Electricity Regulation Bill, 1998: Committee Stage (Resumed).
I move amendment No. 19:
In page 8, between lines 3 and 4, to insert the following subsection:
"(3) A reference to any enactment shall be construed as a reference to that enactment as amended, adapted or extended by or under any subsequent enactment, including this Act.".
This is a technical amendment which provides that any reference in the Bill to an Act is to be interpreted as a reference to that Act as amended by any subsequent Act.
Amendment agreed to.
Amendments Nos. 20 and 22 are related and may be discussed together by agreement. However, as Deputy Sargent is not present, his amendments Nos. 20 and 21 cannot be moved, so we will proceed to amendment No. 22.
In defence of Deputy Sargent, while it may look bad that someone is not here to move the amendments, he and I were in a similar position in that the Taoiseach was answering questions on Northern Ireland and we came out of the House immediately they were over. He may have had other things to do in the meantime. It illustrates the difficulty I have experienced on previous occasions when Taoiseach's questions are taken at the time a committee is meeting.
We recognise the difficulty for Members when the Taoiseach is answering questions at the same time as a committee meeting.
Amendments Nos. 20 and 21 not moved.
Before the Minister moves the next amendment, can we have some clarification about what was decided at the last meeting about combined heat and power? I understand the Minister or her officials are to meet with us. I want to clarify what was decided about the definition of CHP.
I have asked if the meeting has been held. Something may be concluded which could be linked with that subject. The officials are available to meet.
Is it the Minister's intention to include a definition of CHP in section 2?
I do not know until we meet to figure it out. That is the intention of the meeting.
Will the Minister be in attendance rather than administrative——
I will be there. I have no difficulty with that.
I wished to clarify that. I understood the meeting was to take place between Committee and Report Stages.
Yes, but there might be more than one issue to consider.
Amendments Nos. 59 and 103 in the name of the Minister deal with the same issues. People have contacted me since last week's discussions to say the meat of the matter will be decided in amendment No. 103.
Amendment No. 20 cannot be moved but it can be discussed with amendment No. 22.
I move amendment No. 22:
In page 8, subsection (3), line 5, after "energy" to insert "by the addition of further renewable or alternative sources of energy".
Amendment No. 20 seeks to require that a change in the list should only be made in prescribed circumstances. This would mean the Minister would have to make regulations setting out the circumstances in which the list could be changed. The amendment gives no indication what those circumstances might be.
Deputy Sargent is now present. We understand the pressures you were under which meant you could not be here in time to move your amendments. That point was made on your behalf by Deputy Currie. We have moved on to amendment No. 22 but we can discuss amendment No. 20.
I apologise for not being on time. Amendment No. 20 relates to the Minister from time to time by order amending the definition of renewable or alternative sources of energy. It seeks to add the term "in prescribed circumstances". There was considerable debate on this issue at the last meeting. The definition of renewable or alternative energy, which would have included "sustainable" had my amendment No. 21 been moved and accepted, needs to be defined effectively because it is used for all manner of lobbying and promotional purposes. The amendment requests the Minister to define the prescribed circumstances in which he or she would amend the definition of renewable or alternative sources of energy. That is necessary given that there is such pressure on the Minister to take into account various viewpoints and definitions which are often motivated by vested interests.
They are obviously motivated. That is their job.
Yes, but we must try to establish ground rules. The Minister should address that.
The Deputy's amendment seeks to require that any changes should only be made in prescribed circumstances. That would mean the Minister would have to make regulations setting out the circumstances in which he or she would change the list, but the Deputy does not give any indication in his amendment what those circumstances might be. Any order made by the Minister would have to be laid before both Houses in the normal fashion.
Amendment No. 22 seeks to limit the Minister's power to change the list of renewable or alternative forms of energy to a power to add further types to the list. It would not be possible to take away any of the types already listed in the Bill. The Attorney General's office says this is the best approach - not to remove anything in the definition but to add to it if necessary, if there are discoveries of new types of fuels and energy. Any changes would be laid before the Houses of the Oireachtas. When the Deputy uses the term "prescribed circumstances", he does not define it and that leads to difficulty.
I accept the Minister takes account in her amendment of how times will change and different technologies may come on stream. That is fair enough and I accept it. However, I tabled the amendment, not for the purposes of going into detail, but to see if the Minister would find it useful. I suggested that there might be prescribed circumstances to which she could refer. If not, I will not press the issue.
It is not so much there might not be prescribed circumstances but that the Deputy did not define what those were and it would be difficult, therefore, to include the amendment in the Bill. We have provided that changes can be made where new types of technology provide new alternative sources of energy and such changes would be laid before both Houses of the Oireachtas.
The subsection does not make sense with the inclusion of amendment No. 22. Section 2(3) would read:
The Minister may from time to time by order amend the definition of renewable or alternative sources of energy by the addition of further renewable or alternative sources of energy.
That does not make sense. The subsection seeks to give the Minister power to change the definition of a renewable or alternative source of energy. Adding others does not change the definition. Am I reading the subsection wrongly? Does the Minister understand the point I make? This subsection was intended to give the Minister power to change the definition of a renewable or alternative energy source. The phrase "By the addition of further renewable or alternative sources of energy" is stuck on like an appendage. How can a definition be changed by adding on new types? That would not change anything.
The definition incorporates the entire definition, which begins on line 11, page 7.
At the bottom of the definitions the Bill states the Minister can change them.
No, it states the Minister may, from time to time, by order amend the definition of renewable or alternative sources of energy by the addition of further renewable or alternative sources of energy. That has to be reworded, as it does not make sense.
Take, for example, wind energy, for which there is a definition, how can that be amended by adding solar?
