers, the designation of a shipper and supplier of last resort for gas and the regulation and promotion of natural gas safety.

Established as the independent regulatory body with responsibility for electricity under the Electricity Regulation Act 1999, the CER's powers and responsibilities were extended under the Gas (Interim) (Regulation) Act 2002 to cover regulation of the natural gas market. Given its wide-ranging knowledge and experience of both the gas and electricity markets and its statutory responsibility to carry out its activities in a fair and impartial fashion, the CER is best placed to tackle the additional functions and responsibilities proposed by the provisions of the Bill. I now propose to address these provisions in more detail.

Section 3 amends the Electricity Regulation Act 1999, to which I will refer as the Act of 1999 for ease of reference. It provides that it shall be a new function of the CER to participate in the development of an all-island energy market. This preliminary legislative component is necessary for the successful implementation of the provisions of Electricity Regulation (Amendment) (Single Electricity Market) Bill 2006 under consideration by Dáil Éireann.

Policy on an all-island energy market is encapsulated in the all-island energy market development framework, which was published jointly in November 2004 by the then Minister responsible for energy matters, Deputy Dermot Ahern, and his Northern Ireland ministerial counterpart. The framework, produced in consultation with the two regulatory authorities and energy stakeholders, sets out the commitment of both Governments to achieving a single energy market that will contribute to a more secure and cost efficient service for all consumers.

Section 3 also provides that the CER will be granted the power to arrange for the establishment of a single market operator that will, when established, operate an essential system of contracts and arrangements for trading in electricity on the island. The resulting integration of the electricity markets will result in a number of positive benefits over time. It will remove market distortions and minimise the wholesale cost of electricity. It will also create a more attractive location for new electricity generation and investment and thereby improve security and reliability of electricity supplies throughout the island.

Sections 17 and 18 amend the Gas Act 1976 to provide for the full opening of the natural gas market. These sections provide that "any person" shall be entitled to switch his or her natural gas supplier if he or she so wishes. They further provide that a natural gas supplier acting on behalf of "any person" may be granted third party access to gas pipelines or facilities. The upshot of these provisions is that the benefits of liberalisation previously enjoyed by industrial and commercial consumers will be extended to all natural gas customers, allowing them to shop around for their suppliers and to obtain the best value for money.

Section 19 amends the Gas (Interim) (Regulation) Act 2002 by providing that the CER may designate a supplier and shipper of last resort to supply gas to final customers in certain specified circumstances. This prudent measure is designed to minimise the impact on the market and consumers in the exceptional circumstance of a supplier withdrawing from the market or being unable to supply gas to its customers for whatever reason.

Sections 4 and 13 may be of most significance to the public. They amend the Act of 1999 by providing for the regulation via the CER of electrical contractors and gas installers, respectively. In conjunction with section 9, which provides for the taking of emergency measures in certain specified circumstances, and section 12, which provides for a natural gas safety framework, these sections demonstrate that two of the central concerns in the drafting of this Bill were safety and security of supply in so far as they relate to energy matters. It is with this in mind that I am particularly pleased to put forward these provisions for the consideration of Members of this House.

Sections 4 and 13 provide that the CER will have overall responsibility for the regulation of electrical contractors and gas installers in respect of safety in their areas of work. Under the provisions of the Bill, the CER will have the power to designate electrical or gas safety supervisory bodies that will be required to operate in accordance with criteria published by the CER. Under CER oversight, these bodies will be allocated responsibility for the registration of electrical contractors and gas installers as appropriate and will have a number of powers, including the power to inspect work carried out by their various members, the power to monitor and review the training of their various members and the power to suspend or revoke the membership of one of their members for certain specified reasons, including where work carried out by that member is unsafe or of an unsatisfactory standard.

To ensure fairness and transparency in the activities of any such body and between a body and its various members, any fee or charge imposed by it will be subject to CER approval. Any decision by such a body to suspend or revoke the membership of one or more of its members shall be subject to appeal to the CER.

Both sections also provide that the CER shall have responsibility for a number of associated measures relating to the activities of electrical contractors and gas installers, including the power to appoint authorised officers for the inspection of electrical or gas works, the designation by means of regulations of certain works as being solely the province of electrical contractors or gas installers as appropriate and the power to prosecute rogue installers or contractors.

While we have in Ireland an exceptionally professional service provided by installers and contractors, as in all industries we must protect their good name and the assurance of quality work for the benefit of the consumer. The provisions of these sections underwent considerable revision and refinement during their passage through the Dáil. A detailed listing of material for inclusion in these documents is provided in both sections to ensure a comprehensive regulatory regime. Provision is also made for an appeals mechanism to resolve disputes related to the suspension or revocation, by a designated body, of the membership of one of its members, to ensure fairness at all times.

Section 13 also provides for a natural gas transmission system operator and a distribution system operator to appoint a gas emergency officer with powers to enter land and take emergency measures where there is a danger to a person or property arising from natural gas. The CER will also have the power to appoint a gas safety officer to assist in the carrying out of its new gas safety functions.

Section 14 is an enabling provision, which acts as an addendum to section 13, allowing the Minister to make an order to extend certain of the Bill's natural gas safety provisions, such as regulation of installers, to include liquefied petroleum gas, LPG.

The purpose of section 9 is to take account of the probability, however remote, of a sudden crisis taking place in the energy market. Under these provisions, the Minister can, in an emergency, direct the CER or other energy market players to take necessary safeguard measures. The Minister must ensure that, whatever action is taken under this section, the impacts on energy markets are minimised. These provisions are in line with EU requirements on security of energy supply.

