Amendments Nos. 1 and 22 are related and may be discussed together.
Gas Regulation Bill 2013: Committee and Remaining Stages
This amendment is considered necessary because there is no provision in primary legislation to provide for ministerial approval for the making of a pension scheme by Irish Water. The amendment is not really connected to the issue of the disposal of the energy business of Bord Gáis. Rather, it is an enabling amendment to allow the company’s subsidiary, Irish Water, to get on with creating a pension scheme for its workers.
The Water Services Act 2013 provided for the establishment of Irish Water as a subsidiary of Bord Gáis and registered under the Companies Acts. Irish Water was formally incorporated in July 2013 and has assumed responsibility for the roll-out of the domestic metering programme. Also in July, the Government approved the general scheme of a water services (No. 2) Bill, which is being drafted by the Office of the Attorney General. It will provide for the transfer of responsibility for the provision of water services from the 34 county and city councils to Irish Water. It was originally intended to include provisions regarding ministerial approval of a pension scheme in this second Bill. However, Irish Water has commenced recruiting staff to manage the delivery of the metering programme and in preparation for its future role as the water services utility. Accordingly, it is proposed to bring forward Irish Water’s superannuation provisions and include them as an amendment to the Gas Regulation Bill 2013. This will ensure we establish a statutory basis for ministerial approval of any pension scheme established by Irish Water at the earliest possible date.
We support the pension rights of any workers in any organisation, be it the private or the public sector. However, I reiterate that Sinn Féin is opposed to the way Uisce Éireann has been privatised. This is not the way to go. There are many concerns about this which have been echoed by many in city and county councils across the State.
There are significant concerns which we discussed when that Bill came through the Houses. I reiterate our opposition to the privatisation of the Irish water system
I have a small point regarding the amendment's attempt to insert "other than section 46". The version of this Bill I have has no section 46 and that might have to be examined. I do not know if there are other versions in the foyer. I will check that now.
Senator Trevor Ó Clochartaigh will have the opportunity to make his substantive point about the decision to dispose of the energy business of Bord Gáis. This is probably not the place to do so. This is purely to enable the subsidiary company, Irish Water, to establish a pension scheme for its staff and deal with the pension issues of its workers as it thinks fit. Section 46 refers to section 46 of the Water Services Act 2013.
I direct Senator Sean D. Barrett to amendment No. 22 for clarity.
I move amendment No. 2:
In page 7, after line 34, to insert the following:
“(f) the retail energy market in Ireland, assessing whether or not sufficient competition and regulation is in place to ensure prices are kept low for consumers.”.
The issue is about the costs and prices and I would like to hear the Minister's comments on it. The energy market in Ireland is far from competitive and the prices are far from low.
I regret that I cannot accept this amendment - the Senator will understand why - for the same reason I outlined in the Dáil, that information on the retail energy market is already well reported on and published on an ongoing basis by the Commission for Energy Regulation. As Minister I am regularly updated by the regulator on developments and the state of competition in the market. I have no statutory function regarding the regulation of either the electricity or gas markets. Responsibility for regulation of these markets is a matter for the Commission for Energy Regulation, CER, which is an independent statutory body.
The functions of the CER include protecting the interests of final customers including the disadvantaged and the elderly. The regulator is also responsible for promoting efficient, orderly, fair and competitive markets for monitoring competition. Many of these regulatory functions originate from the regulator's obligations under European legislation. Prices in the electricity retail market are fully deregulated. Prices in the gas market are also deregulated with the exception of gas prices charged by Bord Gáis Energy to its domestic customers. Therefore, customers can avail of competitive offerings from suppliers. Prices are set by suppliers and are commercial and operational matters for them. I have no statutory function in the setting of electricity or gas prices.
With the deregulation of electricity and most gas retail prices, the primary focus of the regulator, in so far as prices are concerned, is its joint oversight with the Northern Ireland regulator of the all-island single electricity market, its scrutiny of electricity and gas network costs, which feed into retail prices, and its general consumer advice and protection role. The regulator is accountable to the Oireachtas, and the commissioners have appeared before the committee on a number of occasions on a range of issues.
