Electricity Regulation (Amendment) (EirGrid) Bill 2008: Committee and Remaining Stages.

Sections 1 to 5, inclusive agreed to.

SECTION 6.

Question proposed: "That section 6 stand part of the Bill."

Senator Joe O’Reilly

Section 6 authorises EirGrid to borrow up to €750 million to finance its activities, namely, the establishment of the networks and the North-South and east-west interconnectors. I will be saying in summation later that I welcome the entire project, the establishment of the all-Ireland grid and the possibility of importing and exporting electricity as may be required. Hopefully, we will be exporting power.

I welcome all of that and, as such, have no objection to the granting of the facility for the funding. The Minister for Communications, Energy and Natural Resources said that this was a matter for consideration when it went through the Dáil but I presume some of his deliberations would have passed by now. How does the Minister propose ultimately to finance the interconnectors? This House needs an assurance that it would not affect consumers' ESB bills because there is a threatened increase of 30% in ESB charges and electricity in Ireland which, as I am sure the Minister is painfully aware, are higher than in many other countries. That makes it critical. Would the Minister agree that, if it can be reasonably established by the independent commission and project-related feasibility studies that take cognisance of the flat terrain in Meath and the accessible terrain in Cavan-Monaghan, cabling can be cost effectively put underground in the interest of allaying the well-founded health fears? While we could argue until the cows come home about the justification for fear and the various reports on medical questions and the risk of cancer and leukemia, for the people who live on the proposed interconnector line, the fears are very real.

How does the Minister intend to fund the entire project? Will money be ring-fenced? Can we be assured that the present economic climate will not negatively impinge on it and that consumers will not be victims? Does the Minister accept that if it is practical and can be established as a financially viable option, we should go for the underground option?

Minister for Communications, Energy and Natural Resources (Deputy Eamon Ryan)

I apologise for being late. I was delayed because a broadcasting question came up on the Order of Business and I had to advise the Taoiseach.

Regarding the funding of the interconnectors, we must resolve the east-west interconnector this summer. We seek to have the project completed by 2012 and this requires us to sign off on contracts quickly. The funding issue has yet to be completely finalised. It is a regulated asset so there is a certain guarantee of income streams from the use of that asset. The cost is ultimately borne by the consumers in the sense that any regulated part of the transmission or other asset system is part of the market cost of electricity. The advantage of greater interconnection is that it has the potential to reduce our costs by creating a more efficient system, a better market and allowing us to export green electricity and import electricity at peak times when it is very expensive to switch on power plants here. The long-run effect of the introduction of greater interconnection is to bring prices down. While there is a short-term cost in paying for such assets, they are beneficial. As to the exact financial mechanism, whether it is 100% or 80% debt and 20% capital funding from the Exchequer or the National Treasury Management Agency, the project will have the capital funding to allow it to proceed, as will the North-South interconnector, which is of equal importance, particularly in terms of developing an all-Ireland electricity market.

We have North-South interconnection on one section but the shortage of further interconnection has a significant effect on the efficiency of the all-Ireland energy market we have entered. The benefit of the North-South interconnector is that it will deliver energy supply to counties Cavan and Monaghan, which will not be suitable locations for foreign direct investment in the absence of that. Investors are looking for good electricity supply, particularly for new digital technology industries. Another benefit is that it allows us to operate the North-South all-island electricity market in a more efficient way and reduce costs.

I am cognisant of the concerns of residents along any potential route. That is why we commissioned a report, carried out by a leading firm of international consultants, Ecofys, which is being completed and will be before the Government and the Joint Committee on Communications, Energy and Natural Resources, which can interview the consultants to provide more detail on the findings. This may allay the concerns of constituents, particularly those in the Cavan-Monaghan constituency. I do not wish to determine what will be in the report or the questions of the Joint Committee on Communications, Energy and Natural Resources but an initial examination of international practice in this area suggests this is not an easy technical fix with an obvious alternative that we could develop. The consultants will consider a variety of relevant issues, including health, the environment, technical feasibility of engineering, and management of electricity. The consultants' report will examine these in more detail.

I have confidence in the ability of EirGrid to deliver these interconnectors. EirGrid is proceeding in a professional and proper manner. At times when electricity prices are rising and we are facing a major shift in energy policy because of the international increase in the price of fossil fuels, the east-west interconnector provides a long-term response to high energy prices and it is crucial that it is delivered on time. I am keen to support EirGrid, as is the Government, to help it to do this.