Of course it is, but how can one change the definition in the Bill by adding on new sources that will come on the market as a result of new technology?
I am sure advances in technology will throw up new energy sources.
That is what the amendment is intended to deal with.
Is Deputy Stagg taking issue with the wording of this?
It gives the Minister power to change the definition outlined in the Bill and the power to add new technologies.
There is no provision for deleting anything, I only intend to change it by addition. If the occasion arises, this will involve only addition.
I support the Minister adding new technologies. The Minister has the power to do so by order, according to the Bill. The Minster is also seeking the power to amend the definition of alternative or renewable sources of energy.
In its totality and by addition.
I presume the Minister wants the power to amend the definition if that is desirable.
Yes, but the definition is the totality of what is already there. If an additional source is found it can be added.
Would it not, therefore, be much simpler to state "and the Minister may add additional or further renewable or alternative energy sources as they arise"?
We may think we are legal persons with the right words, but I am assured by the Office of the Attorney General that this is the way to achieve what we want, which is also what Deputy Stagg wants.
I will accept the Minister's point. Why is the proposal to give the Minister the power to change definitions by order necessary? What is its purpose and in what circumstances is it likely to be used? If the CHP lobby gets very strong - it is strong enough at present - could it pressurise the Minister into changing the definition of CHP we are to be given so that one would need only 2 per cent heat?
How is it another matter?
We argued that last week.
The Minister told us today she would insert a definition of CHP.
Will that be one of the definitions?
No, CHP is a separate definition. What is listed here are wind, hydro and biomass; solar and wave power as renewable or alternatives are provided for later.
Section 2 contains the meaning of various items referred to in the Bill. I presume the Minister will include the definition of CHP in this.
That is later. If the Deputy remembers the debate on CHP last week - I think we voted on it——
Are they to be renewable, alternative and CHP?
CHP is not renewable or alternative.
We do not need to have the argument again. My point is that the Minister is seeking the power to change definitions in the Bill. We have been given a long list of definitions——
I said that, but the Deputy does not accept it. It is the definition of renewables and-or alternatives
I have no problem with that. We have dealt with it. As it stands, the section seeks the power to amend the definition of renewable or alternative sources of energy.
By "amend" I mean to add, not to take away.
If we are talking about amending the list of alternative or renewable sources of energy, we are adding to it, and that is what the amendment proposes. Amending the list would be clearer than amending the definition; we would then know the list was amended.
I see the Deputy's point. I am told the list is the definition and one will to add to it when a new form of alternative or renewable energy is developed.
That means the Minister would not have the power to change any of the existing definitional powers.
I would have the power to add another source if I included my amendment.
I am glad of that interpretation. This should be clarified.
Does Deputy Stagg feel the wording is not good?
I do not, but the Minister should examine if it can be made clearer.
The Office of the Attorney General has told us that this is the proper wording. We are allad idem on what should be done, but I am told the Office of the Attorney General has recommended this amendment.
Arising from this discussion, perhaps the Minister could check with the Attorney General to see if all she has is the power to add——
Does the Deputy mean to add to the existing list?. That is what I believe it gives the Minister the power to do. However, I will come back with clarification.
Amendment agreed to.
Question proposed: "That section 2, as amended, stand part of the Bill."
I draw the Minister's attention to line 33, page 6, where it is stated that the final customer means a person being supplied with electricity at a single premises for consumption on those premises. Subsequently, line 21, page 7 states that a single premises means one or more buildings or structures occupied or used by a person or each building or structure adjacent or contiguous to the other building or structure. In defining a customer who would be eligible for electricity from a source other than the ESB, is it possible, under the definitions of single premises and final customer, to aggregate one's purchasing power? As I understand it, to get the 28 per cent EU ration, a customer will be defined as someone needing more than four gigawatt hours. Plenty of people buy more than four gigawatt hours but do not do so at a single premises. I am thinking of hospitals, which have a single purchaser within a health board group, State Departments and companies, the banks and retail chains under direct ownership or franchise. If we are going to broaden it beyond 320 of the wealthiest multinationals, some provision for aggregation would make sense. This Act will define how the regulator will be able to interpret this. I did not table an amendment on the matter because I was not clear about what the law meant. Will the Minister clarify whether it is the very narrow definition of a stand alone building or structure which is involved here? For example, will all Super Valu supermarkets or all Eastern Health Board purchasers of electricity be in a position to shop around or will be they be treated in the same way as householders and purchase electricity from the ESB?
As of now, a consumer is described as a customer on a single premises who consumes electricity on those premises rather than the aggregation strategy to which theDeputy referred where large groups or bodies could aggregate their usage and seek to enter into a competitive arena. It appears that a single applicant from a single site approach is more convenient from the point of view of assessing eligibility than the aggregation method. The Deputy suggested that it might be reasonable to state that all Super Valu outlets within Leinster could come together. Who would set the boundaries on this matter? Who would stipulate how far Super Valu outlets can go? Within the Eastern Health Board area there are major and minor hospitals, nursing homes and so on - how would boundaries be drawn in that regard? Although the assessment for eligibility may seem somewhat brisk, I believe it would be far easier to manage this on a single site rather than conglomerate site basis.
I thank the Minister for that clarification. I put it to her that this is not only a matter of convenience of administration but the most restrictive possible interpretation. Single purchasing is the norm when hospitals or retail operators buy products, such as cotton wool or eggs. We have often discussed Aer Lingus and the strategic alliance; purchasing power is one of the most effective synergies whether one is buying 100 aircraft from a particular alliance rather than five from Aer Lingus.
The point I am making is that purchasing power relates to volume.