Section 12 expands the functions of the CER to include the regulation and promotion of natural gas safety. In this context, the CER will be required to consult the National Standards Authority of Ireland regarding standards and specifications relating to gas safety. Under this section, the CER, having consulted with the Minister, will be required to establish and implement a natural gas safety framework. This framework must include, but is not limited to, inspection and testing regimes for downstream transmission and distribution pipelines and for storage and liquefied natural gas facilities. The CER will report to the Minister annually on the functioning of this framework.

Section 8 amends the Act of 1999 for the purpose of providing for an electricity interconnector owned by a person other than the ESB to be subject to authorisation and licence granted by the CER. For technical reasons relating to the definition of electrical transmission system, the section also provides that such an interconnector shall not be part of the transmission system except where it comes to the issue of calculating and imposing charges for the transmission system's use. Under the provisions of the section, the CER may also, with the consent of the Minister, secure the construction of an interconnector.

I hope this House will join me in commending the Government on its recent decision to give the go-ahead for the construction of a 500 MW east-west interconnector between Ireland and Wales. As a follow-through on this Government decision, the CER has been requested to proceed with a competition to select a developer to secure the construction of this interconnector by 2012 at the latest. On completion, the interconnector will be owned by EirGrid to ensure this strategic asset remains in public ownership.

Section 10 provides for an acting chairperson to be appointed to the CER by the Minister in circumstances where the chairperson is unavailable to perform his or her duties or functions. Further flexibility in the internal workings of the CER is provided for by allowing the chairperson to have a casting vote where a difference of opinion has not been resolved through the usual decision-making process.

A suggestion was made in the Dáil by the Opposition that provision be made to allow for the possibility of a rotating chairpersonship which would be at the discretion of the Minister. This was incorporated into the Bill as it provides an additional measure of flexibility.

To enhance the accountability of the CER to both the Minister and the Oireachtas while also reflecting the reality of the day-to-day business operations of any publicly accountable body, the appropriate timing of the submission by the CER of its annual accounts and work programmes is provided for.

Section 7 provides that the Minister may, in the interests of the proper and effective regulation of both the electricity and natural gas markets, give general policy directions to be followed by the CER in the exercise of its statutory functions. Any policy direction which the Minister may wish to put forward will, in line with established and best practice, be subject to a public consultation process.

I will now address other provisions of the Bill. Sections 5 and 6 amend the Act of 1999 by replacing the definition of combined heat and power, CHP, with a new definition of CHP as set out in Directive 2004/8/EC, and by providing for the methodology through which the various forms of CHP can be calculated. CHP is the simultaneous generation of usable heat and electricity in a single process. It makes use of the heat produced in electricity generation instead of releasing it into the atmosphere, and has a less detrimental effect on the environment than if heat and power were produced independently. It is not strictly a renewable energy but contributes to general energy efficiency and can make considerable energy savings for businesses and industry.

The new definition will facilitate the establishment of a guarantee of origin for high-efficiency CHP, the establishment of appropriate support mechanisms and reporting to the European Commission as required by the directive. It is an important step in ensuring that support for CHP in Ireland can be targeted to achieve optimum energy efficiency and environmental protection. Section 6 also provides for the appointment by the Minister of a person who will be allocated responsibility for the calculation and certification of power-to-heat ratios of specific CHP units.

Section 21 deals with a legal lacuna by providing that a 10% capital stockholding in the ESB be vested in the Minister to give the Minister the same legal entitlement as other capital stock shareholders. Currently, the Minister, the person to whom the ESB routinely reports in a shareholding capacity, does not have any shareholding representation in the company, and accordingly does not have the rights and obligations of other stockholders. At present, the issued capital stock in the ESB is apportioned between the Minister for Finance with 95% and the employee share ownership plan with 5%. Following consultation with the Office of the Attorney General and the Department of Finance it was agreed to regularise the position through the divestment by the Minister for Finance of 10% of the capital stock to the Minister for Communications, Marine and Natural Resources.

Section 16 confers on Bord Gáis Éireann the power to create capital stock in amounts equal to the net assets of the board, in line with Government policy to support the establishment of employee share ownership plans, ESOPs, in commercial State companies in appropriate cases. The basis for the policy is to provide an incentive to employees for enhancing the value of the company. Up to 5% shareholding in the company, subject to an upper limit of €38,000 per employee, may be provided in return for changes that give value to the company. BGE is a statutory corporation and does not have shares in the way that a company set up under the Companies Acts would have. This provision is necessary, therefore, in the absence of the introduction of legislation to convert BGE into a limited company, to give the board the power to create capital stock for the purposes of the ESOP. The board will only create capital stock for distribution of the appropriate share to employees when final agreement on the ESOP is reached.

Section 20 raises the statutory borrowing limit of Bord na Móna plc to a new limit of €400 million. The upper limit of €127 million has remained unchanged since the passing of the Turf Development Act 1998. The core business of Bord na Móna plc has been the supply of peat to the peat-fired electricity generating stations as well as producing peat-based products for use as domestic fuel and in horticulture respectively. While the company intends maintaining these businesses, its future strategy is to develop interests in the renewable energy sector, including investment in co-fuelling peat-fired power plants with biomass, wind farms and possible waste-to-energy.