Senator Joe O’Reilly

I am proud that Fine Gael initiated the calls for the independent study. Deputy Coveney and I were at the vanguard of the Joint Committee on Communications, Energy and Natural Resources in calling for this. I appreciate that the Minister acknowledged the concept. Although the fault does not necessarily lie with the Minister and we cannot blame him for bad weather, I regret that the company carrying out the independent study group did not grant a hearing to the pylon pressure group, the representatives of local communities. While the group made a written submission, it should have been heard in session. This would have done much to bridge connectivity and allay fears. I am happy to be corrected but it was represented to me by the pressure groups that they were not allowed to appear before the study group with technical teams and representatives. Perhaps the Minister could interact with the study group on this matter.

I accept the Minister's reply in respect of funding and take his point that everything ultimately appears on the table of the consumer. Also, I take his point that this will ultimately reduce electricity prices, which is the objective, but it is important to note that consumers are paying too much as it is and that the price rises proposed are not sustainable.

If the Minister can reply to this point I will make the rest of my summations brief. From the Minister's speeches on Second Stage and in the Dáil, I understand that the east-west and North-South interconnectors will facilitate greater access to the grid from renewable energy sources, such as wind farms. I welcome that. It is of great concern to me, and I am sure to the Minister, that we do not have easier access to the grid. In practical terms, does he see improvements being introduced soon? Will he inform the House as to why access is so poor at present?

We should establish co-operative wind farms throughout the country on the model of the co-ops of old. A group of farmers could come together and have a couple of wind turbines on each farm. They should have access to the grid for the power generated, providing them with an income and boosting the local economy and, perhaps, taking care of difficulties. The Minister is aware that agricultural incomes are adversely affected by the cost of inputs, such as fertilisers and meals, which are disproportionately costly this year.

As well as the matter of farm incomes, we also have the issues of the merit of renewable and alternative energy, establishing sustainability and energy security and reducing dependency on fossil fuels. Will the Minister expand on how he envisages more access to the grid? Where are the obstacles? How does he see the situation improving? What steps can he and the Department take to improve this? This is of great concern to me and to colleagues.

Why can seven or eight farmers in County Cavan in my constituency, or in any other county, not come together and form a co-operative, produce wind power and have access to the grid? Senator Wilson agrees with this point. Why can more companies not access the grid with renewable energy? I would like to hear from the Minister on this point, as would many people throughout the country.

Deputy Eamon Ryan

Consultation is a valid issue. The decision we made on commissioning the report, given the significant interest in this and the large number of submissions we knew we would garner, is that it would be better to ask people to make written submissions and ask the consultants in turn to refer to any submissions made. We had a significant take-up on this.

I also thought it was fair to allow the consultants to act in a proper independent way where they did not meet EirGrid or those who might object. I thought this was a proper approach, whereby the consultants examined best practice internationally and examples of similar solutions elsewhere, if they existed. They considered the national sense rather than a specific individual project. This issue will have ramifications, not only with regard to one particular pylon routing but to a number of developments which will occur. At the same time, we asked the consultants to examine specific examples which would shed light on particular projects here. The consultants were not commissioned to meet individual parties. Instead, it was decided to follow the approach of offering them the opportunity to respond to submissions.

The consultation which takes place at the Oireachtas committee is an appropriate form of consultation. One of the great benefits of using the Oireachtas committee as a point of contact is that it involves public representatives, many of whom represent people in the constituencies. It is an indirect but real point of contact where people can ask questions via their representatives. It is also on the record and how we govern its business is organised by the Oireachtas. Consultation in Oireachtas committees works and it is a good form of consultation.

I agree with Senator O'Reilly that the response to increasing electricity prices must be the development of renewables in this country. This is free from any volatility in international gas and oil market prices. It also uses energy more effectively and efficiently. With regard to how we get access to the grid and develop wind farms, it is a concern of mine that we ensure we exceed our targets in terms of the development of renewable wind power supplies. Approximately 1,500 MW of wind power projects have planning permission and a grid connection under the current support scheme, namely, the REFIT scheme. These projects should and will be delivered. In total, approximately 8,000 MW of projects at various stages are seeking planning permission. Nothing is blocking or precluding anyone, including six farmers, from getting together to establish a local wind farm.