By failing to leave this open to interpretation by the regulator, we are effectively imposing huge limits on competition. Would it not be preferable or possible to empower the regulator forbona fide aggregation purposes, particularly in the public sector? If a group of hospitals could save up to £1 million in electricity bills and invest the money instead in front line health care services, that would be a good thing.
Nobody would disagree with that. If we were to consider allowing the regulator to decide what constituted a bona fide aggregation, we would be treading on difficult territory from the point of view of the regulator's management role. It would be difficult to establish a stable, uniform pattern which could be replicated in different circumstances. I have not discussed this matter with anyone but that is my view.
I take the Deputy's point about hospitals and the capacity to save money. During my brief period in the Department of Health, we commenced a measure in regard to bulk buying in hospitals. The potential savings were quite amazing. However, I could envisage the Deputy's suggestion giving rise to disputes on what might constitute a bona fide aggregation. The single site/single application approach seems to be the most fair.
Under this definition only 320 customers will benefit from the first opening up, thereby creating the prospect of competition for Aughinish Alumina and other big multinationals but denying it to others who may be far more deserving of the its benefits. Will the Minister consider the question of single premises which would facilitate——
Not single premises, a combination of premises.
Yes, "single premises" as defined in line 21. I want to clarify whether, having raised this issue today, I am entitled to table an amendment on it on Report Stage.
Certainly. We will carry out further research in the meantime.
Four gigawatt hours is not something which any Tom, Dick or Harry can easily put together. Even if the definition is widened, this measure will not apply to people running light bulbs, no matter how many light bulbs they have. It may only result in another 100 customers or so being added. It will not change the world, although the ESB might argue it could. This could be delimited very clearly.
The word "delimiting" would pose difficulties. I could see people coming to the regulator with what they considered very estimable ideas and difficulties arising for him to adjudicate on them.
The purpose of this Bill is to open up the electricity market. We have decided on the tranche of the market which will be opened.
We have done that in the directive.
Yes, we are following the directive.
We are implementing the directive; 28 per cent is the amount specified - four gigawatt hours of usage on the single customer system gives you 28 per cent. If we add another category, we could go considerably beyond 28 per cent. Given the myriad possible combinations, we could reach 50 per cent. That is not the objective of the exercise. We have decided to introduce competition in stages. The ESB is a State company which needs to be eased into the market. Our investment in it and the jobs of its employees will be endangered if we go any further. We accepted that, argued for the 28 per cent at European level and achieved it. We have also agreed that alternative, renewable and CHP supplies will add to that 28 per cent. They should add at least 10 per cent to the figure at that stage. That will not be of benefit solely to multinationals, that section of the opening of the market will benefit everyone.
It is important that the definition of single premises was hammered out at European level. There was a lengthy debate.
One official gave a long list of the permutations through which companies which were not at all related could go through to find a link so they could get more than one premises. It was decided that the single premises system was the best form and I support that. I am not saying we should not go beyond 28 per cent. We have decided that is the present level and have decided in the directive what further steps will be taken after that.
The final customer is the person being supplied with electricity at a single premises. A "single premises" is defined as one or more building or structure occupied and used by a person where each building or structure is adjacent to or contiguous with the other building or structure. The point made by Deputy Yates specified hospitals in one of the health board areas. The buildings of the hospitals could benefit if they were treated as one customer for billing purposes. The buildings, however, are not adjacent to or contiguous with one another. The Minister made the point that it would be difficult for the regulator to make a decision on it because the buildings could be located in different areas in the health board area. While the regulator may encounter some difficulty, and while the buildings would not be adjacent to or contiguous with one another, nevertheless, the ownership rests with one group of people - the health board for the particular area. Deputy Yates rightly pointed out that there would be considerable savings which would be of benefit to patients. That is one example. There are many more for which strong cases could be made but it would be easy for the regulator in this instance to organise payment and billing like some of the multinationals.
What point is the Deputy making?
Buildings, while they are not contiguous with or adjacent to one another, can be treated as one as Deputy Yates pointed out.
Deputy Yates said that he will table an amendment.
I am puzzled by two things. In the discussion there is an assumption that competition will result in lower prices. There is absolutely no guarantee of that. There are many other examples where there is a great deal of competition. The price of housing did not get any cheaper because there was competition in the building industry.
There is universal demand for electricity. How would it benefit the citizens if they convince one part of the organisation which is State owned, such as the health boards or hospitals, to buy its electricity from some foreign electricity company? That will result in smaller profits for the ESB which will result in less money in the State coffers, meaning there will be less money to give to the hospitals. We would not gain by reducing the bill, if it did reduce it, for the health boards by £1 million a year if the rest of the money the health boards are paying is being exported. There is no benefit for anyone in that except for the foreign company which will be generating electricity in competition with ESB. No one else gains.
Common sense tells me, leaving aside the ideology of who supplies, that I would not like to be the regulator when it comes to making decisions. We all talk lovingly of hospitals because they make a good case but it would not just be hospitals. There would massive battles.
Banks are a case in point. They are pitiful.
Supermarkets would be another area. Then there would be branches of supermarkets. We could speak lovingly of hospitals and schools and wish they could be part of a composite purchasing arrangement but I can see the endless battles with companies claiming to be a subsidiary of another company.
It could happen with public houses.
Yes, if they were all owned by some mogul.
Key points have been raised in this discussion. The Minister has made a trade name for herself on how she went much further than her predecessors in the cases they made to the EU about Telecom Éireann. It was right to go further than the case put forward by Telecom Éireann and the then Government. The synthesis of the argument was that Telecom Éireann succeeded at that time in getting more derogation of protection than was in the public interest. The same can hold good here.
It does not have to but it can.