Bord na Móna also intends to develop a waste management facility, including landfill and composting. The strategy will be financed through a mixture of own resources and debt. The statutory borrowing limit needs to be increased, therefore, to allow the company to borrow the required resources. An increase in the statutory borrowing limit does not, as such, constitute approval to increase actual borrowing to this limit. Shareholder interests will be protected at all times as any proposal from the company will be subject to prior ministerial approval and rigorous assessment before any commitment to capital expenditure is made.

In June 2005, Government approval was secured for the rehabilitation of abandoned mine sites at Silvermines, County Tipperary, at a cost of €10.6 million over a four-year period. North Tipperary County Council has agreed to undertake the rehabilitation works operating as an agent on behalf of my Department. Part 9 of the Bill provides a legal underpinning for this by granting powers to expend funds on mine projects, powers of entry to lands and compulsory acquisition of lands where necessary and by giving discretionary powers to recover State expenditure on rehabilitated lands. It is anticipated that the compulsory acquisition powers will not be required. However, it is safer to cover all eventualities so that the project can be planned and progressed without running the risk of encountering unnecessary and possibly lengthy delays.

This proposed legislation is an interim measure pending enactment of a comprehensive Minerals Development Bill, which was approved for drafting by the Government last June. The intention is that this interim legislation will be repealed as soon as the Minerals Development Bill is enacted.

Section 22 provides that on commencement of the Planning and Development (Strategic Infrastructure) Act 2006, no additional consent requirements are superimposed where an application for approval has been made or a consent given in respect of electricity transmission lines, strategic gas infrastructure or State developments which require environmental impact assessments. It is, therefore, essentially a clarifying provision, which also safeguards against unnecessary duplication of applications for strategic gas infrastructure, in line with the intention of the Act.

The Bill is an important component in the delivery of the Government's developing energy policy. By focusing, in particular, on the issue of safety, while also taking account of the need to progress the integration of an all-island market for energy, the Bill will, on enactment, deliver considerable benefits for all electricity and gas consumers. The Minister and I look forward, in particular, to working closely with the CER and various industry bodies on ensuring the speedy implementation of the Bill's various provisions, following enactment. I look forward to listening carefully to the views of Members of this House on these legislative proposals and to their assistance in progressing the Bill into law.

I welcome the Bill. It gives enhanced tasks to the regulator and there is a strong emphasis on safety with regard to electrical and gas installations. That is important. However, the Bill does not do much more than that. It is surprising that these housekeeping matters for the regulator have not been attended to long before now.

Energy has become an extremely important matter for many people. The issue is discussed far and wide. I am a member of the Oireachtas Joint Committee on Communications, Marine and Natural Resources. The committee has put great focus on the energy issue and, in that context, many of the players involved in the energy market have attended committee meetings. The committee produced a report on energy and the Minister subsequently produced the Green Paper on energy. I was disappointed that in composing our report the committee did not have access to a definitive report compiled by Deloitte & Touche at a cost of €1.2 million in taxpayers' money. That report would have been of interest to the committee members and would have assisted us in framing our conclusions. The Minister's report, although it was welcome after so many years, did not contain a great deal.

Deregulation and liberalisation of the market have meant nothing to the domestic consumer aside from escalating increases in the cost of electricity. People who study their electricity bills will notice the dramatic increase in recent times. I presume that next week the Minister will be applauding a worthwhile increase in social welfare for pensioners. While some pensioners are eligible for the free fuel allowance, which goes some way towards the overall cost of energy, there are many pensioners who have a small extra pension income and are ineligible for the allowance.

Recently the Taoiseach said the number of units would be increased for pensioners. However, as a result of escalating energy costs, many older people go to their local shopping centres and stay there for a period of time simply to keep themselves warm and to avoid using valuable resources to keep themselves warm in their homes. Next week, when Ministers applaud themselves because the threshold of €200 per week will probably be reached in the social welfare payment, they should examine the escalating costs for the people who are paid that pension.

The committee recently met with people representing a large group of industries. These industries are heavy users of electricity. The representatives made the point that escalating energy costs were a large element in the overall costs of those companies. They said that if costs continued in that direction in the future, it was questionable whether some of them would continue to operate in Ireland. The situation is that serious. Those industries might have the benefit, to some degree, of an alternative electricity supplier to the ESB but they have only one supplier of gas. We should not rest on our laurels in this regard because the signs are very serious.

Our economy is sustained by the artificial base of the construction industry, which is a very volatile sector. Compare construction activity with what is happening to our manufacturing industries. In the past five years approximately 30,000 jobs have been lost in manufacturing. I am concerned about the future cost of electricity, gas and energy generally. In many cases it could be the defining reason for companies deciding to leave this country. In that context, if we start to lose industry on that basis, what is happening in the construction industry might result in a false situation for our economy.

Many people see the regulator as virtually a lackey of the energy companies. That is probably unfair. He has a difficult job. Some years ago, when I was a Member of the other House, the final responsibility for increases rested with the Minister. There would be a hue and cry over the increase and the Minister was often forced to capitulate to it and depress the overall increase. The regulator, however, assesses the situation a year in advance and makes his projections. He has already projected a 19% increase in electricity prices from 1 January next year. Having read recent newspaper reports, people are hopeful that he will re-examine this on the basis that the cost of oil per barrel has dropped since then. It is now anticipated that he might reduce that increase by 5%. However, even if he does that, it is still an overall increase of 14%.

