I move amendment No. 1:
In page 3, subsection (1), line 29, to delete "section 9(1)" and substitute "section 9, 10 or 14 (as appropriate)".
This is a drafting amendment necessitated by later amendments. It puts the correct numbers on subsequent amendments.
Amendments Nos. 1, 2 , 3 and amendment No. 3a are related to amendment No. 2 and all may be discussed together.
I move amendment No. 2:
In page 5, before section 2, to insert the following new section:
2. (1) The following section is hereby inserted after section 10 of the Act of 1976:
‘10A. (1) Where a person requests the Board to make an offer to him to transmit on his behalf through pipelines under the control of the Board a quantity of gas that is not less than the minimum quantity of gas prescribed for the purposes of this section, the Board may make such an offer to that person, including an offer to transmit a quantity of gas that is greater or less than the quantity to which the request relates (but not less than the minimum quantity aforesaid).
(2) (a) An offer referred to in subsection (1) of this section shall be made on such terms as the Board considers reasonable and specifies in the offer.
(b) If any dispute arises between a person and the Board as to the reasonableness of terms on which the Board has made an offer aforesaid to that person, the dispute shall be referred to the Minister and, if the Minister, or a person nominated by him for the purpose ("the nominee"), considers those terms or any of them to be unreasonable, the Minister or the nominee, as the case may be, shall give a direction to the Board requiring the Board to make a further offer of the kind referred to in subsection (1) of this section to the first-mentioned person on such terms as the Minister or the nominee specifies in the direction and the Board shall comply with such a direction.
(c) For the purpose of considering a dispute referred to the Minister under this subsection, the Minister or the nominee may request the Board or the person who requested the making of the offer concerned to supply to him such information relating to the dispute as he considers necessary, and the Board or the said person, as the case may be, shall comply with such a request.
(d) The reference in paragraph (b) of this subsection to the terms on which the Board has made, or may be required to make, an offer shall be construed as including a reference to the specification in the offer of the quantity of gas to be transmitted on behalf of the person concerned.
(3) An agreement entered into by the Board in consequence of an offer made by it under this section (including such an agreement as subsequently varied by any lawful means) may be carried into effect by the Board in accordance with its terms.
(4) This section is without prejudice to the powers of the Minister under section 11(1) of this Act.'.
(2) Section 11 of the Act of 1976 is hereby amended—
(a) by the substitution of the following subsection for subsection (1):
‘(1) (a) The Minister may, from time to time, give the Board such general directives concerning the transmission on behalf of another person by the Board of gas through pipelines under its control as he considers appropriate (other than as respects the pricing policy of the Board in relation to that matter).
(b) The Minister may, from time to time, with the consent of the Minister for Finance, give the Board such general directives concerning—
(i) the pricing policy of the Board as to the sale or supply of gas or the transmission on behalf of another person by the Board of gas through pipelines under its control, or
(ii) the financial objectives of the Board, as he considers appropriate.',
(b) by the substitution of the following subsection for subsection (3):
‘(3) In performing its functions the Board shall—
(a) comply with any direction under this section,
(b) comply with any directive under this section concerning—
(i) the transmission on behalf of another person by it of gas through pipelines under its control (including any such directive concerning its pricing policy in relation to that matter), or
(ii) its pricing policy as to the sale or supply of gas,
(c) have regard to any directive under this section concerning its financial objectives.',
(c) by the insertion in subsection (4) after 'a particular case' of 'or in relation to the transmission on behalf of another person by the Board of gas through pipelines under its control in a particular case',
and the said subsection (4), as so amended, is set out in the Table to this section.
TABLE
(4) Nothing in this section shall be construed as enabling the Minister to exercise any power or control in relation to a price to be charged by the Board in a particular case or in relation to the transmission on behalf of another person by the Board of gas through pipelines under its control in a particular case.".
In my Second Stage speech I stated that I was considering the possibility of including a provision in the Bill on Committee Stage to allow Bord Gáis Éireann to provide third party access to a gas network. I have examined that matter carefully in the meantime and amendment No. 2, which involves adding a new section to the Bill, reflects my proposals.
The purpose of this amendment is to provide a statutory basis for the introduction of a system to allow BGÉ to transmit gas owned by another party through the natural gas network at a charge to be negotiated. BGÉ owns and operates the gas network, including transmission and distribution pipelines. At present, all gas that flows through the gas network is purchased by BGÉ. The vast bulk of the gas is purchased by BGÉ from Marathon Petroleum (Ireland) Limited, the producer of gas from the Kinsale Head-Ballycotton field and more recently a small amount of gas from the UK, which is transmitted through the newly built gas interconnector.
In 1992, the Government decided the recommendations of the Moriarty Committee Task Force on the Culliton report on the granting of third party access to the BGÉ network should be implemented. A draft EU directive dealing with common rules for the gas industry, which has yet to be examined in detail by the council, proposed the introduction of third party access for large gas consumers to gas networks. The Ireland-UK natural gas interconnector is now operational and BGÉ is importing gas through it as required.
The Kinsale Head-Ballycotton field will not be depleted for another five years or so but in the meantime BGÉ will have to import increasing amounts of gas to meet its requirements. IBEC has been making representations seeking the introduction of a third party access regime for industrial gas consumers.
Gas purchase prices in the UK have fallen sharply with the result that the ESB and other large gas consumers might wish to purchase their own gas supplies in the UK and to have it transmitted through the BGÉ network. Of course, while gas purchase prices are now at an unusually low level, there is no guarantee that this situation will continue.
My first priority is to ensure that, in the context of the development of the gas industry, BGÉ remains a vibrant and progressive State body with adequate financial resources providing a first class gas supply to its customers. The provision of the Ireland-UK gas interconnector at a cost of £265 million entails significant borrowings by BGÉ. BGÉ now has to reduce its high remaining debt level of £210 million to manageable levels to prepare for the challenge of having to import all its gas requirements in the years ahead at world market prices. There will, therefore, be a pressure on BGÉ to maintain its profit making record.
I have carefully considered the representations made by IBEC and other interests to permit BGÉ to negotiate third party access to its network. I am fully satisfied there can be no question of granting unlimited third party access to the BGÉ network as this could cause serious damage to BGÉ itself and the gas industry in general. Accordingly, I have decided that BGÉ should have discretion in regard to the extent to which it will provide third party access to its network and that only applications in respect of gas volumes in excess of a specified threshold will be entertained.
This amendment will set up the necessary legislative framework for the granting of third party access to the gas network. It involves the insertion of a new section 10A in the Gas Act, 1976, and amendments to section 11 of that Act.
The amendment will give a threefold role to the Minister. First, the Minister will specify a threshold above which BGÉ may grant third party access. The annual threshold in the draft EU directive is 25 million cubic metres or approximately nine million therms and I am considering this figure as the threshold under the new legislation. Including ESB and NET, there are fewer than ten gas users above this threshold. Second, in cases where BGÉ and the application for TPA fail to agree on terms, the dispute shall be referred to the Minister for resolution. The new section 10A will provide for these roles. The third role for the Minister will be to issue general directives on TPA, including pricing.
The granting of TPA facilities will represent a major change in the development of the gas industry. At present, Bord Gáis Éireann is the only body that purchases gas direct from the producer. To cater for the operation of TPA, my Department is already developing its expertise. It recently advertised for consultants to advise it on the charging methodology and other conditions relating to the granting of TPA. Tenders have been received and these are being considered. We hope to be in a position to announce the appointment of the successful consultants shortly.
Bord Gáis Éireann is a highly successful State body which has performed very satisfactorily since its establishment in 1976. It supplies a varied market, including industrial and commercial users, the ESB and NET. Domestic, industrial and commercial users account for 35 per cent of gas sales and 61 per cent of revenue. Gas deliveries to the ESB account for 42 per cent of total deliveries while deliveries to NET account for 23 per cent. In terms of revenue, the ESB contributes 31 per cent and NET 8 per cent.