People think that one semi-State industry is the same as the next. It is not. These bodies vary. The overpowering need for Telecom Éireann was that it was the fastest moving business in the world and if we did not run to catch up we would be left behind. The idea that one semi-State is a duplication of the next is wrong. It could be but it is not necessarily so.
If a new IPP cannot offer lower prices to anyone it will not be able to sell electricity to anyone. There will not be 1 per cent non-ESB competition if there are not lower prices. Why would anyone, even the biggest user of electricity, switch from ESB if it is not to get cheaper electricity?
The point can be made that some people, such as householders, may lose out but it is clear that unless an IPP can offer cheaper electricity it will not sell any. It is as simple as that. We can, therefore, take it as a given that there will be lower prices for those in the eligible customer category, whatever about the rest of us.
What if there is minimal competition after this legislation has been in operation for two years? If, for whatever reason, the IPPs cannot compete or the ESB introduces tariffs as Telecom did with overseas calls to shore up that end of the market, is it open to anyone, within a limited period, to revisit any of these definitions or are they set in stone? Let us say, competition does not take off, either on the purchasing side or on the supply side, is there any prospect of change to ensure competition can be fostered?
I am told the Minister of the day has the right, by order, to widen the opening.
Does that include issues such as this?
I do not know about individual issues, but the Minister will certainly have the right to open up the market further by order if she or he wished. We have decided to develop the legislation in line with the directive, which lays out the stages of opening and competition.
In reply to Deputy Yates' point, I am sure prices will come down. That was the substance of my argument with the ESB last year. The ESB accounts for 1998 are before Cabinet today. They are splendid and I congratulate the ESB.
Whenever independent power plants come in - and I am not setting a limit on them - they will offer cheaper prices in the market opening. It would be daft it they did not because they would not get customers.
With regard to the assumption that competition will bring down prices, it probably will bring down prices for the 330 people at the top of the market. If we were to believe the chief executive of the ESB when he came before the committee, it would have increased prices for 3.5 million ordinary consumers.
The regulator will have the right to deal with the prices issue.
The regulator seems to be in tune with what the ESB was saying in this regard, that the industrial sector is subsidising electricity prices for the domestic sector and the rebalancing will mean that 3.5 million ordinary users, including users with different premises, will see an increase in their electricity charges, including the domestic users, and the 330 might get a reduction.
It is important to note that the Bill does not give away 28 per cent of the electricity market. It opens up 28 per cent of the market for competition. The ESB is entitled to compete and is well placed to compete. It is positive that it is well placed to compete. Various Governments have been working to ensure this. The CCR, the shedding of jobs and other steps have been taken by the ESB to enable it to compete. That is reflected in its balance sheet this year.
The Minister is being much simpler than she needs to be when she says that all the semi-State bodies are not the same. Of course they are not, but that is no excuse for not having a general policy for the semi-State companies. What is missing is a statement of how the Minister sees the semi-State companies developing, rather than just picking them off one by one and taking different steps with them. The principle the Minister is applying to them one by one is the same - to privatise them as quickly as she can and in accordance with directives. If a policy was laid down - and I am not arguing for or against the policy - it would be clear what would happen to the resources arising from the privatisation. That would be included in the general statement of principles.
They go to the Minister for Finance.
They would be applied differently to the different circumstances of the companies. We have no guarantee that competition will occur; we are making it possible with this Bill.
It will occur. There is intense interest in the Bill.
I know there is intense interest in the Bill and in the resulting competition. Some want it to happen more quickly than the Bill will allow - they want all the changes introduced before the Bill is enacted. Competitors from outside are demanding that. There is no guarantee that most people who use electricity will have cheaper electricity. The indications are that once the Minister no longer has the authority to stop the ESB putting up the prices, the regulator will allow it to put up its prices.
I do not accept that. When we talk about rebalancing tariffs, the prices can come down.
The Minister said the ESB is going to put up prices.
The ESB is obsessed with putting up its prices. I fought with it for 12 months not to increase prices. That will be the firm policy direction I will give the regulator.
Section 2(1) refers to wave and tidal generation. There is keen interest in wave generation on the west coast. I presume they are two distinct methods of generating. With regard to the particular project that was due to go ahead in west Clare, Deputy Stagg and I raised questions in the Dáil. We are keen to see that station proceed.
Apparently the EU raised some questions about the £1 million funding which is essential if the project is to proceed. It questioned whether it was an economic or research project. On that basis it withheld the funding. This is a pilot project on the west coast. At present there are no wave stations, although there are numerous sites suitable for wave generation. While much of the discussion has centered on wind farms, the wave stations, which have great potential, have not been discussed to any great extent. There is an excellent site in west Clare.
Yes, because the EU withheld funding. If we could get new initiatives the project might go ahead.
I will get back to the Deputy on that.
I support the Deputy's argument for the development of wave energy. To try to assist in that process the Government made a grant available of £1 million for a specific wave energy project. There was a question raised by the EU when the specific project came in.
Whether it was for research or economic purposes.
It said that it was more a research than a straightforward economic proposal. It is languishing as a result. Perhaps the Minister will look at that.
I do not know much about it, apart from what Deputy Daly has explained.
Question put and agreed to.
Sitting suspended at 4.10 and resumed at 4.45 p.m.
We come to amendment No. 23. Amendment No. 24 is an alternative. Amendments Nos. 23 and 24 may be discussed together by agreement.
I move amendment No. 23:
In page 8, line 7, after "Minister" to insert "and every regulation or rule made by the Commission and every regulation made by the Board".
In amendment No. 24 the Minister is effectively taking on board the amendment I tried to make.
One complements the other. What I am arguing for is that the regulations made by the commission and the board be laid before the Houses of the Oireachtas. I think the Bill allows for regulations made by the board as well.