In the past five years, the price of electricity for the consumer has increased by 61%. That is a shocking amount. We do not have an alternative to using electricity. Many people, especially older people and people on social welfare, are finding it extremely difficult to pay their bills.

Up to 90% of our energy is produced from fossil fuels. I often wonder if we waited too long to become involved in the alternative energy market. This country is extremely suitable for wind energy projects, but there has been a series of delays with these projects. It is a stop-go type of situation. The regulator held off for a period of years, there are impediments in the planning process and now there are delays in these projects getting connected to the grid. If one decides to operate a wind energy project in this country and one has a suitable location, there will be a long gestation process in getting the turbines into operation.

Given our lack of choice due to our dependency on fossil fuels, it is interesting that we have not embraced alternative energy. We give lip service to the concept and it is a popular mantra to say we are considering alternative energy but the reality is that little has happened in the past few years. Recently, Deputy Eamon Ryan and I visited Denmark for two days to see its success in using alternative energy. It is significant that in Denmark, 21% of electricity is generated from wind energy. Denmark embraced the concept because it believed its terrain, particularly in Jutland, suited these projects and because encouragement was given at national level. Now, however, the Danes do not necessarily want wind energy projects located on the land because of the effect on the landscape. They have now successfully established several offshore projects. Denmark, by virtue of its location, has the option of importing electricity from Germany or from hydropower generators in Norway and Sweden. Despite this freedom of choice in terms of shopping around to find the best possible price, it has embraced the concept of wind energy.

We do not have Denmark's freedom of choice. For many years, a monopoly was maintained by the ESB, although we would all acknowledge that company's successes. We have been encouraged to liberalise the energy market within a European context but the extent of such liberalisation has been limited. While industrial consumers may have some choice, the domestic consumer has none. Deregulation and liberalisation have meant nothing to domestic consumers.

Our nearest neighbours in Scotland have had tremendous success in terms of alternative energy. The terrain in that country is similar to ours, which leads me to believe we have been somewhat backward in that regard. Too often, I have seen impediments to success rather than encouragement for innovation.

The United States — the home of oil — is embracing alternative energy. In Iowa, Idaho and elsewhere, wind turbines are widespread. Special concessions are offered for biofuels, with the result that processing plants are being established throughout the country. In Ireland, while one welcomed the recent approval of certain measures on biofuels, this has been too little, too late. Procrastination, which Shakespeare said is the thief of time, describes this Government's policies in the area of energy.

I welcome the Minister of State to the House. I am pleased to have the opportunity to contribute to debate on this Bill because one of the greatest challenges we face today is maintaining a constant supply of safe, clean and sustainable energy and the reduction of costs in the future. Problems as well as opportunities will arise in various areas, so we have to be ready to meet difficulties and optimise the opportunities.

I envisage that the future of energy provision will be within an all-island context. Given the hopeful signs of political progress emanating from Northern Ireland, it is inevitable that as conditions become more stable, industrial and economic growth will create a demand for energy and a greater opportunity for us to co-operate in its supply. That suggests the need for an all-island energy market which I feel is not only possible but also desirable and almost inevitable. One of the functions of the Commission for Energy Regulation will be to develop a market for an all-island supply of energy. The cost of such a project has been estimated at approximately €80 million, 70% of which will be paid for in the southern jurisdiction, with the remaining 30% falling to the North to finance. Doing this will ensure security of supply and more competitive pricing as a result of economies of scale. Customers will also benefit, particularly if they can be sure of their supply and are able to switch suppliers in an open and free market. Thus far, there has been a competitive market for non-domestic electricity consumers but not generally for domestic users. We need to move towards opening the entire island to competition because it is expected that the market in Northern Ireland will be fully open by April 2007.

One of the main factors driving up the cost of electricity is the price of fuel for generation. However, these proposals should bring more efficiencies and greater competition in the market for generating electricity and in distribution. In Britain, it is estimated that 11 million out of 26 million consumers, including 8 million out of 20 million gas consumers, have changed suppliers. The comparative figure in the Republic is only 40,000, most of whom are commercial customers. However, in the telecommunications market, Irish people clearly have no difficulties in changing to companies which offer cheaper services and the better value for money. Such a choice on the electricity side is novel here and, while not yet fully available, it will become as much a feature as flexibility is in telecommunications.

Traditionally, the ESB has been the dominant force in the Irish electricity market, which is hardly surprising given that it has been the only supplier since the foundation of the State. The company has served Ireland well in its three quarters of a century of existence and, while there have been occasional flaws and deficiencies, the quality of the service has, in the main, been superb.

I welcome the proposals to facilitate the interconnection of electricity generated by systems not in the ownership of the ESB. While this will make inroads into the dominant position of the ESB, I have no doubt that the company's vast experience and decades of tradition will allow it to take this new challenge in its stride and that it will emerge a stronger and more competitive entity. Such has been proven to be the case in other sectors and I have every confidence in the ESB to do likewise. Smaller players should be an essential part of the energy industry in this country and they should form part of the Government's energy policies. Viridian Power and Energy, which owns the Huntstown power station in Dublin, is the only large-scale independent power plant operator in the country but even that company is restricted in its contributions to the national grid. New investors will be reluctant to enter the market if a dominant and largely monopolistic player such as the ESB remains. By facilitating an interconnection for other potential suppliers, we will encourage commercial investment in energy.

