Three sections and the Title remain to be considered. I propose that we continue our deliberations until 6 p.m. and resume at 6.30 p.m. if necessary.
Electricity Regulation Bill, 1998: Committee Stage (Resumed).
It should not take us until 6.30 p.m. to deal with the remaining sections. We should continue until we complete the amendments.
Amendments Nos. 59 and Nos. 1, 2 and 3 to No. 59 are related. Amendments Nos. 60 and 61 are alternatives and No. 64 is related to No. 60. These amendments may be taken together by agreement. Agreed.
I move amendment No. 59:
In page 13, lines 3 to 10, to delete subsection (1) and substitute the following:
"(1) The Commission may grant or may refuse to grant to any person a licence——
(a) to generate electricity,
(b) to supply electricity to eligible customers, and
(c) subject to section 27, to supply electricity to final customers which in aggregate does not exceed the amount of electricity which is available to the supplier and which is produced using renewable or alternative forms of energy or is produced by combined heat and power,
on such terms and conditions as may be specified in the licence.".
This is a new amendment No. 59 which I supplied, informally, to Deputies yesterday evening and had printed this morning. It will allow the sale of electricity from combined heat and power to eligible customers or to the main customer from the CHP plant.
We decided, despite the startling revelations, that we did not want to throw out the baby with the bath water and we wished to enunciate very clearly that CHP is a very fine product, very economical environmentally, interesting and important. The purpose of appointing the regulator - which is the intent of this Bill - is to implement the directive on electricity regulation which was formulated and finalised by the previous Government in 1996 in Europe. It was agreed that the 28 per cent would be the first tranche of opening. That was the agreement of the then Government. I looked up the 1996 Government decision, which is as I have stated. Therefore, what I am doing is implementing in legislation that earlier decision.
The first Bill did not contain reference to CHP. My initial amendment No. 59 would have created a 100 per cent opening. I would not, therefore, have been in keeping with the spirit of the Bill or the stated commitments in 1996, 1998 and 1999. This amendment will allow for the sale of electricity from combined heat and power to eligible customers or to the main customer from the CHP plant. It is self-explanatory. It is a substitute for amendment No. 59 on the principal list of amendments circulated on 14 April 1999.
I would like to deal with my amendments, and those in Deputy Stagg's name, to the Minister's revised amendment.
The kernel of this issue is the role CHP will play in the transitional arrangements and the long-term deregulated electricity market. This issue should be considered on its merits. I have had no contact with the National Convention Centre or National Treasury Holdings about the Minister's amendment . The people who have been in contact with me about this issue are very reputable business people, potential customers of electricity suppliers, suppliers themselves and State organisations.
On a point of information, at a recent meeting, Deputy Yates read into the record correspondence from National Treasury Holdings.
I will clarify that point. I have not been in contact with it about the Minister's amendment. Representations I have received in the context of amendment No. 59 have nothing to do with this. I would like that to be put on the record.
In my opinion, the ESB has played a major role in rewriting this section. It has made direct representations to me and to the Department of Public Enterprise. The balance now being struck is not in the best interests of the electricity market and effectively allows the ESB to develop CHP to the exclusion of all other operators and this is contrary to European law. I do not believe this has been checked out with the Commission. The Commission will challenge and will invalidate and challenge this. This is a matter of the utmost seriousness. While I will facilitate us dealing expeditiously with this Bill as I appreciate that there is agreement on all sides to try and work towards the February directive, in the rush to comply with that, the wrong outcome is being attained with CHP.
The significance of combined heat and power is that it is a key enabler in Ireland meeting its Kyoto commitment. At present, Ireland has 2 per cent of the market of CHP. It is way behind the EU average and further behind the EU aspiration of 20 per cent CHP. I acknowledge that CHP uses fossil fuels, and unlike wind, it is not a definable renewable source of energy. However, its energy efficiencies close to 90 per cent compared to 55 per cent of modern conventional plants makes it Kyoto efficient in terms of allowing us to meet our additional power requirements while diminishing the amount of fossil fuels needed because it uses the waste product of heat. CHP is a good thing and an efficient use of energy.
