I have received apologies from Deputy Liz McManus. The meeting has been convened for the purpose of the consideration by the committee of the Electricity Regulation (Amendment) (EirGrid) Bill 2008, which was referred to the select committee by order of the Dáil on 1 May 2008. On behalf of the committee, I welcome the Minister for Communications, Energy and Natural Resources and his officials to the meeting.
SECTION 1.
I have not tabled amendments but I seek clarification on a number of issues so that I will not need to table amendments on Report Stage. I refer to the definition of "interconnector". How stands the proposed North-South interconnector under this definition because it is not considered to be an interconnector in the strictest sense? It is backbone infrastructure for the all-island grid. Will the Minister clarify this? It has been the subject of debate for a while.
I thank all those who contributed on Second Stage and outlined broad support for the Bill. It provided an opportunity for Members to raise issues of concern, including the North-South development by EirGrid. The east-west interconnector will not be part of our transmission system. It will be a point to point connection from an alternative system whereas the North-South interconnector will be an integral part of the transmission system. It is defined as part of the transmission system and not part of a point to point connection with another state.
Will the ownership of the so-called North-South interconnector remain with the ESB? Will it be owned and managed by EirGrid? The legislation relates to the east-west interconnector, which is——
It is Government policy to progress the separation of the ownership of the transmission assets so that EirGrid would have responsibility for those. I set out in a statement two months ago the process in which we are engaged.
I am trying to establish whether EirGrid will have to raise loans and spend money on the North-South project or whether it will be ESB-financed.
It will be ESB-financed but even to get through planning and go to construction, there will be a time lag. The ownership position in two or three years is yet to be resolved.
Section 3 provides for a private company, subject to approval, to finance, build, own and run an interconnector. A company such as IMERA, which recently made a presentation to the Joint Committee on Climate Change and Energy Security, has proposed two interconnectors, with the first to be built by 2012. The section states an interconnector constructed by the private sector "shall be deemed to be in the public interest". What does the Minister mean by that?
The development by IMERA cited by the Deputy is a private venture. It is done outside Government control and responsibility. It is up to the company to progress the various planning processes. Should one be built in those circumstances? It is still subject to the regulations so that the market rules in terms of how the market and trading on it apply are subject to regulation by the energy regulator. In that sense it shall be deemed to be in the public interest that it is subject to control by the regulator, as would any other piece of such infrastructure.
I move amendment No. 1:
In page 5, before section 5, to insert the following new section:
5.—(1) EirGrid may not, without the approval of the Minister given with the consent of the Minister for Finance, acquire, establish or dispose of subsidiaries or invest in other undertakings.
(2) Without prejudice to EirGrid exercising any of its functions, a subsidiary of EirGrid may exercise such and so many of EirGrid's functions as are provided for in the memorandum and articles of association of the subsidiary.
(3) An alteration in the memorandum of association or articles of association of a subsidiary of EirGrid shall not be valid or effectual unless it is made with the consent of the Minister.".
I am introducing this amendment following consultations with EirGrid and the Office of the Parliamentary Counsel. This amendment does not represent any change of policy but rather provides a clarification of the powers of EirGrid's subsidiaries in respect of the performance of their functions with regard to the east-west interconnector. This amendment, which was drawn up in consultation with the Office of the Parliamentary Counsel, is intended to eliminate any legal uncertainties regarding subsidiary companies and avoid any potential delays in the commissioning of the east-west interconnector by 2012.
Following the discussions in the Dáil on Second Stage, I am aware of, and grateful for, the support around the table for expediting this east-west interconnector as soon as possible. In proposing the amendment, I am aware that it will apply generally to any future subsidiary of EirGrid. The amendment, therefore, includes checks and balances to ensure that the subsidiaries will not take on additional functions or powers without ministerial consent.
In respect of the figure of €750 million, which the Minister is essentially setting as a ceiling for borrowings by EirGrid, my understanding is that the new interconnector was going to cost about €300 million. Why are we setting such a high figure?
The interconnector will obviously be subject to competitive tender so we do not have any clear indication as to what the final cost would be. The figure of €750 million is in no way indicative of a potential cost. It was set as a figure sufficiently high to give the company flexibility if it was appropriate to invest in other infrastructure using such a capital or borrowing base and not to in any way give an indication as to what the overall costs of any one project will be. It was set at that level to give flexibility so we would not have to amend the legislation if, in the short run, the company was looking for further borrowing opportunities.