I mentioned previously in this House the provision of a small hydro-electric system in my constituency which will have the dual effects of providing some of the cleanest energy possible and demonstrating to other prospective investors the potential for small independent ventures to be financially viable. I am pleased to observe that progress is being made on this significant scheme, which I pass regularly, and I note that the line to the national grid is currently being laid.

In the context of my earlier comments on Northern Ireland, it is essential that we provide another interconnector between our jurisdictions. Regardless of the outcome of the present political dialogue, which I am sure will be successful, we will have a closer relationship and a greater interdependence between North and South. If we can link across a continent to Russia for our gas supplies, it is commonsense to guarantee the connection with Northern Ireland for electricity. The present interconnector is less than effective and suffers many constraints. We have progressed politically and we need to reflect our advances in the hardware to give both our communities a greater security of supply. The question also arises of the interconnector from Scotland to Northern Ireland, which guarantees our neighbours sufficient supplies. We can in turn benefit from this, just as we can from the 500 MW interconnector which will be constructed between Ireland and Wales.

While supply can technically flow in either direction, according to which country has excess supply at any given time, the most likely scenario is that we will be the recipients of electricity from the UK. This opens up an entirely new debate in regard to nuclear energy because we would be taking our electricity through a grid supplied by nuclear sources. We are a nuclear-free country, and with the occasional exception everyone wants to keep it that way. It is bad enough to have Sellafield on our doorstep and other nuclear stations on the east coast of Britain to threaten our wellbeing without generating the same threats in our own country, over which we have full jurisdiction. I admit to some reservations on the matter, which is one reason I have consistently pushed to make us as self-sufficient as possible in energy supply. I repeat that we must put more resources into researching the generation of electricity from other renewable and sustainable sources such as wind, wave, biomass and the like.

The big problem is encouraging independent generation and getting such power into the grid, and every effort must be made to make the task as easy as possible. We are daily told of the imminence of peak oil production, of the substantial demand that will come from the greatly expanding economies of China, India and other eastern countries, and of instability and insecurity regarding the supply of gas from eastern Europe. We have seen how the gas supply to Russia's neighbours was shut off, and while there does not appear to be any threat at present to those who can pay for their supply, we do not know what will come down the tracks in a decade or two.

Now is the time to provide for the hard times, to encourage home-produced energy and do what we must to guarantee easy access to the grid for those who enter the market, removing insecurity from the equation for them. We should be mature enough to realise that people do not invest vast sums in any enterprise without a reasonable expectation of success, and while there are still obstacles, they can be easily removed. The ESB is doing a good job and has served us well, but this is 2006, with massive energy needs, and not 1956, when demand was easily satisfied.

While I have concentrated on electricity, the Bill also deals with the supply of gas. Once again, I am very much in favour of opening up the market and getting ever more suppliers involved. We have outgrown the State monopoly that in many areas guaranteed our very survival in the darker days of Ireland's growth and development. We have a very different economy now. We have different needs, mainly because they are greater, and our economy needs competition to thrive.

That is why we need Aer Lingus and why there should be more than a single dominant player in any service. The Bill proposes to open up the gas market fully by 1 July 2007, something to be welcomed. There will be a dividend for both the consumer and the country as a whole. I do not propose to enter the present debate, if we can call it that, regarding the Corrib field, except to say a supply from that source had been expected in 2003. That has not arrived, and we need the reassurance that such a supply can be give, and the sooner, the better. It is high time the dispute was brought to an amicable and mutually acceptable conclusion, with gas flowing into the grid. We currently have two gas supply lines or interconnector pipelines from Scotland to the north of Dublin and from Scotland to Northern Ireland. The interconnector between this jurisdiction and Northern Ireland is to be completed very soon, which should give us a greater degree of confidence regarding supply.

This is a positive Bill with several constructive and necessary provisions, measures that will have to be implemented if we are to continue to grow as a modern country and economy. I commend it to the House.

I welcome the Minister of State, Deputy Browne, to the House. If he does not mind, I will use the opportunity to speak more on the general issue of energy, to which he referred several times, rather than on the specific legislation.

However, I would like to raise one point that he made. I was listening to him with half an ear, trying to do two things at once, but I believe he spoke of increasing the borrowing capacity of Bord na Móna so that it might become involved in such things as biomass and wood pellet production. However, he also mentioned landfill, which caused me to do a double take. I have examined the Bill since re-entering the Chamber some moments ago. I cannot find any reference to landfill in it, yet the Minister mentioned it in his speech. If the midlands are to become a landfill site, we had better know his plans, and I ask that he address that in his response.

The debate has seen interesting issues raised, but I would like to focus more broadly. I agree with Senator Kenneally on nuclear power, something to which I am obviously opposed, for reasons outlined here several times by the Minister for the Environment, Heritage and Local Government, Deputy Roche. These figures may not be correct, but it boiled down to the numbers 10,000, 1,000 and 100. The first is the half-life of the isotopes of waste uranium produced; the others were other relevant danger periods. I wish to make a serious point, which is why we need a debate on the possibilities. I come from the standpoint of wishing to rule out nuclear energy, but I would like a debate on one aspect, which I have not heard discussed by anyone in Ireland.

We are opposed to nuclear energy because of the dangers to the environment and humanity. Some 25 years after the disaster at Chernobyl, the plant is still unstable and beyond our control. We do not know what is happening under the sarcophagus built around it. I do not want to sound too technical, since I am in no way adept in this matter and speak as a layperson. Chernobyl and all existing nuclear power stations depend on nuclear fission, a term heard many times. Nuclear fission is effectively where one takes unstable uranium isotopes and allows them to collide with one another in a controlled environment. Millions or trillions of tiny explosions create the energy, but the danger lies in the process being uncontrollable. It also creates waste that lasts more or less for ever. That is why we all live in terror of it and oppose it.