It operates within a gated system managed by the regulatory authorities and EirGrid. This clusters developments so our transmission connections are effective and we can build distribution and transmission connections to such wind farms. The scale of resources we will develop by the next decade is 4,000 MW of onshore wind farms. In the interim, we need to examine other technologies, such as wave, tidal, offshore wind, biomass and a range of various supplies so we build up renewable power supply as our main and, ultimately, our 100% green power supply system for the country.

There is nothing to preclude establishing a wind farm and I very much encourage it. It is difficult for smaller consortia, small farmers or others, to make projects deliver quickly. One difficulty is that so many wind power projects are going ahead, it is difficult to access turbines. Major progress has been made in the wind industry in the United States, Germany, Spain and elsewhere and it is difficult for a small operator to get access to turbines. However, this should not preclude us.

I could not agree more that the development of community-led and owned wind farm facilities is progressive. It tends to increase community support for the wind power system. For smaller farmers or people in business, we should consider micro-generation solutions where if even a single turbine can be matched to local demand for electricity, it cuts back on the need for pylons. A power supply system is not necessary as supply is delivered where it is used. We should move towards a distributed generation system. My colleague, the Minister for the Environment, Heritage and Local Government, Deputy Gormley, has helped in terms of changing the planning requirements so it is easier to do this. My Department, via Sustainable Energy Ireland, introduced a pilot scheme to support and test how to develop micro-generation. We are developing it and I accept from any side of this House or the Dáil the need for us to progress this more quickly.

Question put and agreed to.

Sections 7 to 10, inclusive, agreed to.

Title agreed to.

Bill reported without amendment and received for final consideration.

Question proposed: "That the Bill do now pass."

Senator Joe O’Reilly

I thank the Minister and acknowledge his engagement with the House and with the issues we raised. I appreciate his interest and his genuine effort to grapple with the issues. He is proactive in these areas. This Bill was not initiated in this House but I was happy that major legislation from the Department was initiated here, namely, the Broadcasting Bill 2008. I hope it will set a precedent and that we will have legislation initiated in this House regularly, which is important. My party did not obstruct the passage of the legislation in any way in either the Dáil or Seanad because we are committed to the establishment of the North-South and east-west interconnectors. We are concerned about security of electricity supply, the move towards renewable energy, the access of such sources of energy to the national grid and reducing the cost of electricity to improve the competitiveness of the economy and the well-being of individual users.

The legislation facilitates EirGrid to proceed with the necessary borrowing to develop the interconnector. I thank the Cathaoirleach for his management of the debate. I appeal to the Minister not to close his mind to undergrounding and to examine openly and objectively the report of the independent commission without a fixed view. Research and the technical development is ongoing. This is an evolving sphere and nothing is set in stone. Where it is possible to engage in undergrounding, that should be achieved. The Minister should also factor in issues such as the impact on tourism and the environment and the devaluation of property to the cost of overgrounding. It does not come down only to the construction cost. The Minister should examine this in a holistic way, wisely and courageously, in order not to disconnect from the people and to underground where possible.

Senator Michael McCarthy

I thank the Minister for his attendance. I especially welcome his remarks about public representatives and the consultation element inherent in our roles, not only as legislators but as public representatives, as a conduit between the public and the Oireachtas. I thank the Cathaoirleach for the manner in which business was organised. I also thank the Minister, his officials and other Senators who contributed.

Senator Diarmuid Wilson

On behalf of my colleague, Senator Walsh, I thank the Minister and his officials for the smooth manner in which the legislation was taken in the House. I also thank the Opposition spokespersons for their co-operation. I reiterate Senator O'Reilly's comments about undergrounding. Both of us represent the same constituency and this is a major bone of contention in the area.

Minister for Communications, Energy and Natural Resources (Deputy Eamon Ryan)

I very much thank the Senators for their help in passing the legislation. It is the first time I have overseen the passage of a Bill and I am honoured to see it head off to Áras an Uachtaráin, hopefully for a signature. I have had positive experiences with both Bills I introduced in the House. The initiation of the Broadcasting Bill here was positive, progressive and useful. Likewise, I very much appreciate the comments of all Senators and I will take into account the infrastructure project covered by the legislation. I hope, in passing the Bill, we will assist EirGrid in developing critical infrastructure at a time when we need to reduce our energy costs and protect our competitiveness.

Seanad Éireann debate -
Tuesday, 1 Jul 2008