In section 2 I set out to define CHP. What we are trying to do is get bona fides CHP plants. I tried to define that with 70 per cent thermal efficiency. If the Minister wanted to raise that to 80 per cent, we will have a chance to discuss that between now and Report Stage. That is the way to nail it down so that we do not have heating projects that are really electricity generators. I am all for not driving a coach and four through the competition regime by allowing that laxity. However, bona fides CHP plants will be greatly penalised by this.
A possible example is Aughinish Alumina which in the process of heating bauxite to take out aluminum uses huge volumes of heat which can be turned into electricity. The terms of this Bill greatly restrict this. Obviously they will be one of the companies who will be unable to sell that spare electricity capacity to industrial local users if they were to develop co-generation. This has nothing to do with the National Convention Centre.
The legal interpretation of the Minister's amendment No. 59 is that this is a deliberately unworkable provision as CHP projects will be rendered uneconomic and uncommercial. While CHP is more environmentally friendly than any other generating technologies using fossil fuels, the proposal that all heat be used in terms of the sale of electricity, is not practicable in many industrial processes. Has the Minister checked with either DG7 or DG4 in the Commission as to whether this amendment contravenes Article 20 of the Electricity Directive which allows auto-production - that is that a CHP producer can wheel third party electricity to any site owned by a company or group of companies anywhere in the EU? Furthermore, it suggested to me that it is contrary to the Commission's recent communication of October 1997 which stated that member states must adopt the development of CHP as a priority. What proposals there are to discuss this with the Commission, if there has not been liaison with the Commission? Can the Minister confirm that this will allow the ESB to develop CHP but not allow others because of this provision of total heat?
It is put to me very strongly that the revised proposals by the Minister discriminate against CHP producers as opposed to conventional generators and this is a breach of the electricity directive. Could the Minister also explain the consistency of her amendment with Articles 85 to 90 of the Treaty of Rome as this amendment is believed to be a technical barrier to free trade?
I understand that one major CHP developer is considering an Article 169 notification if this provision is introduced. Has the Minister had any consultations with those who are responsible for our Kyoto commitments as to whether this adheres to them. Will the ESB be asked to divest itself of the system it currently operates throughout the country? The Minister must be aware of CHP sites already owned by the ESB and how they will be affected by this provision. It has been suggested to me that AER competitions could be rendered illegal by this provision.
In terms of State enterprise, while we have the ESB on one side, we have the valid interests of Bord Gáis in this regard. They were concerned with the original amendment No. 59, where the clause "in aggregate" would make it extremely restrictive for CHP. Obviously that has been greatly exceeded by the revised amendment No. 59. The effective position being put to me is that the ESB will be the only supplier of top-up and stand-by electricity. The effect of the original amendment No. 59 would have been to reduce the competitiveness of alternative producers by requiring that all the customers' needs by met. That is the critical point. All of the customers' needs could not have been met. The terms of the original amendment No. 59 did not allow for the supplier of energy generated from wind power, since this energy source is subject to weather conditions. A customer would have to have two suppliers - the ESB and a CHP supplier. The revised amendment No. 59 has changed that.
On amendment No. 59 will the Minister consider the question of the industrial site because paragraph (d) states "to supply the single premises of the main heat customer of electricity". Perhaps one possible compromise would be to allow supply within a specified distance, be it a kilometre of the single premises, be it adjacent to or part of the one consortium of buildings. This would in some way allow the combined output of heat and electricity to be met. In the case of Aughinish Alumina where there could be up to 250 megawatts, if they had an adjoining industrial site, they would be forbidden to supply it under the ratio that is being put out in terms of all the heat.
Amendment No. 1 to amendment No. 59 is not the total solution, but my position on this was, that I did not want to open up 100 per cent of the ESB market. I wanted a situation whereby bona fide co-generation or bona fide CHP would be allowed to develop in the transitional phase within the confines of for instance the geography of a particular industrial site. I am also advised that the IDA has developed industrial sites with CHP in mind and that this amendment will prevent that type of marketing and development whereby people would have access to CHP, electricity and heat supplies. I have tried to put across the points made to me. We started off with a Bill that had little or nothing for CHP.
There was nothing.
We then moved to a situation where the ESB said CHP was open-ended. We were in dialogue with a view to reaching a fair compromise. I am not prescriptive as to what the best compromise would be but I am informed that the definition, as set out, is worse than the original in so far as it is unworkable and impracticable. Effectively, only the ESB, which is acknowledged to be efficient by members of the committee, can develop CHP. I put it to the Minister that it is unfair that CHP can only be developed by the ESB. That is the contention of many people. On that basis I will oppose amendment No. 59.