Another version of nuclear energy is known as nuclear fusion. The difference is that instead of the isotopes banging off each other, one fuses them together in a controlled, stable environment using stable isotopes. That creates energy and waste with approximately 1% of the danger of nuclear fission. The relevant half-life is approximately a hundredth of that in nuclear fission. That must be examined, since it deals with many of the greatest terrors regarding nuclear energy.

It is already happening in the world, following global attempts to develop it. Eventually, France won the tender to advance it, and it is now happening there. Scientists expect to produce energy from nuclear fusion within the next 20 years. It is also being worked on in the English midlands, where energy has been already produced. All that remains is to perfect it, and I would like to hear more on the subject. I suspect that ultimately I will oppose it as much as I do conventional nuclear power, but I would like to approach the matter with an open mind, hear the discussion and consider the comparisons so that we are not polarised.

The other technology I would consider is wind power, which has been dealt with several times. However, there are two aspects that we must consider. Such power is not reliable, since the wind does not always blow. However, there is wind somewhere in Ireland 90% of the time, a figure that is even higher in winter. We must have all the wind power linked together. Airtricity has made an extraordinary and progressive proposal to the European and global community, namely, to erect a series of wind farms from northern Scandinavia to the Mediterranean, harnessing any weather systems moving in. That would be connected with the European grid, something from which we can all gain. I would like that to happen to provide an alternative method of generation.

The most common element on the planet, hydrogen, also happens to be one of the most efficient and practical gases. It can be used as a liquid or a gas, and it can be transported in cylinders, by gas pipes and by various other means. The place in which it is most commonly found is water; it is the "H" in H2O. Energy is created by separating the hydrogen from the oxygen in water, and that energy is pure hydrogen. When one burns and uses pure hydrogen, the waste is pure water. It is the most complete eco-friendly system of energy usage.

The expertise already exists to allow for such extraction for the purposes of producing power. I understand BMW, for example, will have the prototype of a hydrogen car on the market next year. The problem, however, is that hydrogen extraction is currently inefficient because the energy cost of extraction is more or less equivalent to the hydrogen energy produced. It is not commercially viable, but that will change. The Department of Communications, Marine and Natural Resources should give grants for doctorate level research on hydrogen extraction.

The Department should also insist that every new house should include a solar panel. There is no simpler way of saving on energy costs. Spain has recently introduced regulations in this regard and we should do likewise.

I spoke in this House some two years ago about micro hydro-electricity systems. I am pleased the Government is looking into this issue. When I was in school, we were told that the potential for hydro-electricity in Ireland had almost reached its peak. Developments in this area, however, mean it is now possible to develop local or domestic electricity from the smallest rivers. In Britain and Northern Ireland, for example, a producer who generatess either wind electricity or hydro-electricity in his or her local area can feed it back into the grid, although they receive only a tiny payment for their contribution. There is significant resistance to such a development here. Any producer who creates excess energy for community use should receive some recognition. This is an area in which we can make practical progress in the context of our commitments under the Kyoto Protocol and the Government's energy policy.

The incubational centres attached to the institutes of technology and universities should be encouraged to engage in top-level research into hydrogen extraction from water and the development of micro hydro-electricity power units and efficient wind power units. Developments in the latter in recent times, for example, mean they have moved away from wind sails to a system where wind is trapped internally. Much progress can be made in these areas, some of it involving science, design and engineering. Much of it, however, is common sense.

The last time I checked, which was some six months ago, wood pellets could only be bought outside the State. That is appalling. What is Coillte doing? We are producing all types of wood products, but those persons who are given grants to install wood pellet burners are obliged to purchase the pellets from Northern Ireland or Wales. It would make sense to put out a tender for the production of wood pellets, and this should be done in consultation with Coillte. It is a question of growing and using easily renewable wood resources, pine in particular. This is a practical step that could be taken immediately.

We could do much in the practical ways I have outlined to raise awareness in regard to energy usage. The provision of solar panels in every new home and support for top-level research and development in the incubation units of third levels institutions are issues the Department should consider as soon as possible. The expertise is there to facilitate developments in engineering that will ensure progress in regard to wind power and micro hydro-electricity units. I recognise the Minister of State's intention in this Bill but there is much more we can do in this area.

That was a remarkably technically adept contribution from a Senator who said he had no technical expertise in this area. I join other Members in welcoming the Minister of State and his officials to the House. It is interesting that we had no debate on energy in the House for some four years but have had five or six such debates in the last several weeks. Many of us have had opportunities to raise issues of concern and I do not wish to be repetitive.

This is a highly technical Bill and, like Senator O'Toole, I do not claim to be in any way fluent in the intricacies of its provisions. In general terms, it allows the regulator to operate in an all-island energy market. This is to be welcomed. Earlier today, another Member pointed to the importance of working towards an all-Ireland economy in general. The sooner we make progress in this regard, the greater will be the benefits not only in the energy sector but also in terms of the ability of the island of Ireland to attract foreign direct investment in an environment where indigenous industry and commercial activity can flourish to a greater extent than heretofore.