Bord Gáis Éireann has developed the gas industry so that gas now contributes 17 per cent of our total primary energy requirement as against 6 per cent in 1980. It also contributes 26 per cent of the fuels input to electricity generation. Domestic customers have increased by an average of 9 per cent per annum over the last three years and now stand at some 233,000, representing over 30 per cent of all Irish homes. Bord Gáis Éireann plans to have natural gas available to 40 per cent of all Irish homes by the end of this decade, which will be the equivalent of 75 per cent of all homes within the area of the gas grid.
All this progress has been achieved without the need for any State investment in Bord Gáis Éireann. On the contrary, the Exchequer has benefited by a total of £394 million in contributions from Bord Gáis Éireann. Not only gas consumers but indeed the whole economy have reaped the benefits of Bord Gáis Éireann's success. This success story is due, in major part, to the expertise and resourcefulness of the Chairman, Dr. Michael Conlon, the board, its chief executive, Mr. Philip Cronin, and the management and staff of Bord Gáis Éireann.
Bord Gáis Éireann is a lean, clean outfit. It is highly profitable and efficient and has achieved all of this from the chaos and debris of a collection of failed private sector gas companies, including Dublin Gas. I am surprised that we are now seeing a proposal driven mainly by Deputy Molloy, and coming from a new right wing position for the Deputy, that would have the effect of destroying——
We are on Committee Stage, not on Second Stage, which has been completed. I must ask the Minister to confine his remarks to the section in question.
The Minister would be better sticking to the script that the civil servants gave him and not drift into an ideological tirade.
There is no question of going off on an ideological tirade. I was seeking to put an end to a right wing ideological drive from Deputy Molloy, which I totally reject and which I find, having looked at the files on the matter, to be a new found ideology from the Deputy.
We would make more progress if we confined ourselves to the items on the agenda on Committee Stage. I ask Members, including the Minister, to co-operate with me in endeavouring to move forward on this Committee Stage and to confine our remarks to the amendments listed on the Order Paper.
I was not disagreeing with much of what the Minister was saying until he took off near the end on some kind of rocket of his own. May I remind the Minister that there would not have been any gas interconnector were it not for the change of Government in 1989. The previous Government had made no provision to put this proposal before the EU Commission for inclusion in the Structural Funds which were available at the time. It was an initiative I took shortly after my appointment as Minister. It resulted in the EU agreeing to fund a feasibility study and grant substantial funding for the construction of the pipe, with the agreement of my colleagues in Government at that time. The previous Government had taken no initiative with regard to this matter and, as is known, I had quite an amount of involvement in the work which led to the eventual construction of the pipeline.
In view of the EU requirement to provide for third party access to the gas interconnection systems we have the legislation before us today, including the amendment in the name of the Minister. I welcome the Minister's proposal in so far as it is providing a legislative basis for third party access to the gas interconnector. The amendment in my name relates to the method upon which the third party access will be based. I note that the Minister's amendment does not make any reference to a minimum or a maximum amount and leaves it open to the Minister and to Bord Gáis Éireann to decide who eventually is going to have access.
The word was out that the Minister intended to confine access to consumers who would be able to take a minimum of nine million therms per annum, which he has now confirmed to the committee today. The amendment in my name proposed that this minimum figure be set in the legislation, that it be at one million therms, not nine million, and that the Minister would have the right to lower the figure below one million by way of regulation, but that it would have to start at one million therms.
I want to hear more of the Minister's thinking with regard to why he had decided that it would be at nine million and why he decided not to put this figure into the legislation; the way the legislation is worded at present the figure could be raised subsequently and could exclude all users except the ESB if it was raised to a certain level. For example, a level of 300 million therms might exclude everybody but, perhaps the ESB.
The intention of the Internal Market with regard to energy was to introduce competition for the purpose of achieving greater efficiency and lower energy costs within the EU, and that the benefits to the Union, to industry and to domestic and commercial consumers that would accrue would arise because of competition. To this end there had to be access to the main methods of transporting energy such as gas pipelines or electricity transmission systems in order to introduce competition. However, the possibility of competition will be excluded if a minimum figure of nine million therms is imposed. The amendment in my name proposed that this figure should be one million.
The Minister has given very little grounds so far which would make me reconsider pressing the amendment. I hope we have a good discussion on this and that we get the full facts. I understand that the costs of constructing the interconnector are quite high, despite the substantial grant aid received from the EU, and that the repayment of the Bord Gáis Éireann's debts arising from the payment of the costs of construction will mean that the company may not be in profit for some years. I understand that dividends from the State have been suspended until such time as Bord Gáis Éireann returns to profits after the completion of the payments arising from the construction of the gas pipeline. The Minister did not put this aspect across as clearly as I am doing. Will he confirm whether this is the position, both with regard to the dividends from the State and to their resumption after a return to profit, which would include payment of all the costs of putting in the pipeline?
The Minister must accept that if he places a nine million therms limit on the companies who would have the right to access gas to the pipeline, he is confining access to ten companies, as he indicated. Of these, there is the ESB; I am aware of the NET situation which is most unsatisfactory as there are legal contracts that cannot be broken without the State paying huge compensation. However, we have been informed that it will terminate in 1999. Since this matter became public and was circulated in the business community, a number of companies have written to express concern at the proposed limit. Some of the letters were sent to the chairman and I only received them this morning. They are from the Building Materials Federation, the Irish Dairy Industries Association and C.H.P. Limited, on whose behalf John Fingleton made a submission. A number of other communications were received while IBEC has expressed concern on behalf of Irish industry which would be denied access to the pipeline because of this restriction.
In order to enable us to make up our minds on this matter, could the Minister give us more information on the economics of the pipeline? Why would it be necessary to introduce the Minister's proposed limit of nine million therms? If people have access to the pipeline it will mean revenue for the owner, Bord Gáis, and the more companies that have such access the greater is the potential revenue for Bord Gáis as a result of the greater utilisation of the interconnector. If it is to be limited to nine million therms only a few companies will be in a position to consider whether they want to buy their gas through it. In view of its huge cost and the investment by the Irish taxpayer in addition to European Union grant aid, it is in everybody's interest to seek to achieve the maximum utilisation of the pipeline from the outset. If the Minister sets a very high minimum figure he is excluding a raft of Irish industry that might have been considering and looking forward to the option of being able to buy its own gas and that might be in a position to do so in the future. That prospect is excluded when the figure is set so high and those industries will not have right of access to it.
Deputy Molloy received the three submissions at this meeting because I only received them this morning in the post. I got them to the Deputies as quickly as I could. I thought it better to bring them to the meeting rather than leave them in the Deputies' post boxes in case they did not see them until later.
I appreciate the Chairman's help.
I will call Deputy Finucane and Deputy Treacy in that order. Then I will ask for further contributions on this group of amendments before asking the Minister to reply to the points raised.
Many industries throughout the country were looking forward to the establishment of the interconnector. They saw it as an energy resource at reasonable cost which would help to make them more competitive in meeting international competition. The Minister indicated that the threshold would be nine million therms. The ESB and NET have been mentioned but it would be interesting to know who the other companies are. We all know what a drain NET has been on the State's resources in the past and here it appears to be getting another concession.
The Minister is also aware of the submissions from various organisations mentioned by Deputy Molloy. They will be disappointed if the threshold is restricted to nine million therms because it will be confined to an exclusive club of about ten. The submission from ICOS, on behalf of the co-operatives, was very interesting. It suggested that Bord Gáis would have an opportunity to maximise its involvement in their sector because, although one would anticipate that the maximum demand on an energy resource would occur in the autumn and winter period, the co-operatives' peak period would be from March to October. ICOS was writing on behalf of all the co-operatives in the country and would be looking at this because co-operatives are up against a great deal of international competition. Another submission suggested a maximum of three million therms.