In her opening statement in support of the amendment, the Minister referred to the debate yesterday and her concern about the type of lobbying conducted and the language used. While the Treasury Holdings spokesperson described the ESB as corporate thugs and included Smurfit, CRH and Guinness in that category, the most important part of that debate is not the language used but that lies were told to this committee. Deliberate falsehoods were peddled to this committee by Treasury Holdings. On foot of the lies I tabled an amendment because I took them on face value until the ESB corrected the situation and demonstrated that Treasury Holdings was telling us lies. My party is preparing the registration of lobbyists Bill. Will the Minister speak with her Cabinet colleagues about the urgent need for regulation of lobbying so that it will be an offence in law to bring a false story to the committee?
I concur with what the Minister has said in that we are seeking to open 28 per cent of the market for the generation and supply of electricity in Ireland. I am not sure what benefit will be derived from that. Recent European studies have demonstrated that we have the best electricity prices in Europe. In comparison with Northern Ireland, for both industrial and domestic use, electricity prices are 20 per cent cheaper in the Republic. Northern Ireland has deregulated 100 per cent and has a private monopoly. While the Minister previously controlled our public monopoly, nobody seems able to control a private monopoly. If we are heading in that direction we would not do ourselves, or those who use electricity for commercial or domestic purposes, any favour.
Throughout the debate the Minister and the Opposition recognised that combined heat and power was a desirable form of energy, whether in the form of heat or the electricity that heat and power will produce. Everybody accepted that CHP is good. There were well based fears, given modern technology, that plant masquerading as CHP would have access to 100 per cent of the market and would not be real CHP. The experience elsewhere is that plant which say it is CHP does not operate in that way. It may heat the manager's office with a small percentage of its total energy output and sell the rest of the electricity to whoever it wished.
If there is a combined heat and power plant for Guinness - which has been labelled as corporate thugs - it should use its electricity and heat from that plant in Guinness. Guinness is operating such a plant now and it was not provided by the ESB. Organisations similar to Guinness will, under the terms of the Minister's amendment, also be able to do so. There is no doubt about that. I do not understand the thinking put forward which suggests nobody would be able to operate CHP except the ESB. That is simply not true. Guinness is doing it now using exactly the system described by the Minister where the heat customer is there also.
Because I am a strong supporter of heat and power I have tabled two other amendments and I seek guidance on them. They were amendments Nos. 3 and 4 to the amendment which the Minister has withdrawn. Amendment No. 4 states:
After paragraph (c), to insert the following:
"(d) to supply electricity to the board subject to section 27,”.
If accepted that would mean CHP providers could supply electricity to the board. My amendment No. 69a states:
In page 13, between lines 30 and 31, to insert the following subsection:
"(7) The Commission shall monitor licensees to ensure that they continue to conform to all the conditions and requirements of their licences.".
On section 27, I have tabled an amendment to amendment No. 103 which is related. This amendment seeks that the electricity would be sold at spill price where there was excess over requirement so that there would not be a question under the power purchasing agreement which I understand has been agreed. The spill price would apply to any surplus the CHP plant would have. That would encourage CHP plants to operate and they would not have the fear of having excess electricity over their requirements. I think that would meet the bill.
The Minister's amendment is close to a proposal I put forward at an earlier stage. I will accept the Minister's amendment which is more professionally worded.
I have listened to the two previous speakers. Following on from what was said yesterday by Treasury Holdings, it was mentioned that my colleague, Deputy Gormley, supported the position. While Deputy Gormley met with Treasury Holdings and expressed interest, that did not amount to total endorsement. I wanted to clarify that because I think a little liberty was taken between what a Deputy might rightly be curious about and full endorsement. The Green Party supports favourable terms being given to CHP as it is much more efficient than conventional generating of electricity. I would like to hear the answer to the question put by Deputy Yates who asked if there had been any discussions between the Minister or her Department and the Minister for the Environment and Local Government on how far this Bill would go towards helping to meet Ireland's Kyoto obligations. We are at a critical part in the Bill if we are to take that obligation seriously.