I move amendment No. 2:
In page 6, after line 4, to insert the following subsection:
"(2) The Electricity Regulation Acts 1999 to 2002 and this Act may be cited together as the Electricity Regulation Acts 1999 to 2008.".
I am standing in for Deputy McManus who, unfortunately, cannot be here. This is a technical amendment more than anything else. Rather than having a consolidated piece of legislation, it aims to ensure that all other legislation in this area would be recognised also.
I am afraid that this amendment is not accepted. I thank Deputy Lynch for proposing it in place of Deputy McManus and recognise the intent to simplify the citation of the various Acts. However, on consideration of the views of the Office of the Parliamentary Counsel, I am not accepting it.
The inclusion or non-inclusion of a collective citation was an issue that the Office of the Parliamentary Counsel decided upon at the time of drafting. I am advised that the relevant provisions for EirGrid are not and would not, after enactment of the Bill, be found in the electricity regulation Acts but in the European Communities (Internal Market in Electricity) Regulations 2000, as amended by subsequent regulations. A collective citation is, therefore, not appropriate in this case.
I am further advised that even if there were a collective citation, the Bill could not be cited with the earlier Acts, as section 9 relates to the 2000 regulations. Other free-standing sections within the Bill relate specifically to EirGrid, for which standard corporate provisions are not dealt with in the Electricity Regulation Acts, 1999 to 2000. Those sections that textually amend the Electricity Regulation Act 1999 will be read as part of that Act when the Bill is enacted.
While I again thank the Deputy for proposing an amendment which was designed to clarify the provisions of the Bill, I hope she understands that, particularly in a technical drafting matter such as this, we are guided by the recommendations of the Parliamentary Counsel.
What is unfortunate about that answer is that it is all too easy to recognise it. Parliamentary Counsel and departmental staff do not like it when issues are pointed out to them. However, the amendments proposed usually reappear somewhere along the way, perhaps in their own words. Ministers, in particular, should be a little more open.
On behalf of the select committee, I thank the Minister and his departmental officials for attending.
I would like to make one final closing remark——
Before the Minister does so, I wish to make a brief remark, if that is allowable.
Certainly.
My party is in favour of this legislation, which we believe is necessary. We want the interconnector to be built as soon as possible because it is infrastructure which we clearly need. In terms of the provisions of the Bill as a whole, how are they going to be paid for? I understand that with this Bill the Minister is legally providing for EirGrid to borrow to finance the project. However, on Second Stage it was unclear how he intended this infrastructure to be funded. Will it be partially funded by money borrowed and raised by EirGrid, topped up by public moneys, or will it be entirely funded by the company's borrowings? I would welcome some clarification.
I thank the Deputy for his comments. We are examining a number of funding options but the Government has not made a final decision on the matter. The options include the project being wholly paid for through borrowings, as is now possible, given the borrowing limit being provided for in the Bill. They also include an Exchequer contribution or other flexible mechanisms such as use of the National Pensions Reserve Fund. I will not rule out any financing option that will provide the facility as quickly as possible and at the lowest cost to the taxpayer. This crucial infrastructure will be financed appropriately and we are committed to delivering it as quickly as possible. The exact form of financing has not been finalised with the Government and the company but this will happen within the tendering process which must proceed.
This is a complex issue. We are dealing with quite complex planning issues because of the nature of the project, the foreshore licences and other issues that need to be resolved. I hope that if further complexities requiring clarification arise I may return with amendments on Report Stage as necessary. I resolve to build a facility as quickly as possible to provide us with energy security and a more flexible electricity market. For that reason I appreciate the committee's time and efforts in dealing with this Bill.
I have not studied this Bill detail because I was not dealing with it. However, is the Minister's amendment an attempt to ensure we will not see the type of asset stripping that happened in the case of Telecom Éireann?
The intent of the amendment is to give flexibility to EirGrid so that it would have the powers to use a subsidiary company. EirGrid is a publicly-owned company and will remain as such. This amendment is a mechanism that can be used to give the company flexibility to deliver the project if this is required.
It seems the entire process is exactly the same as in the case of Telecom Éireann. I was just wondering whether the amendment was an attempt to stop that happening.
I have yet to meet anyone either in this House or in any other House who believes we should take the transmission assets out of public ownership. I would love to hear someone who believes that is a clever step to take because I do not.
That is good to hear.
I did not ask that question.
The Minister confirmed for the Deputy that there will be no asset-stripping.