In County Limerick, Aughinish Aluminum has been seeking an alternative energy resource to electricity. Would it be one of the companies above the nine million therms threshold? Who are the nine companies mentioned by the Minister because they will probably form an exclusive club? What are the implications of a threshold of three million therms as was suggested by Mr. Fingleton in one of the submissions? How many companies would benefit from that threshold? In addition, another submission suggested that one million therms would make it accessible. What would be the demand on Bord Gáis in that context?
I am a layman in this regard. The Minister said that the interconnector has been quite expensive and cost over £200 million. Having expended that amount of money initially, the layman's point of view would be that it would be wise to set a ceiling that would maximise the usage by interested bodies. I have no expertise in this area but I would look at it from the point of view of a businessman and ask if it will be beneficial to companies in the State. At present it appears to be too restrictive.
I endorse what has been said by Deputy Molloy and Deputy Finucane. We represent the citizens and consumers and natural gas is the property of the people of Ireland. The interconnector has been paid for by Irish and European taxpayers and it is also the property of the nation. Equality of opportunity must prevail for third party access to a State asset or resource for those who require it.
There has been a great deal of talk this year about cosy cartels. If we are to adhere to the spirit of the European directive by having a facility whereby we lease nine million therms and in doing so vest totality of opportunity in a maximum of nine companies — if there are nine — we are, first, conferring unfair and inequitable benefits on these people vis-�-vis the smaller consumer or corporate entity or employer who is making their contribution to the country in their particular way. We are also allowing the people who have this access to distort and depress competition by flooding the market with their products at a particular price or by distributing resources, whether it is gas or otherwise, in a particular way that will ensure that those who try to expand their operations will not be able to do so.
We are totally out of line with what is happening elsewhere in Europe and particularly in the United Kingdom. I ask the Minister to ensure that this position will not prevail. There might be an effort in this Bill to protect a State monopoly by going down this road. We are legislators and we represent the people. If we put into law something that is innocuous and lacks transparency, it will allow others in a particular situation and at a particular time to take decisions which fulfil their role and adhere to European directives but are not in the best interest of the nation. I ask the Minister to take a serious view of this.
We have an interesting submission from ICOS and other bodies which are worried about the implications of this. I have an interest in the dairy industry, I am involved in the Town of Monaghan Co-op, a small co-operative, and we are worried that larger consortiums will benefit and smaller ones will not. We await with interest the Minister's reply to find out who are the eight others who will gain from the level of output being suggested. I appreciate the Minister's anxiety that the company concerned should not experience financial difficulty because it has already made a commitment but we must also make sure there is fair competition. I ask your permission, Chairman, to again contribute after the Minister has given us the information we are seeking.
As we are on Committee Stage, there is no restriction on Members contributing more than once. I try to ensure there is no repetition but you are free to contribute again after the Minister has spoken.
I thank Members for their contributions. Amendments Nos. 1 and 2 to amendment No. 2, in the name of Deputy Molloy, will set a threshold of one million therms per annum or such lower amount as may be specified by the Minister for eligibility for third party access.
Amendment No. 3 to amendment No. 2, in the name of Deputy Treacy, proposes a threshold of 1.5 million therms per annum. This amendment could be taken to mean something else because of the way it is worded but I understand the thrust of what the Deputy is saying and his intention is clear to me.
On Second Stage I stated that my first priority with regard to the development of what is still an immature gas industry is to ensure that BGÉ remains a vibrant and progressive State body with adequate financial resources providing a first class gas supply to its customers. We must be conscious of the small size of our network. We must also bear in mind the substantial public investment in the system. I am not satisfied that it would be in the best interests of the gas industry generally or of BGÉ that the company should grant unlimited access to its network for gas transmission.
The consumption threshold I am considering at present is a minimum of nine million therms, or 25 million cubic metres, per annum on one site. This threshold is contained in the draft EU directive concerning common rules for the Internal Market in natural gas. There are fewer than ten customers above this threshold. I do not have a list of their names but I am advised that if I had I would not be at liberty to disclose them because of the need for their commercial sensitivities to be protected.
What about the commercial sensitivities of their opposition? It works both ways.
If they are going to be affected by the legislation——
We should allow the Minister to complete his contribution and Members may then contribute.
My next point is important. The figure of fewer than ten customers should not be viewed in isolation. BGÉ's annual report for 1984 shows that two customers, the ESB and NET, account for 65 per cent of BGÉ's gas which was delivered in that year. The other customers account for another 10 per cent of the total gas produced and delivered by BGÉ in any one year. This 75 per cent is the amount we suggest should be available for third party access. This is not a baby step but a giant one. The threshold proposed in the EU draft directive seems reasonable to me and I hope the committee will accept it.
I am considering an amendment in that regard on Report Stage. I do not want to mislead the committee on this but because this is of such importance, I am considering having it part of the primary legislation rather than subject to ministerial order.
None of the taxpayers' money was used for the interconnector; BGÉ used its own money. It now has an infrastructure, excluding the interconnector, which is valued at £380 million; the interconnector is valued at £260 million. In the same period the company paid £400 million into the coffers of the State. This is a real achievement.
We must also be conscious of the reality that the company has long term take or pay contracts with Marathon, which was the only source of gas to the Irish consumer until recently. If we opened the transmission systems to all comers, BGÉ would find itself in the same position as British Gas, which will lose approximately £1,000 million this year because of wide open third party access. We could implant this desperate scenario on BGÉ, which has been highly successful. Even if we reduced the threshold to one million therms, this would have huge consequences for the company. It would have to pay Marathon for the gas even though it would not be able to sell it. It would have to take or pay; this is the type of contract it has with Marathon. It needs to ease in third party access so that it can continue to pay off its debt and reduce it to manageable proportions.
Deputy Molloy suggested we should now make maximum use of the interconnector. We can bring double the total quantity of gas required by Irish consumers through that pipe. This would mean that all of the contracts BGÉ has with Marathon would have to be terminated but BGÉ would still have to pay for the gas. This would be the economics of a lunatic asylum and we do not propose to do anything like this. This company has developed over many years and, as Ministers, Deputy Molloy and Deputy Treacy assisted this process. It would be criminal to do something which would have the effect of wiping out BGÉ and I ask the committee not to suggest that we should do so.
I would like the Minister to expand on the take or pay contracts with Marathon. From my knowledge of the situation, we do not have a guaranteed natural gas supply into the future. There is a limit to the amount of gas available from our own resources. Marathon is the professional in this area. We did not have the capacity or expertise to do the job which Marathon did for us. It made an agreement with the State and is happy to be doing business with it.
It has engaged in exploration to see if it can procure more resources. There is a reasonable chance that this exploration will prove positive but there is no guarantee. In this situation take or pay does not seem relevant. There is a limit to the amount of gas available, which is being supplied to a State customer at a preferential price and to other customers at a reasonable commercial price. There is a major demand by other companies and in the mid-west, the west, the midlands and towns in other areas for gas supplies. Consideration has been given in the past to extending the supply to Shannon, Ennis and Galway.
We must take into account the limits to the amount of gas we have and the fact that we have a large interconnector. Perhaps the taxpayer did not put cash into building the interconnector but it put money into Bord Gáis Éireann over the years. For example, Guinness Ireland Limited or Irish Distillers Group Limited deal with a product for which there is great demand. While they must be congratulated, it would be a sad day if they were not able to manage a resource which is of such commercial importance to the State and to the companies. We cannot protect two or ten companies to the exclusion of others which have a contribution to make if they are given the same level playing field as other companies.
I concur with the Minister's remarks about the outstanding job done by Bord Gáis Éireann under its present chairman and chief executive. I congratulate them on the level of success they have achieved to date. I know the company is under great pressure because of the huge debt it has taken on to fund the construction of the gas pipe. I do not wish to make any proposal which would detract from its ability to fund its debts. I take it from what the Minister has said that the cost of repaying the money borrowed to construct the gas pipe is expected to be met within five years.