I welcome the Bill's provisions in regard to ministerial direction on policy issues. Other Departments can learn from this. To use the analogy of local authorities, too much has become an executive function. The input of Departments is being diluted. A question to a Minister, for example, may well draw the reply that he or she does not have responsibility in a particular matter. It is left to the questioner to seek answers in various places, often ending up no wiser than when he or she started. This Bill provides that the Minister shall have the power to make a direction in regard to any matters raised, and will do so in a manner that ensures greater accountability to the Oireachtas. All Ministers should have this capability. This common sense approach can be lost within regulation and legislation. We can only gain from the inclusion of such a vitally important provision.

Anything that facilitates the development of an all-island energy market is positive. Such a development is good for competition. I understand Senator Finucane's questioning whether the introduction of the regulator has seen any real benefit to the consumer. An all-island energy market will be larger and may attract more operators, to the benefit of the consumer. It would also be positive for security of supply.

Most Members have referred to the renewable energy area. Recently, there was a good debate in the House on the White Paper on energy. Much more, however, needs to be done in this area. As Senators O'Toole and Kenneally stated, we do not wish to look to the nuclear option but to renewable energy sources. To achieve this, the public must be more incentivised. While we all identify energy supply as a problem well down the line, we will be better off if we are innovative at an early stage in getting people to buy into green energy. Many people, including Members, may change their cars in January. They could make a contribution to the use of renewable energy if they have €150,000 to buy a hybrid top-of-the-range Lexus.

It is only €39,000 for the Saab 9-5.

If the various car manufacturers were encouraged to make available a wider range of hybrid cars, the public could be incentivised to buy them if VRT on them was waived. This is the type of innovative approach that must be employed to get the public to engage with renewable energy.

While the greener homes schemes are great on paper, it is very Irish that we cannot get wood pellets from domestic sources for wood-burning boilers. With Coillte felling vast acreages of forest, why can Enterprise Ireland not offer grants to go into this industry? All new build or major refurbishment projects must incorporate green energy improvements, be it solar panelling or wood pellet boilers. We need to push the boat out on this as future generations will not thank us for a superficial approach.

The Minister and the Department have made great strides in this area. However, we need to set the bar that little bit higher. The Bill will take us that step further to achieving the target date of July 2007 for an all-island energy market. I am pleased that the Bill provides for ministerial direction in energy policy. Other Departments, when drawing up legislation, can learn from this. All too often it is the commission, the board, the regulator, the council or whatever which decide matters rather than those elected by the people.

On today's Order of Business I raised a hobbyhorse of mine, the need for the Government to address VAT on fuel bills. Last year, the Government took in €233 million in VAT receipts on domestic gas and electricity bills. We pay a VAT rate of 13.5% on our fuel bills, while in the UK and Northern Ireland consumers pay only a 5% rate. While we have no control over oil and other energy commodity prices, we have control of the VAT rate. Consumers are fed up with their rising ESB and gas bills. They are further annoyed at the double whammy from the VAT rate. It must be reduced.

That is an issue for the Minister for Finance.

It is an energy issue and the Department of Communications, Marine and Natural Resources would be leading the way if it tackled this issue. For the first time ever on the doorsteps I am hearing complaints about the VAT rate on fuel bills. I never paid too much attention to my ESB or gas bill but now I do.

I agree with Senator MacSharry on a VRT waiver for hybrid cars. The Government, to be fair, has led the way in areas such as the smoking ban and the plastic bag levy. It can do the same with hybrid cars. A bolder and more imaginative policy direction in this area is needed.

Biofuel production must be taken more seriously by the Government. In Carlow,-Kilkenny, for example, there is a biofuel outlet in Goresbridge, which does not give much choice to those motorists in other towns. Until biofuels are available in every petrol station, motorists will not convert to them. Some years ago, car owners changed from leaded to unleaded petrol. A similar transition can be made with biofuels. Biofuel production would also create a new market for crops such as sugarbeet, particularly with the loss of the sugar industry. Even wheat, as opposed to beet, could be used and give another option for tillage farmers in the south east. Ireland can follow the example of Iowa which has been developing alternative energy industries for the past 30 years.

I commend the Government on bettering energy efficiency in new homes. I urge it to extend the grants available to home owners to carry out energy efficiency works. The essential repair grant covers insulating houses whose occupants are over 65 year olds. SEI also has a grant system in place for insulating existing houses. If we encourage people to audit the energy efficiency of their homes, they will more than likely find that their insulation is not adequate. If all houses were insulated properly, we could reduce fuel consumption for heating.

While the Cathaoirleach believes VAT on fuel bills is a matter for the Department of Finance, I urge the Minister of State to consider it. The biofuel issue must also be examined. Greencore will not get involved in biofuel production on its sugar factory sites. I would rather a biofuel production facility on a greenfield site. As our energy supplies are vulnerable we must examine new energy resources.

Is there a speaker from the Government side?

In that case I shall have to leap into the breach, unprepared as I am.

Senator Norris is the only speaker offering now.

I was not really offering but the Cathaoirleach's benign paternal eye spotted me. This is a matter on which I had thought I might have an opportunity to speak but there have been many other engagements this evening, such as the launch of Deputy Michael D. Higgins' book and the launch of a programme for the restoration of St. Patrick's Cathedral by the Minister for the Environment, Heritage and Local Government, Deputy Roche. I gather some funds will be made available to ensure this valuable project proceeds.