The Deputy's amendment refers to regulations by the ESB.
That can be dealt with under its powers. My amendment No. 24 is a technical amendment as required to clarify that orders or regulations made either by the Minister or the commission are to be laid before the Houses of the Oireachtas by the Minister or the commission as appropriate. It is just a rewording of the amendment.
Will the Minister explain further the regulations made by the board?
Under the 1949 Act the board makes those orders for laying. What the Deputy wants to do refers to regulations made by the ESB. This is already dealt with under the ESB's existing powers. Amendment No. 24 seeks to delete "under this Act" and substitute ", in the case of orders or regulations made by the Minister, or by the Commission, in the case of orders or regulations made by the Commission,".
For the sake of clarity and ease of reading of the legislation, would it be bad law to include the board here as well as having it in other Acts?
It is already in the 1927 and 1949 Acts.
Amendment, by leave, withdrawn.
I move amendment No. 24:
In page 8, line 7, to delete "under this Act" and substitute ", in the case of orders or regulations made by the Minister, or by the Commission, in the case of orders or regulations made by the Commission,".
Amendment agreed to.
Section 3, as amended, agreed to.
Sections 4 to 6, inclusive, agreed to.
I move amendment No. 25:
In page 9, subsection (2), lines 24 and 25, to delete "An Comisiún um Rialú Leictreachais" and substitute "An Coimisiún um Rialáil Leictreachais".
This is a drafting amendment to correct the spelling of the name of the commission as Gaeilge.
Amendment agreed to.
Question proposed: "That section 7, as amended, stand part of the Bill."
This section provides for the establishment of the commission. Will the Minister clarify the position about an energy regulator in general as opposed to a narrow electricity regulator? A concern made known to me is that most of the potential IPPs will use natural gas and that there may be a problem about regulating the gas sector. There is an EU directive on gas and BGE is interested in getting into the electricity generating business. Is it the intention that the same commission which is being established under the provisions of section 7 will regulate gas affairs or will there be a separate regulator or a separate office in the same building or is it intended that Mr. Reeves would do the two tasks? If so, is it intended to introduce a separate Bill whereby the title would be changed to the electicity and gas regulations Bill, or is there anything other than gas being contemplated?
What does the Deputy mean?
As of now, there is one person, Tom Reeves, who will be the regulator. He is grandly titled the commission. We have not taken a full policy decision or signed a ministerial agreement on the matter but it is envisaged that the commission will expand to include a gas regulator but it will continue to be called the commission. What other energy are we talking about?
Is it called the electricity regulation as opposed to the energy regulation?
So the Minister may change that in a subsequent Bill?
We may change it if that person is appointed. If there is a gas regulator clearly we could not refer to the electricity and gas regulator. The commission would consist of two or perhaps three people. It was envisaged that the commission would consist of three people. I thought that was too grandiose. It was then envisaged that the commission would expand when we appointed a gas regulator. There will be separate legislation for the gas regulator and the commission will then consist of two people.
On the same subject, I thank Deputy Yates for raising the point. I understood the intention was to have a regulatory commission rather than individual commissioners for each discipline and that this Bill was the forerunner of that infrastructure of regulation. During my period in the Department lengthy discussions on that took place and serious concerns were expressed about the powers being transferred from the Oireachtas to that commission. It should be said that this Bill deals with many of those concerns. Arising from that, the Telecom regulatory Bill which I introduced needs to be amended——
——with the new information and our experience of it to bring it into line with the conditions in this Bill. This is superior legislation over the Telecom regulatory Bill. It was envisaged at that time, and perhaps the Minister would indicate if it is still the case, that this legislation would be the framework for regulation and that we would include the others in this under that commission. Presumably there would be a Telecom, energy and communications regulator and there would be a chairman of the commission and two other commissioners who would be responsible for various Departments. One of the concerns was that it would be a powerful body. The experience in Britain of having individual personalities as regulators has not been successful in that the personalities of the people concerned regularly got in the way of the type of regulation hoped for in the legislation. Perhaps the Minister could tell us about that.
I will give my opinion as distinct from what may or may not be laid down later. An all-inclusive regulatory commission, with every regulator coming under its umbrella, would be too powerful in its remit for Irish society. Etain Doyle is set up in her office and she is doing well. There is no question that the legislation in respect of her office needs to be altered. It was ridiculous to think we could have a number of regulators who were accountable to nobody. That would be a recipe for an Orwellian scenario. In terms of the commission, it would be Tom Reeves for electricity and then somebody else for gas. I do not see what other energy will be involved. We are talking about having a three person commission and, in that sense, the duties would be across the board. There would be a two to one majority on any particular vote. I do not yet have any papers which lay out how the commission will proceed, apart from this one.
Will we not have to have a postal regulator and a transport regulator?
All of the areas where competition is to be introduced.
But those people certainly would be four times more powerful than any Dáil or Seanad.
Nobody has given me a reason for or against.
I would also like to put on the record that the Telecom Bill was the first attempt at regulation. I always want to take the blame for it but, in fact, it was not in my remit but under the circumstances that arose at the time, I was obliged to take it in the Dáil.
If the Minister examines the history of the period she will understand the reason.
Question put and agreed to.
Amendment No. 26 is in the name of Deputy Yates. Amendments Nos. 27, 28, 29 and 30 are related and we will discuss amendments Nos. 26 to 30, inclusive, by agreement.
May I ask a question before we agree to take them together? I do not see how we can take Nos. 26 and 27 together - they are not in my name - because if No. 26 is accepted——
I can clarify that. I wish to withdraw my amendment No. 26.
Amendment No. 26 not moved.
Is it agreed to take amendments Nos. 27, 28, 29 and 30 together, by agreement? Agreed.