A manageable proportion of the debt.
BGÉ would then be free of its debt and would be able to stand alone on a financial basis. It would be unjustified to maintain a nine million therm minimum in the new situation. What is the Minister's attitude to retaining a nine million therm minimum for a period of five years and then reducing it to one million therms?
I accept what the Minister said about the implications for Marathon Petroleum (Ireland) Limited and that this is a finite resource. Is there any ongoing exploration, apart from what Marathon Petroleum Ireland Limited achieved outside Cork, to make more gas available and to make it accessible to more users than it is at present? Aughinish Alumina has a capacity for 150 million therms and over the years it has tried to become financially sustainable. The argument was often used as regards Aughinish Alumina that it could not be considered in the context of the present gas resources because that would rapidly deplete them. I thought the gas resources were being expanded in order to allow more people and more companies to tap into this facility. Is that the Minister's ambition as regards exploration?
People should be aware that approximately 80 per cent of the gas used in 1996 will come from Marathon Petroleum (Ireland) Limited. BGÉ must buy and pay for it even if it does not sell it. It would be crazy to introduce a system where it must buy the gas from Marathon Petroleum (Ireland) Limited and not sell it to customers. This is a reducing amount. In 1996 it will be 20 per cent from outside sources and 80 per cent from Marathon Petroleum (Ireland) Limited. That will reduce over five years to a point where it will be 100 per cent from outside sources.
At that stage all the gas will be imported and third party access will be available under my proposals to 75 per cent of all gas customers. Many customers will not opt for TPA; they will allow BGÉ to buy in bulk on the foreign market. It will be able to buy gas better than any individual and it will then sell it to and transmit it for the customers directly to the source they need. My officials and BGÉ advise me that this will probably be the scenario rather than customers buying and importing their own gas.
At present, gas in Britain is at a temporarily low price. This arose because the British Government decided that the TPA level should be 300 therms. This meant that every householder could decide to buy gas wherever they liked. That left British Gas with huge volumes of gas which it had to buy but could not sell. It has put it on the market below cost to try to recover some of its huge losses. This has led to temporary low prices in Britain. The interconnector between Britain and Europe will shortly be in place and then gas will no longer be sold at a low price because British Gas will be able to sell North Sea gas to Europe rather than only to Britain.
As regards what will happen in five years' time if the level is reduced, that should be considered then. I should not try to predict what will happen. It would be better to include it in the primary legislation so that this committee and the Dáil could make a decision at that time.
As regards exploration and the expansion of the network, BGÉ is currently examining the cost of expanding the network. A range of exploration is occurring off the west coast. I am positive about its prospects as are the exploration companies which have put their pockets where their mouths are as regards the multi-million pounds being spent in the Porcupine Basin. Drilling will start there next year. Drilling is taking place at present off the west coast, but not in the area about which I am talking. Chevron will immediately start drilling two back to back wells. A range of other explorations may give us another source and we may then be able to use the interconnector not only to import gas, if it is required, but to export gas as well.
I congratulate Deputy Molloy, who was the Minister for Energy at the time, for making the decision that the interconnector should be put in place. Our gas supplies were extremely vulnerable from a security point of view because if there was a breakdown on the line from Kinsale, our gas supplies would have been cut off. We now have the security of a second source.
Discussions are ongoing at official level about the possibilities of an interconnector with Northern Ireland which is building a separate interconnector with Scotland. That would give us continued security even after Marathon Petroleum (Ireland) Limited completed its operation. There is a lot of activity in the exploration area and we have the security required through the interconnector.
I cannot accept the amendments.
I listened carefully to the Minister's reply because I wanted to hear his short-term and long-term plans. It is difficult to argue against his policy. This is a classic example of the State taking all the risks and accepting the problems associated with them and then others outside see where there is a possible killing to be made and they want to move in. I have looked at the submissions received from various groups and they all say how important it is for them to be provided with this facility. They are not putting forward any hard figures on where the savings will be or how much cheaper they will be able to obtain it.
In other areas we have seen examples of how inadequate the present system is compared to when it was totally nationalised. The dangers I see are that if it is thrown wide open to one million or below a million therms, groups of companies will come together and some other person or group will be competing against Bord Gáis. They will be buying in bulk to facilitate all the smaller companies because there is no way any of the smaller companies will be in a position to negotiate with any company to try and obtain a reasonable price from them. I believe what the Minister has said. Even in five years time Bord Gáis may be in a better position to negotiate for a better gas price for this country.
For us to undermine it in any way at this stage would be very bad politics. We should support the Minister's proposal not alone in the short term but in the long-term interest of Bord Gáis and the country.
I concur with Deputy Fitzgerald. Now that the Minister has elaborated I can understand the logic and reasoning behind the decision. I am heartened by the exploration activity. I trust and hope that it leads to success because if we can expand gas resources coming into the country then we will not be talking about a limitation of nine million therms. I would expect that restriction to drop to make it more accessible to many other companies looking to the future. I accept what the Minister has said for the short and long term.
I cannot fully accept what the Minister is saying. Taking the total economy in the broadest context and looking at what successive Governments and semi-State organisations have been espousing for the past decade, we have to be competitive as a nation. We have to be able to produce goods and deliver services at a reasonable price in order to compete in the international market place and add to our economic growth. We are throwing all this back in the face of recommendations in various reports like Culliton and Moriarty which made it clear that we must have energy at the right price as well as high standards of efficiency and productivity.
As legislators we are not serving the State or the Legislature properly if the supply of energy will be distorted by a semi-State organisation and we will not protect the opportunity that should provide a level playing field to other companies, corporate entities and employers in this country who have the same right to a facility and a resource as any others in European Union. We should not pass legislation whereby we adhere to the spirit of European Union laws and regulations in one way yet deprive those who are entitled to equality and fair competition in another.
The Minister should give some signal to small consumers that he is on their side and that we will have some clarity as to what the maximum will be. If one is going to pitch it at nine million in a vague way then we are going nowhere.
On the point Deputy Treacy is making about competition, gas has competed most effectively in this country with other fuels. Not alone has it given good value to customers — 250,000 of them — but it has also forced down and kept down the price of other fuels because it was so keenly priced and efficiently delivered. In addition, Irish Gas is now preparing to compete with foreign gas which will again benefit customers.
Nobody is being excluded from using gas except those living where there are no gas pipes, and the economics of providing new pipes is the issue there. Where pipes exist everybody has a viable, efficient and competitive supply of gas. Bord Gáis has ensured that and has demonstrated that it can compete with all comers by increasing its share of the market dramatically, as I pointed out earlier.
We need to wipe away the idea that somebody is being restricted or not getting a fair crack of the whip. The idea that a domestic customer can go to Britain and negotiate a gas supply for themselves is nonsense. Of course the domestic customer can turn off the gas and use something else anytime they want to; they have absolute freedom to do that. They do not have a contract. BG has a contract to supply them but the customer does not have to use it. That is their prerogative. Small customers, right up to the nine million bracket, are the people to whom the Moriarty Task Force on Culliton said the interconnector should be made available. They are the people who meet the criteria laid down by the task force and who we are putting into this section so that they will have third party access. Many of them will not use it, preferring to continue to use the expertise of BG to buy in bulk for a group of customers and sell on to them, but the other possibility will continue to be available to them.
To go below that level to a point where BG still has take-or-pay contracts for 80 per cent of the requirement of this country would be very bad economics both from BG's and the customers' point of view in the short and long term as well as from the country's point of view. Deputies should reconsider the effects their proposal would have on the gas industry and its customers.
Has BG any proposals for extending the network to the west? Only one half of the country can benefit from it while the other half has been completely forgotten. Have they any plans to extend the network and give the rest of our citizens an opportunity to share what half the country enjoys?
In other words, when are you going to extend the pipe to Goleen?
No, it is not that. When are you going to extend the pipe to Galway, Limerick, Tralee or west Cork?