The regulator is required to report annually to the European Commission detailing its economic role and associated policy developments. This report includes details of developments regarding competition in energy markets. In addition, in carrying out its consumer protection and marketing monitoring roles, the regulator presents to me an annual report on the development of competition in the market, including prices and commentary on developments. All these reports are publicly available on the CER website.
Electricity and gas costs in Ireland are influenced by various drivers, with global gas and oil prices being the most significant factors. Among other drivers, over which we have little or no control, are exchange rate movements, the cost of capital, our small size, our geographic location, our low population density, our population dispersal, EU legislative obligations and unfavourable international events. Given the scope of these diverse drivers and their upward impact on prices, clearly there is limited potential scope for protecting Ireland from external energy price shocks.
Amendment, by leave, withdrawn.
Cuirim céad fáilte roimh an Aire. Tá Sinn Féin ag cur in éadan an athraithe atá á dhéanamh anseo agus an príobháidiú atá á dhéanamh ar acmhainní na hÉireann agus acmhainní Stáit. We tabled a number of amendments that have not been accepted because they conflict with the principle of the Bill as read a Second Time. It is amusing because most amendments conflict with Bills because we disagree in principle with what is happening. The Government intends to hive off a profitable company, which made a gross operating profit of €79.4 million in 2012 compared to €44.3 million in 2011.
We fundamentally disagree with its privatisation. We compare what is envisaged here with what happened in the case of eircom. There are concerns with regard to how the network will develop in the future. We are not the only ones who disagree with the move by the Minister and his Department to privatise the company. At its annual conference in 2012, the Labour Party voted to totally reject the sale of State assets. Obviously, however, the Minister is paying no heed to his party's view on the issue. It is disappointing that the Government and this Labour Party Minister are forging ahead with the troika-sponsored policy of privatisation, the sale of State assets, etc. In that context, the asset in question is profitable and should remain in State ownership in order that the revenue to which it gives rise might be used to further develop the system here.
We thrashed out the principle on Second Stage. I do not want to be obliged to willingly dispose of State assets and certainly not before each individual asset is subjected to scrutiny. In the context of any broad disposal of State assets, I would rather we were not in this position. However, on Second Stage I explained at some length why we find ourselves at this current pass. Senator Trevor Ó Clochartaigh and his colleagues in the Lower House have the luxury of telling me what they are against, but they never inform me as to what they are for. If I agreed that we should not dispose of the energy business of Bord Gáis Energy, would Sinn Féin outline for me how I might meet the requirements set down by the troika? What should I sell? It does not make any sense for the Senator to indicate that he opposes the sale of a profitable State company. Does he believe anybody would be interested in buying unprofitable State companies or that we would obtain good prices for such entities?
In the context of where we started in respect of this matter - namely, with a requirement placed on us to come up with a figure of €5 billion through the sale of State assets, to be put towards writing down our debt - we eventually settled on a figure of up to €3 billion. We negotiated a facility to the effect that 50% of the proceeds from the sale would be used for productive reinvestment purposes, job creation and so on. This represents tremendous progress in the context of where we were previously. I look forward with considerable excitement to whoever purchases the energy part of Bord Gáis Energy's business becoming a serious player in the energy market. The said market needs as much competition as possible. We learned a lesson from the mistake made in respect of the global privatisation of Telecom Éireann some years ago. As a result, we are retaining in public ownership the networks and distribution business of Bord Gáis Energy. That is the significant aspect. If a company purchases the energy division of Bord Gáis, there is every prospect that it will create additional employment and increase market share. Such a company will not be coming into this country to lose market share. We need as much competition in the marketplace as possible.
I am obliged to deal with the real world as it confronts me. Compared to some of the alternatives for realising proceeds from the sale of State assets, the decision being made in this regard could be very good for the country, for consumers and for what, I hope, will be a growing workforce within the company.