I move amendment No. 27:
In page 9, subsection (1)(a), line 46, to delete "draft" and substitute "publish".
The first function of the commission is to draft, pursuant to whatever direction the Minister may give, proposals for a system of contracts and other arrangements. I put it to the Minister that the job of a civil servant advising the Minister is to draft items the Minister may or may not publish, but the job of a regulator is to publish, which incorporates drafting in the first instance. The Bill would be greatly improved by replacing the word "draft" with "publish" because it incorporates "draft" and goes a step further in that it sets out a transparentmodus operandi. A regulator’s role is more active than that of a civil servant and I will let my amendment stand on its merits. The Minister might like to respond - it is a one word change.
The Deputy is correct. The amendment represents a shading but it is a necessary shading and I accept it.
Amendment No. 28 is complementary in a sense to amendment No. 27 in that it seeks to insert "which shall be publicly available when given to the Commission". The commission will not get policy directions in secret or privately and everybody else affected by the policy directions given by the Minister will also have the benefit of knowing the basis on which the commission will publish proposals of a system of contracts and other arrangements, etc. The policy directions should be available publicly when they are given to the commission.
That is probably in order. I do not see anything incorrect in it but we may have to alter the wording slightly. It is proper to point that out and that they would be made publicly available. Perhaps we could insert the word "made" publicly available.
I am not an expert in drafting but if the essence of it——
The essence of the amendment is "publicly available".
That they would be available to both the trade and the public.
Amendment agreed to.
I move amendment No. 28:
In page 9, subsection (1)(a), line 47, after "Minister," to insert "which shall be publicly available when given to the Commission,".
The wording in Deputy Stagg's amendment is good and would enhance the Bill, but I propose to insert the word "made" between the word "be" and the word "publicly". The amendment would then read "which shall be made publicly available . . . "
I accept that. If necessary, I will withdraw my amendment.
The amendment, as amended, will read "which shall be made publicly available when given to the Commission,". Is that agreed? Agreed.
Amendment, as amended, agreed to.
I move amendment No. 29:
In page 10, subsection (1)(a), line 2, to delete "for" and substitute "to facilitate and promote competitive".
This amendment is probably more contentious. What it seeks is not ideological. Subsection (4)(a) contains the words "to promote competition". The commission's duties are set out in subsection 4 and its functions are set out in subsection 1.
The duties are listed in subsections (4)(a) to (4)(e), inclusive.
My amendment seeks to ensure that the promotion of competition is incorporated in the commission's functions as it is incorporated in its duties. It seeks to clarify that a key function of the commission will be to promote competition.
Does Deputy Stagg wish to comment on amendment No. 30 before I reply.
I am not clear about the effect amendment No. 29 would have on the Bill.
It proposes to delete "for" in subsection (1)(a) and substitute "to facilitate and promote competitive".
I take it subsection (1)(a), if amended, would read "to publish, pursuant to a policy direction or directions of the Minister, which shall be made publicly available when given to the Commission, proposals for a system of contracts and other arrangements, including appropriate rights and obligations, to facilitate and promote competition." Is it proposed that the words "for trading in electricity" be deleted?
Subsection (1) (a) would read ". . .to facilitate and promote competitive trading in electricity." I made the point that subsection (4) (a) contains the words "to promote competition".
Surely the person concerned would also have to deal with straightforward trading in electricity or can there be trading without competition? He will deal with trading in 72 per cent of the market where there will not be competition for a considerable period. This provision cannot be confined to the competitive area.
There will not be competition in a large section of the market for a considerable period and conditional arrangements in respect of a number of years have been agreed.
I have no difficulty with the words "to facilitate and promote trading in electricity", but it is also necessary to state this person will have the function of trading in 72 per cent of the electricity market in which there will not be competition when this Bill is enacted.
Under section 8(4)(a) the Minister and the commission are obliged to carry out their duties.
It would be preferable if the words "to facilitate and promote competition" were inserted after the words "trading in electricity".
The Minister said that under section 8(4)(a) the Minister and the commission are obliged to carry out their duties.
I am advised the amendment is not necessary because the commission and the Minister are already obliged under section 8(4)(a) to carry out their duties with regard to the need to promote competition. I note we have a new chairman, Deputy Daly.
Given that the words "to promote competition" are included in their duties, why can they not also be included in their functions?
They are in so far as section 8(3) provides that it shall be their duty to carry out their functions and exercise the powers conferred on them under this Act. I am advised that the Bill already lays out this duty and that the amendment is superfluous. The transition period is laid down in the directive, although we have not yet decided on its duration. Initially part of the market will not be competitive, but it will become competitive at later stages. It would be difficult to include the form of wording proposed by the Deputy in section 8(1)(a). It is stated in section 8(4)(a) that the commission has a duty to promote competition.
It will not be a big deal if the Minister cannot accept this amendment. She said it is superfluous. I will withdraw it.
Amendment, by leave, withdrawn.
I move amendment No. 30:
In page 10, subsection (1)(c), lines 6 and 7, after "paragraph (b)" to insert "and taking account of matters raised in public consultations".
I am concerned about window dressing in legislation. Subsection 1(b) states "to engage in a pubic consultation process on the procedures to be adopted by the Commission to implement the proposals drawn up under paragraph (a),". Subsection 1 (c) states "following the public consultation process referred to in paragraph (b) , to make regulations,. . . " That means the public consultation could be purely window dressing.
The Minister is a dab hand at that.
Consultations which might lead to nothing.
No, I always consult and I nearly always get my way.
What about the Great Southern Hotel Group?