I have asked BG to examine the expansion of the network to a number of places including Galway and Shannon. There are a number of towns involved but I do not want to start listing them. I have asked BG to look at the economics and they are at present carrying out a study to see how best that can be done. I hope they will come back to me with something positive.
I hope they are not forgetting south-west Cork either.
The point should be made that BG created wealth and paid £400 million into the Exchequer; as far as I can find out, the Exchequer never paid them any money. Maybe at the point where Dublin Gas was taken over there might have been something, but I do not think there was. I cannot find that any payment was ever made to BG, but they made £400 million of payments which benefited the whole country. The economy benefited from that £400 million, including Goleen and other lovely places in west Cork which I have often visited and enjoyed.
How could the entire country have benefited when parts do not have a supply?
The entire country benefited from the money paid to the State.
Something which must have come home to the Minister when studying these papers is that this country has greatly benefited from the private investment made by Marathon Petroleum Ireland Limited in the exploration programme it undertook and which resulted in the discovery of this gas. The economy has benefited from the results of its exploration investment in delivering gas and a straight cash transfer to the Exchequer arising from the profits of Bord Gáis Éireann made from the distribution of that gas.
We have had a good return from the results of that exploration programme which was undertaken without any investment by the State. I hope we will be as lucky in the future and that we will discover equal amounts of gas or oil in another offshore location. Unfortunately, further efforts that have been made by Marathon, which has made a huge investment since the gas find in Cork, have not resulted in any great success other than the small Ballycotton field. Our thanks are due to that American company. We have certainly benefited from the investment of Americans in this country.
The Minister referred to the situation that has developed in the gas industry the United Kingdom. Nobody would suggest that we reduce the minimum figure to 300 therms per annum which the British have done. This is a minuscule figure and is a recipe for disaster. My amendment or that of Deputy Treacy does not propose anything close to that level. We seek to ensure that industry of a reasonable size will be able to benefit from the third party access requirements of the European Union which would force competition into our gas industry at a greater level.
The monopoly that exists at present where BGÉ distributes indigenous gas found by Marathon will change with the depletion of those stocks and the necessity to acquire gas elsewhere through the interconnector. If people have the right to compete to bring gas through the interconnector, we will need to introduce a greater level of competition into the gas industry. If we limit the number of companies which can access the pipeline to those who will consume more than nine million therms, then we will not introduce any degree of competition given the size of our economy and the consumption levels of the major companies. That level may be all right in other European countries but it will not have any effect here. It will act as a major deterrent against the possibility of private investment in power generation, through the construction of private gas power stations, if they must achieve a certain level of consumption which determines the level at which they can come in.
Combined heat and power proposals will be restricted because we know from experience that the amount consumed is small vis-�-vis the ESB, which will be at a disadvantage if it does not have the right to access this. By having competition, it can buy from BGÉ which will buy in bulk, which will have a greater customer base and which, in most cases, will be able to quote a better price. However, if BGÉ does not have any competition, there will be no incentive to keep the price as low as possible. The taxpayer may benefit from a transfer of profits into the Exchequer if and when that happens.
We are obliged under Internal Market rules to bring greater efficiency into the operation of our major national utilities and to achieve that we are obliged to introduce competition, which we are pitching at a very high level. The only argument I would accept from the Minister is that the State, through BGÉ, has made a considerable investment in building the interconnector. Until that debt is cleared, BGÉ should be afforded some protection against the intensive competition it would face if the levels were lowered to those in the UK. Even one million therms might introduce extra competition at a time when it is still vulnerable.
The Minister does not want to comment on what might happen with a Government in five years. At that point, if the BGÉ debt is cleared, the Government would be in a position to open up access to the interconnector by reducing the levels. I hope that will happen but we cannot argue about the future — we are dealing with the legislation before us. To ensure that a good degree of competition is introduced, the level at which the Minister is pitching it is too high. I will press my amendment that it be reduced to one million therms.
I appreciate the Minister's comments. Obviously, contracts have been entered into and if they are not met, there will be extreme financial burdens on BGÉ. If we do what Deputy Molloy suggested it will put serious pressure on anyone who enters into a long-term contract. Do we have any commitment to Marathon if it discovers further gas resources? Can we be guaranteed that at the end of the five year period we will be able to get gas at European or interconnector prices so that we do not prop up individuals rather than give the benefit to the people?
The Minister made it clear why he wants to retain this level. He said 100 per cent of gas will come through the interconnector in five years. Is that on a strict sliding scale from the 20 per cent which is coming through at present? We should be able to see the benefit of the lower prices from the interconnector now rather than in five years.
I endorse what has been said about Marathon's contribution. It is an outstanding international company with a positive attitude and it is important that we acknowledge its contribution. I hope the exploration programme around the coast will provide a positive return in the future as it is in our interests that it happens. The Minister is worried about protecting BGÉ's debt; he wants to ensure that it can move forward and that its debts are eliminated. There is nothing wrong with that.
The Minister also said that, from all the information available to him his Department, from BGÉ and other sources, it is likely that in the future BGÉ will be asked to act as the honest broker on behalf of many small consumers requiring gas supplies. That is an acknowledgement of the expertise of BGÉ, with which I concur. There will always be people with initiative who may see other options, but BGÉ will have a key role to play. I do not know why the Minister is so worried about BGÉ. It is a company with expertise and I commend it on its tremendous contribution in handling a product which is vital to our economy.
We cannot allow legislation to pass which includes the figure of nine million therms. We do not know when it will be changed; it will depend on the initiative of a Minister, Department and Government, either together or separately. We must give some signal that we will not pitch this figure at a level which is an agreed European norm but which is not in the interest of the population and the economy of this small island and the initiative of many indigenous people who are prepared to make a personal contribution to the nation. We must ensure the opportunity exists and I ask the Minister to indicate whether he is prepared to give an acceptable figure which would allow us to review the position in terms of our amendments.
Deputies Molloy and Treacy mentioned Marathon, which is an efficient international company. However, we were both lucky that, in the first well it drilled in our shores to a depth of 8,000 feet, it found gas at 2,500 feet. It has drilled many wells since but has not found any further commercial levels of gas. Deputies are aware that Marathon is first and foremost a commercial company. It is not some ragged trousered philanthropist giving a present to Ireland. While its operation is efficient, it also drives a hard bargain.
It would not be in business if it did not do so.
Kinsale was good for the Irish people but it was also good for Marathon. The officials in the Department and the previous Minister also drove a hard bargain on behalf of the people and achieved the best possible outcome. There is no question of the company being kind to Ireland. It is efficient and it was very much in our interest that it found the gasfield at that time because it made it possible to do certain things. However, mistakes were also made in terms of the gas that was found in 1976.
By a Labour Minister.
I cannot remember which Minister was in power——
He is still around.
——in the Department of Energy. I still consider the agreement with NET was not the best use of a large proportion of the natural gas which was found.
My amendment proposes a huge step forward towards allowing 75 per cent of the country's total requirements to be available through third party access. The nine million therms will allow that level of access. The new fledgling industry has made a huge investment in terms of infrastructure, part of which remains to be paid for, and the Opposition Deputies acknowledged it needs a breathing space over the next five years to enable it to put the debt in order and to ensure it is manageable in a commercial sense.
We are now importing gas through the interconnector and this amount will increase, as Deputies acknowledged. We will also have access to gas not just from Britain but, in the near future, from as far afield as the Middle East, Russia and Norway, from interconnectors across Europe. This gas and that market will be available and I pay tribute to those who decided, particularly Deputy Molloy as Minister, to put the interconnector in place. However, the private sector did not put the interconnector in place; it would not take the risks. The State and the State company took the risk and it was a good and proper decision. The private sector now appears, with undue haste, to want to grab the benefits, as it perceives them, of third party access. It wants to move rapidly in that direction.