I remind Senator Trevor Ó Clochartaigh that we are on section 16 which deals with the transfer of assets, etc., to the network company. We are not engaging in a wider Second Stage debate.
Absolutely. In the context of what the Minister said, it is important to note that Sinn Féin Senators regularly provide the Government with alternatives. All I need do in this regard is to refer him to our pre-budget submissions for this year and previous years. We have put forward options - which have been costed by the Department of Finance - for dealing with the difficulties relating to the finances of the Government in a much more forthright way that would not result in the sale of State assets. We have called on the Government to consider the options we have put forward but it has obviously decided not to do so, which is a shame.
Anyone who is familiar with the private sector will be aware that it is common practice for profitable companies to take over unprofitable ones. I do not believe, therefore, that there is much logic to the Minister's argument in this regard. When a company gets into difficulty, a larger concern with expertise of a certain type will often take it over and make it profitable. Businesses tend to turn things around. Companies in the private sector do not usually sell off their cash cows - namely, divisions that are making a profit - at giveaway prices to rivals that might make them even more profitable. That is why there is very little logic to what the Minister is attempting to do. I believe he knows that, as do the members of his party who voted a particular way at its 2012 annual conference. The Minister is aware that by privatising Bord Gáis, he will also be privatising Uisce Éireann. Of course, the latter is being made a subsidiary of the former.
The Minister knows the arguments and he is being somewhat disingenuous in his replies. Sinn Féin's alternative has been costed. We can forward it to him if he wants to read it.
I support the Minister and will not listen to lectures by Senator Trevor Ó Clochartaigh on the sale of companies in the private sector. Unprofitable companies are generally sold for 10% or 20% of what they are worth and then asset-stripped. Ultimately, those involved probably make some sort of profit. The idea is to make a profit from the sale of a profitable company. We will then have money to invest in job creation and pay down some of our debt. That is what we are seeking to do.
Senator Trevor Ó Clochartaigh is wrong in all three of the points he made. In the first instance, this is not a budgetary matter. We are not discussing the budget. I read Sinn Féin's pre-budget submission. We might discuss the latter at another time, perhaps over a pint in the Dáil bar. What we are discussing is the contract entered into at the time of the bailout in 2010 and the requirement to dispose of State assets, not for the purpose of budgetary reconciliation but rather in order that the State can make a contribution to the cost of the bailout programme. Greece and Portugal were required to make similar contributions under their programmes. This is not a budgetary matter.
The Senator has pointed out that private sector companies regularly take over loss-making concerns. What is happening in this instance is not a takeover. Mr. Chopra and Co. are not interested in taking over Bord Gáis. They do not have the slightest interest in Bord Gáis. Rather, they are interested in applying a contract that was entered into in 2010 and in ensuring that this country makes a contribution to the cost of its bailout programme. It is not a takeover situation and the latter would not arise in this instance.
I am not privatising Uisce Éireann. Where in the name of God did the Senator get that idea? Rather, I am growing Uisce Éireann as a commercial State company within the Bord Gáis stable. The result of this will be, happily, that more people will be employed in that stable after this event takes place than is the case now. For example, up to 2,000 people will be involved in the installation of water meters. The company will expand its services from there. People in Dublin and in Galway, the city in which the Senator resides, have recently been at the sharp end in the context of difficulties with regard to accessing safe and clean water. As stated, Irish Water is a company within the Bord Gáis stable.
It is a commercial company designed to increase employment and to do what we should have done a long time ago in regard to the wasting of water and our approach to water conservation and protecting clean water supplies. This city is on a knife edge because during all the years when the country was, to quote a former Tánaiste, "awash with money", we did not invest sufficiently. I am not privatising Uisce Éireann. It will be a State-owned commercial company.
Amendments Nos. 3 and 16 are related and may be discussed together, by agreement. Is that agreed? Agreed.
These are minor drafting amendments. There is no point in trying to present them as substantive.
Amendments Nos. 4 to 7, inclusive, 9 to 14, inclusive, and 23 to 32, inclusive, are related and may be discussed together, by agreement. Is that agreed? Agreed.