The Deputy knocked me off my train of thought. A requirement of modern legislation is that there should be public consultation of various sorts, but often it is not stated what should happen to the material collected during the consultation procedure nor is it stated that if the Minister is specially informed by that procedure what should happen as a result of that. My amendment proposes that in subsection (1)(c) following the words "following the public consultation process referred to in paragraph (b)," the words "and taking account of matters raised in public consultation" should be added. That does not bind the Minister to the opinions expressed, but account would have to be taken of them. It was suggested that a preferable legal wording is "to have regard to". That language is used at local government level and has been tested in the High Court. It means that when a county manager is making a decision and he has to have regard to another person's report, all he has to have done is read it and he can ignore it. The words "taking account of" may be layman's language in this context. If we have public consultation, we should insert some wording in the Bill to the effect that it cannot be ignored subsequently.
The thrust of what Deputy Stagg said is fine. It is proposed his amendment be reworded as follows "and taking account of matters raised in the public consultation process" and tabled on Report Stage.
The Deputy realises that draftsmen cannot let anyone else have their way.
Does Deputy Stagg intend to withdraw his amendment?
We have a choice; it can be read into the record now or it could be resubmitted on Report Stage, but the fewer amendments on Report Stage, the better.
Amendment, by leave, withdrawn.
Amendment No. 31 not moved.
I move amendment No. 32:
In page 10, subsection (1), between lines 13 and 14, to insert the following:
"(e) to provide a consumer complaints service for all matters relating to the generating, supply and distribution of electricity.".
This is to provide a customer complaints service for all matters relating to the generation, supply and distribution of electricity. When we spoke about such a role in Telecom, the Minister said she would introduce a complaints service as part of it.
When I was reading today I thought of what Deputy O'Shea, Deputy Yates and I had said at that stage of the IPO Bill.
The point is that if we can have a service to deal with complaints about the telephone, why not have a service to deal with complaints about the electricity service? In the detailed briefing I had from the ESB I am delighted to say it does not oppose this. I was told the ESB supports the establishment of a customer complaints commissioner. The ESB has established an independent commissioner under its own initiative and would support a commissioner in line with that proposed in the draft legislative proposals published by the DP in May 1998, the Blue Book. The amendment would undermine ——
Deputy Yates's amendment will undermine it.
Sorry. The consumer complaints commissioner is likely to be incorporated in the second item of legislation with the ESI reform.
The position of the ESB is that it supports the establishment of a consumer complaints commissioner as opposed to this one.
I am talking about one at arm's length from the ESB because I do not think one can be judge and jury in one's own case.
There are issues of distribution, of supply, of someone not satisfied with the time period the supply was installed or someone who had a fault and it was not dealt with or someone who had power cuts every other week. I am proposing that the consumer complaints service should be part of the commissioner's terms of reference because, whatever else, he is independent. The ESB cannot wash its hands of being accountable to the public. The Ombudsman's role does not cover the ESB.
The ESB deals with complaints against it.
Of course, it does it itself.
The Deputy misunderstood the ESB's position.
Yes, I did. The net argument is that what is good for customer service in Télecom Éireann is good for the ESB.
I am not sure about some aspects, for example, I presume the people in Lanesboro or Ballymahon could complain about the smoke from the stack when the wind blows it in that direction. Is that the type of complaint envisaged in relation to generation or is it that the consumer would not have enough electricity for the milking parlour or factory?
I would be prepared to trade generating and drop that. The ESB has its list of objections and it thinks the word "generation" should come out as well. I would be prepared to drop it if supply and distribution were covered.
I am resisting the temptation to enter into the general discussion but I think problems arising from the generation of electricity should be covered by the amendment. Increasingly attention will be paid to the means of generating electricity and the consumer is likely to have to foot the bill so that we meet our Kyoto commitments, although that is not clear from what the Government said today.
The Deputy has a later amendment on that.
Yes. I want to stress that electricity generation is as much an issue of public concern as supply and so on.
The ESB has a customer complaints commissioner. He is a very nice person and seems to deal with matters efficiently. He prepared and published a big glossy report. However, I take the Deputy's point that he is employed by the ESB. Remember all the rows about the previous Insurance Ombudsman, Ms Marrinan-Quinn? Let me read this sentence: since the commission will have a very heavy workload in setting up the regulation of the electricity industry, the electricity division considers that the commission should not be given any additional responsibility at this stage - that was Tom Wall. The issue of public electricity supply will be dealt with in the next legislation to complete the implementation of the electricity directive. It would be appropriate to consider the issue of consumer complaints at that stage. I see that point because in the heady days of a year ago we thought this legislation would be about three sections of a Bill to set up the regulator. This Bill encompasses most of the directive, the remainder will be in the next Bill to make the ESB a plc. It is necessary to have an independent consumer complaints commission at arm's length from the ESB. I am sure the person who is in the post at present acts independently but if your salary is being paid by the organisation, how independent are you? I will ensure the question of consumer complaints will be dealt with in the next Bill.
The difference between self-regulation and external regulation is the line in the sand that I am setting out and I think we are agreed on that.
I do not know the exact phrase but I think it is "make me pure, but not now".
St. Augustine said, "Lord make me pure, but not just yet".
The Minister missed her true vocation.
I did; I should have been a nun and look at what Members would have missed.
It is a bit like St. Augustine. The Minister could undertake to deal with it on Report Stage, but when it will be dealt with in the next Bill, it could be a Minister away. Me thinks that if there was a determination to do it, it could be done in this Bill on Report Stage. Ms Etaine Doyle came before this committee - the Minister was not present at that meeting - to discuss cable companies. People had made numerous complaints about faulty reception and so on to her but this was not part of her brief as her function was to assign the licence to the operators. What struck me is that with all the regulation, somebody forgot the consumer. The same applies to this legislation. It would not be unreasonable to do it on Report Stage.