There is no question that future private power generators will use less than nine million therms. Any viable station would be way above that level. Combined heat and power has no difficulty whatsoever in terms of competition. CHP was highly successful in the recent round of alternative energy requirements.
Deputy Crawford raised the point of future gas requirements. There are no commitments on our part or the company's to any future finds. It may decide to export the gas. Marathon did not have that option when it found gas. It had to either sell the gas to Ireland or keep it. As I said earlier, it sold the gas to Ireland but it did not give it away. If further gas is found, it would be of immediate benefit under the regime put in place during Deputy Molloy's time in office. I hope the committee will accept the amendment.
Will the Minister indicate his thinking on a figure which would be acceptable to him and his Department and satisfactory to the State and to us?
Nine million therms at 25 million cubic metres of gas annually for one customer on one site will allow TPA for 75 per cent of the total. If we go beyond that figure, BGÉ will be placed in danger and the Deputies and the committee do not wish to do that. It is a relatively young company which has done much for Ireland. Nobody wants to enforce a level of gas TPA now which would put it at risk. The Deputies may not be aware of the risk the company would face if anything below the nine million figure was accepted.
The risk is not that obvious.
There has been much discussion of this matter, although I understand and fully appreciate the importance of the amendments. However, I must put the amendments at some time and we have almost reached that point. If Members have any comments which have not already been made, they should make them now. If not I will put the amendments.
The Minister said the nine million therms level will mean that 75 per cent of the requirements could be purchased outside. If the Opposition's amendment was accepted, what would be the percentage?
About 80 per cent.
The Minister's attitude is a little disingenuous. If Marathon had not discovered the gas, BGÉ would not be necessary and we would not be discussing this situation.
We could import it.
The interconnector would have to be put in place and it is in place. It is the responsibility of the State and Government to provide a climate for investment in Ireland to take account of our demographics and geographics and the small level of demand and disadvantages which exists in comparison to the UK in particular or Europe. The State has done this and we have a duty to ensure there is equality of opportunity for those who require it to use the facility the State has put in place. This responsibility is placed on the State and there is no point making the investment unless the opportunity is provided to those the State is supposed to serve. This equality should exist.
I am prepared to be reasonably generous in my attitude to my amendment if the Minister will indicate whether he will consider bringing forward an amendment on Report Stage which might include the figure of two million therms.
If I bring forward an amendment on Report Stage it will be for nine million therms.
On that basis, I intend to withdraw my amendment in favour of Deputy Molloy's amendment.
We will come to that in due course.
It is clear from what the Minister says that were it not for the fact that an EU draft directive on gas included a figure of nine million therms the figure here would not be nine million therms. The Minister would seek to have an even higher figure. The directive states that individual countries can introduce a lower figure than the figure indicated as a maximum.
I have detected nothing in the Minister's replies that would indicate his anxiety to ensure industry has access to the pipeline for the purposes of seeking to enter into separate contracts for the purchase of gas rather than being tied to the monopoly position of Bord Gáis Éireann. We are excluding the opportunity for competition which will help industry and help to force down prices generally. Sticking to the nine million figure without any indication of a preparedness to consider a lower figure makes it necessary for me to press my amendment in order to highlight that industry will be denied access to the pipeline under this legislation for a long time.
We can only deal with the Bill before us. We are told it is to be further amended with a figure of nine million written in. I oppose the Minister's amendment and press my amendment.
I move amendment No. 1 to amendment No. 2:
In the third, fourth and fifth lines of subsection (1) of the new section 10A inserted into the Act of 1976 by the new section proposed to be inserted in the Bill by amendment 2, to delete "the minimum quantity of gas prescribed for the purposes of this section" and substitute "one million therms per annum or any such lower amount as may be set down in regulations".
Is the amendment being pressed?
Yes.
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Tá |
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Fox, Mildred. Foley, Denis. Kitt, Michael. Molloy, Robert. |
Nolan, M. J. O'Keeffe, Ned. O'Rourke, Mary. Power, Seán. Treacy, Noel. |
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Níl |
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Bell, Michael. |
Fitzgerald, Brian. |
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Boylan, Andrew. |
O'Keeffe, Jim. |
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Broughan, Tommy. |
Ring, Michael. |
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Byrne, Eric. |
Ryan Seán. |
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Crawford, Seymour. |
Sheehan, P. J. |
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Finucane, Michael. |
Stagg, Emmet. |
As there are fewer than 22 Members present, I am obliged to wait for eight minutes or until such time as 22 Members are present.
As eight minutes have elapsed, the division will now be taken on the question "That the new section be there inserted".
The Select Committee divided: Tá, 12; Níl,6.
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Tá |
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Bell, Michael. |
Fitzgerald, Brian. |
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Boylan, Andrew. |
O'Keeffe, Jim. |
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Broughan, Tommy. |
Ring Michael. |
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Byrne, Eric. |
Ryan, Seán. |
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Crawford, Seymour. |
Sheehan, P. J. |
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Finucane, Michael. |
Stagg, Emmet. |
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Níl |
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Cullen, Martin. |
Molloy, Robert. |
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Fitzgerald, Liam. |
Nolan, M. J. |
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Foley, Denis. |
Power, Seán. |
Before we go any further, I wish to protest in the highest fashion on behalf of myself and two Members of the Select Committee who were locked out and who informed me that they were not given written notice of this meeting.
I must rule that out of order as the Standing Orders — which I read out — provide that we wait for eight minutes or until such time as 22 Members are present. I waited eight minutes and the Deputy was not present. I am obliged to close the doors when the vote is being taken, as would happen in the Dáil Chamber.
The man immediately in front of me got through the door.
I reject that totally.
Can you confirm whether written notice was given to Members of the Select Committee?
Amendment 2a will not be moved as it has been substituted by amendments No. 1 and 2 to amendment No. 2, which was on the first white list of additional amendments dated 29 November 1995. Amendment No. 3 in the name of the Minister is related to amendment No. 24 and both will be taken together by agreement.
On a point of order, what are the arrangements in regard to this sitting? It is now after 1 p.m. Is it proposed to adjourn this meeting?
We will suspend the sitting now and resume at 2.30 p.m.
Amendment No. 24 is related to amendment No. 3 and both may be discussed together.
I move amendment No. 3:
In page 5, between lines 21 and 22, to insert the following subsection:
(1) Section 2 of the Act of 1976 is hereby amended by the substitution of the following definition for the definition of foreshore:
foreshore has the meaning assigned to it by section 1 of the Foreshore Act, 1933;...
These amendments relate to foreshore. Amendment No. 3 is a technical amendment of the Gas Act, 1976, which will, for reasons of consistency, bring the definition of foreshore in that Act into line with that of the Foreshore Act, 1933. The definition in the 1976 Act is currently narrower than that in the Foreshore Act. Amendment No. 24 will insert a new section into the Bill clarifying for the avoidance of doubt that the gas, petroleum and other minerals development Acts do not prejudice the provisional Foreshore Acts. The operation of the latter Acts is not, therefore, affected by the other Acts referred to.
Do we require a quorum for recommencing a meeting like this?
No. We only need a quorum at the start of the meeting.
Will we finish the Bill today? I understand there is a problem with accommodation.
Yes. Two committees have booked the same room. The Select Committee on Legislation and Security has priority but, apparently, an arrangement was made for RTE to cover the other committee and we are currently trying to sort out the problem.
At what time is the other committee meeting?
At 3 p.m.
Therefore, are we working until 3 p.m.?
I will continue until another arrangement is made. I want to try to complete this Bill today, if possible. We are trying to negotiate accommodation and we will continue until we can make alternative arrangements.
Since the Chairman would be more au fait with the rules of the committees will he say if there is a provision that allows a Member to ask for a quorum?
No quorum is required for the resumption of a meeting.
If there is nobody but the Chairman and the Minister present, is the Chairman saying the Bill can be passed?