This group of amendments seeks to perfect the legislation. It does no more than correct an omission in the earlier legislation where, instead of referring to Bord Gáis Energy, it ought to have referred to Bord Gáis Energy and its subsidiaries. The amendments are technical and are proposed in order to provide greater clarity regarding the assets, licences, rights, liabilities and staff of the company and its subsidiaries which may be included in the transfer plan, and to provide that assets may be transferred to the energy company from the company or its subsidiaries.
We oppose this section as we opposed previous sections, but I will not rehearse the same arguments. We take the same ideological position.
I am interested in learning the company's responsibilities under the Official Languages Act agus an dualgas atá ar eagraíocht Stáit feidhmiú as Gaeilge. How will that be affected by the transfer? Will the responsibility on companies to implement a scheme under the Act remain with the new company and, if so, will it have to prepare a new scheme? This issue was raised with me by an elderly person who had tried without much success to do business as Gaeilge with Bord Gáis. This individual subsequently contacted the Department of Communications, Energy and Local Government to ask whether anybody in the company could work as Gaeilge and was told there was nobody. The person was eventually cut off because the bill was not paid. It is a serious issue even if it appears minor in the context of the bigger picture. What plans are in place under the restructuring to deal with citizens who want to do business as Gaeilge?
I understand the status quo obtains. There is no change as regards doing business with Bord Gáis Energy. The energy business, whatever it is called, will be a private company governed by the same rules applying to any private company. I am sorry if the Senator was told by my Department that nobody in Bord Gáis was competent to discharge the issue raised as Gaeilge. I do not know whether he has reliable information on whether that actually happened, because it is not the case that nobody in Bord Gáis can handle a query as Gaeilge. It should not have happened.
I am relating what the person said to me. I may forward the correspondence on the issue to the Minister. This is an issue that arises when we sell assets to a private company. I understand that once a company is privatised it is no longer covered by the Official Languages Act.
The new company.
The privatised company.
There is a dual company as before.
It is a step backwards from the situation in which citizens were able to do their business through the medium of Irish. Perhaps this is an issue that needs to be considered in future regulations. It could be taken into consideration in the ongoing review of the Act by the Minister of State at the Department of Arts, Heritage and the Gaeltacht, Deputy Dinny McGinley. Any company that takes over a semi-state body should be responsible for continuing to provide a seirbhís as Gaeilge. It is not just an onerous task; it is good business and a positive marketing initiative.
Amendment No. 8 has been ruled out of order because it is conflict with the principles of the Bill.
Government amendment No. 12:
In page 15, line 29, after “transfer” to insert “to the energy company”.
Amendment No. 15 in the names of Senators David Cullinane, Trevor Ó Clochartaigh and Kathryn Reilly has been ruled out of order because it is in conflict with the principles of the Bill.
Amendment No. 17 in the names of Senators David Cullinane, Trevor Ó Clochartaigh and Kathryn Reilly has been ruled out of order because it is in conflict with the principles of the Bill.
I move amendment No. 18:
In page 16, after line 33, to insert the following:
"(2) Any disposal by BGÉ of its shares in an energy company shall not result in an increase of the ratio of net debt to shareholder’s equity of BGÉ.".
This amendment relates to the issues of debt and the disposal of shares. I understand the Minister dealt with the same matter in the Dáil, but I am interested to hear his views on it.
The Senator has raised an important point in this amendment. The bottom line, however, is that in order to deliver on our troika commitments, to which I referred earlier, and, more important, in order to fund our programme for jobs and economic recovery, we must proceed with the sale of Bord Gáis's energy business. I cannot, therefore, accept an amendment which seeks to delete the provision that empowers Bord Gáis to dispose of its energy business subject to ministerial consent.