My mind is not closed to the idea.
On the basis of the Minister's last comment I will withdraw my amendment.
Amendment, by leave, withdrawn.
I move amendment No.33:
In page 10, subsection (1), between lines 13 and 14, to insert the following;
"(e) to advise the Minister on aspects of electricity generation in relation to sustainability with particular reference to Ireland's commitments to Local Agenda 21 and the Kyoto Agreement on Global Climate Change.".
As the Minister intimated, there was an issue to deal with. The Kyoto Agreement must be a mainstream issue and it must be dealt with as part of any decision making process. I ask the Minister to accept this amendment so that it will be clear to the commission that the current and future national interest is included under its remit. I hope this is seen as relevant and important. TheSunday Business Post commented two weeks ago that the Government was working on the Kyoto protocol. However, it is still unclear what it intends to do. The Government needs to include this subsection in the Bill and the Minister should ensure it is part of the commission’s remit.
I support the amendment, which the ESB finds acceptable. The Minister of State at the Department of Public Enterprise, Deputy Jacob, made profound commitments along these lines at the annual conference on wind energy in Waterford three or four weeks ago. The Minister will hang him out to dry if she does not accept this amendment.
I support the amendment. I assure Deputy Sargent this is a mainstream issue. The Minister and the main parties have indicated general support for the idea.
Actions speak louder than words.
We are about to act on the matter. The issue of greenhouse gases is not confined to the interests of any one group. There is concern about this issue throughout the world and agreements are made to deal with it. It is correct that we should specify that in this Bill.
I also support the amendment. The ESB and the IVO are making determined efforts to tackle the problems and to improve the situation. I am sure the Minister and the Department are putting pressure on them to ensure they do not damage the environment and that they improve their facilities for cleaner emissions.
This is an interesting amendment. The Minister for the Environment and Local Government, Deputy Dempsey, has direct responsibility in this area. The commission will be an economic rather than an environmental regulator. The Environmental Protection Agency plays that role.
Local Agenda 21 and the Kyoto Agreement are initiatives arising from the United Nations summit. Those agreements may be superseded by other agreements.
The reference to them in the Bill would then become redundant. We should do something about that. To say it is just the responsibility of the Minister for the Environment and Local Government is to abrogate our responsibilities as a Department under whose aegis are the main energy using bodies. I take the point that Local Agenda 21 and the Kyoto Agreement might be replaced by local agenda 21 plus and the Madrid agreement. Kyoto was the beginning but there will be more conferences on sustainability.
Mr. Tom Reeves will be an economic regulator, not an environmental protection regulator. We should have regard to the environmental protection needs laid out in the Kyoto Agreement and Local Agenda 21. However, our needs will change in four or five years' time. We must, therefore, have a mechanism in place as the Kyoto Agreement and Local Agenda 21 will probably change.
We could include Ireland's international environmental commitments.
I agree with the idea. The argument put to me is that it is the responsibility of the Minister for the Environment and Local Government. However, it is not good enough for a Department, under whose aegis are the main energy using bodies, to state it does not have any positive input except to fulfil our orders. It would serve us better if we met the Minister for the Environment and Local Government and the regulator. The argument in my briefing notes is that this is an economics department and it has enough to do without dealing with the green department. We should, however, meet the green department.
I agree with the Minister. It is valid to say the Department of Public Enterprise should set parameters for the industries under its remit rather than depend on an outside Department to set them as it would not have the same knowledge of the industries as the Minister. Denmark, whose ministry consists of energy and the environment, was quoted a number of times as an example of what we should consider.
The argument seems to be that while other matters will be put upon us from time to time, there will not be an integrated approach with the Department of the Environment and Local Government as we have more important business to do. I understand the point about not using the words of Local Agenda 21 and the Kyoto Agreement because they will be superseded by other agreements. Perhaps the amendment should state, "to advise the Minister on aspects of electricity generation in relation to sustainability with particular reference to Ireland's commitments".
I have no problem with the wording that takes into account future developments. If we are to leave developments with the Department of the Environment and Local Government, we will certainly not take them on board and deal with them. I have no problem with that, but I have a problem with any indication that this is outside the remit of the Bill. I see it as being fundamental, absolutely critical, to the Bill.
Even though we all think the current situation is serious and we are dealing with it in a serious manner, the increase in those gases - which are supposed to be held at 13 per cent up to the year 2012 - has already breached that level. We are off with the fairies to some other planet, goodness knows where. We have not met our commitments and will not do so. The OECD estimates conservatively that we will increase those gases by more than 28 per cent. Other commentators say it will be more. There will clearly be a huge economic implication for us on account for what is happening with our energy generation.
There is also a moral need.
Let us leave the morals out of it. That is another vocation. However, the hard-nosed economic reality of cash comes down to an estimated several billion pounds. We can talk about the flooding in Bangladesh or Honduras, and other environmental issues. I am sure the people there would see those issues as being critical to their very existence. There are issues which can be said to be economic in that matter also.
I want to clarify that we will insert an acceptable wording on future implications, and that we will act upon it. I am glad the Minister has overridden the view, which I find frightening, that this is somehow an environmental issue that should not worry us in energy terms.
At one point that Department might become heavy handed when it will be too late to try to get on top of the problem.
I thank the Minister for overriding that view.
On Report Stage I will table an amendment to encompass it.
Amendment, by leave, withdrawn.
I move amendment No. 34:
In page 10, subsection (2), line 15, to delete "may" and substitute "shall".
Amendment agreed to.
The Select Committee adjourned at 5.33 p.m. until 2.30 p.m. on Tuesday, 25 May 1999.