Yes. It is the responsibility of Members, not the Chairman, to be present. Convenors on both the Government and Opposition sides are responsible for the activities of Members. It is not my function.
I would then like to draw the attention of the meeting to the fact that no Members are present.
That was said already. The Deputy's point is noted. It is not my responsibility.
On designated areas under the Continental Shelf Act, 1968, and the orders made thereunder, what procedure is followed in the making of those orders? Where can we gain access to them and are there any changes proposed in the immediate future?
There are no immediate changes proposed.
What is the procedure for making the orders?
They are made under the Continental Shelf Act, 1968. There is no change in the procedures used.
In regard to our 12 mile territorial limit, the designated area of the continental shelf for Ireland extends up to 500 miles from our west coast in some places and consideration has been given to further extensions. Is the Minister stating that no extension is currently under consideration?
This amendment is a technical one to bring the definition of a number of Bills in line with each other so that there will be consistency.
I am only asking for information. I know it is secondary to the amendment.
This amendment is only giving consistency to the definition under a number of Acts where an inconsistency existed previously.
Is the Minister considering any further extensions of that designated area?
No.
We are on amendment No. 3 to section 2 in the name of the Minister. Amendments Nos. 3 and 24 are being taken together. We have already dealt with that and we are now dealing with the section.
I wanted an opportunity to intervene.
I am on amendment No. 3 on page 4. The amendment is already agreed. We are now putting the section as amended. The question is: "That section 2, as amended, stand part of the Bill". Is that agreed?
No. I want to ask a question before we agree to it.
Ask the question.
The new section 2 provides:
The Minister may, from time to time, give the Board such general directives concerning the transmission on behalf of another person by the Board of gas through pipelines under its control as he considers appropriate (other than as respects the pricing policy of the Board in relation to that matter).
Can the Minister explain who the other person might be and what this subsection intends to do?
The other person would be somebody who is getting third party access.
Is the pricing policy specific to the board or has the Minister or the Department any role in that regard?
The Minister has a role in general policy issues; it might not be specific to a particular case. The Minister gives general directives to BGE and that will be done subsequent to the Act.
The table in section 2 states:
A person, other than the Board, shall not, without giving previous and reasonable notice to the Minister, construct or operate a pipeline on, over or under the surface of land or of any sea bed that is situate in the territorial seas of the State or a designated area (within the meaning of the Continental Shelf Act, 1968).
That seems to imply that a person other than BGE who wishes to lay a pipeline would have to give notice to the Minister of their intention. It does not state that they would have to have the Minister's approval. Can the Minister explain that?
That is correct. Section 40 of the Gas Act, 1976, provides that persons other than Bord Gáis Éireann cannot construct or operate a gas pipeline on land without giving prior and reasonable notice to the Minister. The Minister may attach conditions to the construction or operation of such a pipeline and such conditions shall be complied with. As underwater gas pipelines are now part of the international gas infrastructure, section 2 of this Bill extends the provisions of section 40 of the 1976 Act to cover Irish territorial waters or a designated area within the meaning of that phrase under the Continental Shelf Act, 1968. There are no proposals before the Minister for the provision of an underwater pipeline at present. The only one built to date is the Ireland/UK natural gas interconnector pipeline provided by BGE from Moffat in Scotland to Loughshinny in north County Dublin.
I am aware of that. I am asking whether the section requires the third party to have the Minister's authorisation for laying a pipeline. The 1976 Act and this amendment simply require that they give reasonable notice to the Minister; they do not provide that the Minister's permission or authority is required. The Minister can impose conditions but if the Minister's authorisation is not required there appears to be something missing.
There is nothing missing. They need not apply to the Minister for permission.
They do not have to get the Minister's permission to lay a pipeline under territorial waters or on the Continental Shelf?
Under the surface or on land, the same situation pertains.
If they do not require the Minister's permission, how can he apply conditions?
When the conditions are met the Minister cannot stop them doing the job. However, he can stop BGE.
Under this section any third party or country — for example, the Norwegians — who wished to bring an oil pipeline into Ireland can do so without the permission of the State?
That is correct.
That is a strange situation.
Chairman——
We are on the section and not dealing with amendments. The Deputy has already asked a question. If the Deputy wishes to say something on the section, that is fine but I cannot leave it open. Does he wish to make a further point?
I cannot understand why there is difficulty about allowing us in.
I know the Deputy is not familiar with the procedure but I am the Chairman and I am responsible for it. I can allow a Member in only once on the section having dealt with the amendments.
I thought that was the case on Report Stage.
Make your point or I will put the section.
Very briefly, Sir, as I would not like to upset you. Is the Minister saying that any individual, corporate or otherwise, has the right to lay a pipeline in the sea if he meets certain conditions?
Yes.
Surely the law of the sea or legislation in that context must take control? Somebody must have to give permission so that navigation and so forth will be protected.
All legislation, including that to which the Deputy referred, would have to be complied with before the conditions are met.
Amendment No. 3a has already been discussed with amendment No. 2. Is the Deputy pressing the amendment?
NEW SECTION.
I move amendment No. 3a:
In page 5, before section 3, to insert the following new section:
"3. — All third party access to all energy interconnectors will be the full responsibility of the national energy regulator who shall decide—
(a) volumes, pricing, and all other detail, etc.,
(b) that all appeals against decisions by the national energy regulator shall be made to the Minister for Transport, Energy and Communications, whose decisions shall be final in all matters.".
We had some discussion on this amendment this morning——
We discussed the amendment with the previous group of amendments and the only question before us is whether the Deputy wishes to press or withdraw the amendment.
With respect, Chairman,——
The Deputy seems to be consistently trying to tell me how to do the job of Chairman. It is the Deputy who does not understand the procedure.
I will leave that for others to decide.
The Deputy is misreading the procedure. He is not entitled to speak on the amendment because it has already been discussed.
I have been involved with legislation from both sides of the House for thirteen and a half years.
You obviously do not know much about the committee system.
I pioneered the first committees that brought legislation through the House for 15 months so I have a fair idea.
I am telling you what the Standing Orders provide.
I never saw a committee operating in a way that a Deputy who had an amendment down in his name was not asked to move it.
I am telling you what the Standing Orders provide.
I was never at a committee where a Deputy was not asked to move an amendment in his name.
The amendment was taken with a group of amendments which have already been dealt with. I now want to know if you are pressing the amendment.
You may take the amendments together, but you must ask the Member in whose name the amendment is tabled to move it and that gives me the right to discuss it.
It has already been discussed with the group of amendments.
This has not been discussed with the group of amendments.
Deputy Treacy is proposing to insert a new section which is important because it deals with an energy regulator. Surely that could not have been discussed with the previous section unless it was agreed? The proposer is not aware of it having been agreed and there were only two other people in the room at the time.
With due respect, Deputy Molloy, as regards amendment No. 2 to section 2, I read out the proposal twice and it was agreed.
I was not here, but Deputy Treacy says he did not agree to it.
He did not put forward any objections and it was agreed.
When did that happen?
The Chairman may have prematurely made an assumption that it was agreed.
This happened during our discussion on amendment No. 2 to section 2.
Are you talking about this morning or this afternoon?
I am talking about this morning.
I cannot remember that happening.
This happened at least an hour and a half into the meeting. Amendment No. 3a has already been discussed with a group of amendments. I ask the Deputy to either move it or withdraw it.
We should continue with the business before us. I was handed the group of amendments this morning and I queried some of the numbers the Chairman read out. However, we will not get anywhere if there is an attempt to bundle us along.
I am not doing that. I allowed an extensive discussion on the group of amendments this morning and we then disposed of them.
This matter was not discussed this morning.
We did not discuss this matter this morning.
Amendment No. 3a was included in the group of amendments taken with amendment No. 2 in the name of the Minister. I read it into the record twice.
The Chairman is attempting to railroad this business through before 3 o'clock.
That is wrong.