The Government is committed to retaining the gas network business in State ownership as critical national infrastructure. In doing so, it is incumbent on us to ensure this important business remains well funded and with an investment grade credit rating so that it can continue to invest and to provide dividends to the State as shareholder. The Government, therefore, will ensure there is an appropriate gearing level in Bord Gáis's networks business following the sale of the energy business. This is not, however, a matter that is amenable to provision in primary legislation. To do so, while possibly well intentioned, could result in a situation whereby borrowings to fund necessary infrastructure investment are precluded. That would not assist the company, nor would it deliver security or value to energy consumers and citizens.
While I am not in a position to accept the amendment, I assure the Senator that this matter will be kept firmly under review by me and my colleague, the Minister for Public Expenditure and Reform, on the advice of our officials and the NewERA shareholder executive.
Amendment No. 19 in the name of Senator Mark Daly has been ruled out of order as it involves a potential charge on the Exchequer.
I move amendment No. 20:
In page 16, after line 33, to insert the following:
"(2) BGÉ shall not dispose of the assets of Irish Water.".
This amendment relates to the broader issue of the disposal of State assets, which we discussed on Second Stage. Our concern is that, in some cases, we are selling assets which account for only one month's borrowing. As Senator Trevir Ó Clochartaigh pointed out, where an asset is making a profit, it does not seem wise to sell it. This amendment seeks to prevent the sale of Irish Water. If it is accepted, any proposal for such a sale would require amending legislation and, thus, the approval of the House, rather than being within the remit of the Government alone.
I support the amendment and expect the Minister to do the same in the earlier intervention whereby he stated categorically that he is not in the business of selling off Uisce Éireann. This amendment would copperfasten the position that Bord Gáis Energy cannot dispose of the assets of Irish Water and they will be kept in State ownership. Will the Minister clarify the Government's stance in this regard?
I can only repeat the categoric assurance I have already given. We are not setting up a commercial State company to run water services on the basis that we are going to privatise them. Similar to the gas networks, our water assets are critical national infrastructure. Irish Water has therefore been established as a fully State-owned subsidiary of Bord Gáis Energy and there is no intention, now or in the future, to dispose of it or its assets.
As Senators are aware, my colleague, the Minister for the Environment, Community and Local Government, Deputy Phil Hogan, will bring a new water services Bill before the Oireachtas in the coming months. I understand an outline of the draft scheme of that Bill has been published on his Department's website. I am advised that the matter raised in the Senator's proposed amendment would be more properly addressed in this forthcoming water services legislation. On that basis, I cannot accept the amendment.
Schedules 1 and 2 agreed to.
Amendment No. 33 has been ruled out of order as it is in conflict with the principles of the Bill.
Bill received for final consideration.
We had the principal debate on whether to sell the energy business of Bord Gáis on Second Stage. I thank those Members of the House who contributed to the processing of the Bill which clears the way for the sale of the energy business. Contrary to the commentary people may have read in the public press, the intention is to proceed with the sale. By this I do not mean proceeding with the sale at any price. It is the intention to honour our commitment that the energy business of Bord Gáis be disposed of. I believe the ultimate outcome will be a good one for the Exchequer and the country in terms of the issues raised about competition, a better deal for consumers and a significant additional competitor in the marketplace. I thank the House for enacting the legislation expeditiously.
I thank the Minister and my colleagues for their contributions. I wish the Minister well in the pursuance of the sale. I welcome another competitor coming into the market. There is plenty of room for more competition.
I thank the Minister for giving of his time in the House. Unfortunately, we do not agree on this issue. We do not agree on a number of issues, but we will still debate them fairly. The fundamental and ideological move of selling Bord Gáis Energy, fuelled by the austerity agenda of the troika, is the wrong one. There were other options which Sinn Féin put to the Government. The budgetary scenario is linked with the fiscal scenario and the sale of assets could have been avoided. At its national convention in 2012 the Labour Party called for this not to be done. It is not a good day for the State and it is very disappointing that the Bill has been passed. We hope the Government has no further plans to sell off profitable State assets such as this one which was making a profit for the State and should have been kept in State ownership.
I thank the Minister for coming to the House to take Second, Committee and Report Stages of the Bill. As always, I enjoyed the debate.