I am glad to have the opportunity to speak on this Bill because I have several general points to make. The Minister of State has referred to franchising out maintenance and repairs on gas lines. This is deplorable. It is part of the move away from our creditable State agencies. Gas and water supply, allied with companies such as Bord na Móna, were State enterprises. Although some had problems, at least one knew with whom one was dealing. Now one does not. Every time one calls about a missing part, one speaks to a different person. There should be some standardisation. It is a pity we have chosen to franchise everything out and dismantle State enterprises. This runs through the entire system. It applies to telephone services too. The company says it will record one's conversation for the purpose of teaching its apprentices rather than asking permission to do so.

There is a section in the Bill dealing with safety of liquefied gas in pipelines. This strikes directly at the Shell to Sea issue. I am dismayed at the Government's attitude to this matter. It is extraordinary that our Constitution, which guarantees property rights, appears only to guarantee the rights of property developers and speculators. Small people who feel it is their right to protect their homes do not seem to matter nowadays. This Government has not supported these people. Instead it has enlisted the forces of the Garda Síochána into the battle on behalf of a notorious multinational, Shell Oil.

I am afraid the Senator may be diverting slightly from the real purpose of this debate.

I want to divert here. We are after all a nation of digressors.

Is it in order to digress?

Of course it is. If it was not in order the Cathaoirleach would have stopped me long ago. Laurence Sterne not only wrote digressions in Tristram Shandy but also wrote a whole chapter entitled “A Digression upon Digressions”. I assure the Cathaoirleach that I will be modest and control myself.

This is germane to the question of the safety of gas pipelines as contemplated by the Bill. People have the right to protest when they feel their safety is threatened. The Government obviously feels the need to be a monitoring power and purports to look after the welfare of citizens in this Bill. It is appropriate to raise this issue, especially to sound a warning about how this powerful company is investing heavily in media spin. We must be careful not to assist in this.

I am only repeating what I said on the Order of Business a few days ago. It was astonishing that the good and decent Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, allowed himself to say in the Dáil that an unnamed acquaintance of his had overheard a telephone conversation on a mobile telephone in Grafton Street in which the words "Rossport", "riot" and others were mentioned. That is smear and it is not good enough. I had complimented this Minister a few weeks previously on his courage in tackling other issues. Given that the former Minister, Ray Burke, handled licences in an unusual way that caused considerable comment, this should be opened up. It is inappropriate for the Taoiseach to say the correspondence is closed and so cut off the debate.

I hope we will have an opportunity under the Cathaoirleach's wise chairmanship to open up the question of the Shell to Sea campaign, the rights of the people in that area and the fact that they were attacked. I have seen the videos and spoken to people who were involved. One man, a professional photographer, was beaten with a baton and pushed onto the barbed wire. That is not appropriate. I am looking to the Cathaoirleach to guide us and ensure we have a full and proper debate on this topic.

As such, does the Senator recognise that this is not entirely relevant at the moment?

Everything is relevant. It is all a matter of degree. That is why the Cathaoirleach is so wisely tolerant of me. There are now two Ministers of State present in the House and we hope that some of these protests will make their way back to Government, even if it requires a certain elegance of construction to make them appear relevant.

I would like to take up the question of fuel allowances, which may not be directly contemplated in the Bill. Somebody mentioned the fact of people needing to keep warm, particularly elderly people. Although this may not be directly contemplated by the Bill, it is appropriate at this time of the year that the Government bear it in mind. I heard a case on the radio of a person who had gone marginally over the income limit, perhaps as the result of having a special savings incentive account, SSIA, and was cut off from the free fuel supply. This man and his wife have cancer and the form of her cancer leads to a coldness of the extremities bordering on hypothermia. They are vulnerable people. This comes under the heading of energy in a broad sense. In a country which has sufficient funds, cases such as this should be dealt with in the most flexible possible way. I thank the Cathaoirleach for his lenience and tolerance.

I thank the Senators for their contributions to what has been a constructive and open discussion. I look forward to their assistance in bringing the Bill forward. I welcome the Senators' broad support for the provisions of the Bill, especially those relating to safety and to the development of the single electricity market.

Senators on both sides of the House were at one on the issue of bio-fuels. Senators Kenneally and MacSharry referred to sourcing wood pellets. I understand that a new company in Carlow may be about to set up soon to produce wood pellets, which would be helpful. As all the Senators pointed out, the supply of wood pellets depends on a company from outside the State which is doing a reasonably good job. It announced recently, however, that there would be no new wood pellet supplies until early in the new year, which would cause problems.

Senator Fergal Browne mentioned bio-fuels and we must be aware that last year the Minister for Finance substantially increased the excise exemption limit to 163 million litres. The Minister for Communications, Marine and Natural Resources announced 16 projects to take up this exemption which is a move in the right direction. The Minister for Finance will consider what changes he can make in that area in this year's budget.

Senator O'Toole will, I am sure, make a submission to the Green Paper, the closing date for which is 1 December, next Friday, on nuclear fusion, hydrogen, micro-hydro systems and solar panels in all new houses to be built from now on. I remind the Senators that the greener homes grant scheme announced by the Minister for Communications, Marine and Natural Resources makes grant aid available for solar panels and biomass and several other areas. The public has displayed significant interest in these schemes. The Minister will consider rolling out more such schemes soon.

I thank the Senators for their contributions and look forward to the completion of the Bill on Committee Stage when I am sure there will be amendments on some of the issues raised in the debate so far.

Question put and agreed to.
Committee Stage ordered for Tuesday, 5 December 2006.

When is it proposed to sit again?

Tomorrow at 10.30 a.m.