There should be some accommodation for the Members who want to make a positive input. We could also be stroppy and call votes so that the Bill would fall before 3 o'clock. The Chairman should accommodate the Members.
I am usually too accommodating and Members take advantage of that. If I kept to the rules, much of what happened here this morning would not have happened. I am not trying to railroad this Bill through and I do not wish to complete it before 3 o'clock. The only reason we cannot continue beyond that time is because another committee has already booked the room for 3 o'clock. We are trying to negotiate that position.
Is there an update on that position?
I am awaiting a decision from the Whips.
Was there any discussion this morning on an energy regulator?
No. It is a matter for the Members concerned in whose names the amendments are tabled to refer to it.
Surely a chairperson of a meeting has discretion in relation to matters where there is agreement? I propose that you allow a discussion on this amendment which has not been discussed. If you have discretion, I ask you to allow a discussion on this amendment with the agreement of all the Members.
I do not have any discretion because the amendment has already been discussed. To follow the Deputy's procedure would mean that every time a group of amendments is discussed together there would have to be a second discussion on each individual amendment. That would not be procedurally correct.
It is most unsatisfactory that lists of amendments taken together are handed to Members after the meeting has started. I was not aware that this amendment was included until afterwards, but I thought we would have an opportunity to discuss it now. However, the Chairman will not allow a discussion on it because he claims it was agreed to take it with the earlier amendments.
I have been more than fair. If what had happened last week in the Dáil happened here, there would not have been an adjournment on Committee Stage. The Ceann Comhairle would have proceeded with it and I am obliged to proceed on the same basis. The amendment has already been discussed with a group of amendments.
I would like to hear the Minister's response to my amendment No. 3a.
Amendment No. 3a provides that all issues relating to third party access to the Ireland UK gas interconnector would be the responsibility of the energy regulator. The amendment proposes that the energy regulator would decide the volumes, pricing and all other details. Appeals on the decision by the energy regulator would be made to the Minister. As Deputies are aware, the Government is committed to the establishment of an independent energy regulator. Amendment No. 2 in my name provides that in the event of a dispute between BGÉ and the applicant for TPA as to the terms or conditions, the matter may be referred to the Minister. The Minister or his nominee will then determine the dispute. When a new regulator is appointed over the energy sector, the issue of regulation of the sector will be handled by the regulatory authority. The more appropriate context in which to consider the matter of appeals from the decision of the regulator would be the legislation establishing that office.
I hope the Deputy is satisfied that what we are doing is a temporary measure to cover the period of time between now and the appointment of an energy regulator. At that point this role will be handed over to the energy regulator, as the Deputy suggested would be desirable and I agree with him.
I am surprised at this information which puts the cart before the horse. Could the Minister give us any indication of when the legislation for the appointment of a national energy regulator will be published, when he may be appointed and what role he will play?
The issue of regulation of utilities is under examination in my Department. It is a complex issue which requires more than one section in an Act. I hope the Dáil will have an opportunity to discuss the regulations in the next few months.
What areas of responsibility does the Minister expect the energy regulator will have?
I am not in a position to speculate about future legislation.
Would the Minister not agree that it would have been appropriate to have had the legislation for an energy regulator in place before proceeding with the third party access proposals? As the legislation is now structured, the Minister has the power to decide who can connect to the interconnector. He can exclude all medium sized companies under the Act and he can adjudicate on any applications to BGÉ. There is no independent person to make the decisions. It has always been considered an essential part of the establishment of the internal energy market with third party access that there would be a body independent of the State company, the Minister and the applicant companies which would have a role to play as regards pricing and various other conditions in relation to the granting of rights of access and prices to be charged. This is important in the electricity industry and in the gas industry. The Minister holds all the powers. He told us that legislation will be introduced to provide for the establishment or appointment of a regulator at a later date.
We are giving the Department and the Minister considerable powers which could be used to frustrate the development of the internal energy market.
I do not envisage a situation where a Minister would use powers to frustrate the development of industry or the internal energy market.
The Minister already proposes to limit it to nine million therms.
In the ideal world it might have been desirable to have not only an energy regulator, but a utilities regulator in place before this other legislation. However, we do not live in the ideal world and the best thing we can do is to prepare for that in these sections. Because of matters outside my control, including what is happening at EU level, we cannot determine what the regulator's role will be until the EU directives are finalised.
In the meantime, it behoves us to get ready for that, hence this Bill. The Minister will be the temporary regulator to whom appeals between parties will be referred. That power will be passed on to the regulator of utilities or of energy when that legislation is ready, which will be in the near future. The Deputy should not say Ministers can do what they like. They are required to act responsibly in all legislation and this and other Ministers are bound by that.
That is the point I made. This legislation does not bind the Minister for Transport, Energy and Communications tightly as regards these matters; it leaves it very open. A final arbiter can be used in all matters. The Minister seemed to imply that an EU directive or legislation was necessary before he could proceed with legislation to appoint an energy regulator. I do not believe that is correct. Other countries have gone ahead and appointed regulators under their domestic legislation. Surely, it is within our remit to do that irrespective of the internal energy market and EU requirements.
That would be putting the cart before the horse; perhaps other countries have done so. It is highly desirable to wait for the detailed EU directives on energy before we proceed with that core issue. There is a raft of issues to be considered as regards the regulator, including the appointment method, whether it will be a commission or one person, funding, independence and the appeals system. It is not possible to include a regulator in the amendment proposed.
It is indicative of the Minister's attitude to the internal energy market that he is proceeding in this way and it is regrettable.
The Deputy is wrong. It is not an indication of my attitude to the internal market. We are talking about pragmatism and what can be done now. I accept the point that in the ideal world it might be better to have the utilities regulator in place first, but that is not possible as the legislation is needed now.
The Minister's view is that other countries which have proceeded along these lines are all out of step and that he is the only one who is doing things correctly.
There was no obligation on me to put down this amendment on TPA but I saw it as the right thing to do.
The Minister has put it down in such a way that it will be restrictive and he will have total control over the matter as the final arbiter. The internal energy market aspirations of the EU have not been fully fulfilled in the terms of this Bill as presented. This merely tips the hat in the direction of internal market requirements and third party access.
That is nonsense. Some 75 per cent of the gas market is available and that is not a tip of the hat. We did away with tipping hats a long time and I hope the Deputy has not started it again.
These are two State companies and the private sector will have little opportunity to gain.
Why did not the private sector build the interconnector if it wanted it?
We will adjourn on amendment No. 3a. There are two alternatives as regards when we can meet again because the Select Committee must meet in a televised room and, therefore, we are limited. We could meet this evening at 5.30 p.m. or on Friday.
Can we meet next week?
At this stage, we do not know what rooms will be available.
Can we meet on Tuesday as opposed to Wednesday because that is the day of the match?
Can we meet at 5.30 p.m. this evening?
No, because I must be in the Dáil for a debate.
We could meet at 7 p.m. this evening.
What about Thursday week?
I will be at the Energy Council in Brussels. I will get the EU Directive cleared so we can make progress on that.
Now the Minister can see why I was trying to make progress today. We have three Estimates to deal with and two Bills before Christmas.
There is a section of this Bill which allows payment to be made to Bord na Móna and I am anxious that the committee deals with it to allow it to go through the other Stages so that payment can be made in 1995.
I will communicate with the Minister when we establish the days the facilities will be available. I thought we had this room for the day. We could meet at 11 a.m. on Tuesday week.
I was anxious to complete the Bill this week so it could go before the Seanad next week.
This Bill has been lying around the Department since 1992.
Is Tuesday at 11 a.m. agreed?
If we do not meet until Tuesday next, this Bill will not be passed in 1995.
Is there any reason we cannot proceed tomorrow?
I will be tied up with other business tomorrow. Next Tuesday is the only time which suits.
Is Tuesday at 11 a.m. agreed? Agreed.
The Select Committee adjourned at 3.10 p.m. until 11 a.m. on Tuesday, 12 December 1995.