I am pleased the Minister's amendment separates the generation and the supply of electricity because previously the two had come together and that was causing problems to smaller operators. It is important to separate the limit being put on conventional electricity or even CHP generation of electricity and the situation in which renewable forms of generation find themselves.
This aspect of electricity has huge potential in Ireland. The Minister and other speakers in this debate have acknowledged the potential of renewable energy. The amendment seeks to allow a limit to be put on the amount of power that can be generated by, for example, wind power and it goes against the spirit of competition which is behind the Bill. Like Deputy Stagg I am unclear if it will be to our common good to push this agenda. However, we have agreed to the directive.
The renewable energy sector will find its own level. I hope it will expand from a commercial point of view. However, if a cap is to be imposed it will put us at odds with our European neighbours and countries worldwide which are trying to force up the amount of renewable energy for reasons of security of supply as well as environmental criteria and obligations, including carbon trading and so on. I hope we can separate these strands.
Paragraph (c) of the amendment states:
subject to section 27, to supply electricity to final customers which in aggregate does not exceed the amount of electricity which is available to the supplier and which is produced using renewable or alternative forms of energy or is produced by combined heat and power.
On the question of limitations, it mistakenly appears to regard these aspects as coming from a similar stable. It is important to distinguish between CHP, which is a high producing and efficient enterprise, and a reliable source. It does not depend on the elements. This must be borne in mind when comparing it to renewable sources. The Minister has already separated generation and supply and I ask her to separate renewable energy from CHP. At present it does not make sense, even if the criteria of competition are taken into account.
Has the Deputy dealt with amendment No. 61 in his own name?
There has been much activity today, albeit couched in more polite language than previously. Many of us have lost sight of what we are about. When I inherited this directive, which had been agreed by the previous Government whose members included DeputyJohn Bruton, Deputy Spring and Deputy De Rossa, the arrangement was already made and put in writing as to how the directive would be implemented. I cannot say that often enough and I am sorry for having to repeat it for the third time.
I became Minister in 1997 and we started to hold open fora and debates. Inherent in this process was the fact that this legislation, the purpose of which is to implement the regime of a regulator, was to be in conformity with the directive as we had adopted it, that is, 28 per cent of the market opening on 17 February 2000 and 32 per cent in 2003. This is to be followed in 2005 by an EU review of all of the countries which have implemented the directive.
This objective appeared to me to be sensible. I am not of the school of thought that everything proposed by a previous Government must be rejected. Indeed, two Bills, dealing with Bord na Móna and Aer Rianta, were also in preparation when I took up office. I proceeded to implement the directive in accordance with the formal decisions made by the previous Government. In all of my meetings with people connected with the Bill I have said that the 28 per cent opening has been agreed across party benches. That is the reality.
The Bill has given rise to many amendments, which is good. It means there is debate and a meeting of minds, which can be excellent, and the Bill has been infused by that spirit. We have all increased our knowledge from the way we have dealt with the Bill. On several occasions I have accepted many amendments and I hope I will accept many more.
The Bill was published last December. CHP was not mentioned. I never heard from the very fine Aughinis Alumina until today. A delegation visited my Department this morning. I was attending a parliamentary party meeting. In the course of its submission it said it favoured the original amendment No. 59, in my name because it provided for unrestricted access to 100 per cent of the electricity market.
We must return to the first principle, which is my obligation to implement the directive and the first part of that process is the appointment of the regulator. The second part will be introduced in the autumn. The regulator will oversee the 28 per cent opening, enunciated and formally decided on by the previous Government, and carried on by me and my Department.
People have kindly complimented me for accelerating the opening up of the telecommunication industry by 13 months. However, that is a different industry. We must be careful about how we proceed here because there could be huge and unforeseen consequences for the country. One would be a vast amount of stranded assets. There is an allowance of stranded assets throughout the transitional period, but a vast amount of stranded assets, which it would be very difficult to control or manage, would be very serious for the country. It would be wrong in social policy terms to have the country proceed on that basis.
Combined heat and power, CHP, is a very good thing. That is why we included it in the Bill. However, there are bona fides CHP and those who are masquerading as CHP for other purposes. I must pay attention to that. The various stages agreed by the previous Government in respect of the years 2000, 2003 and 2005 have been accepted by me.
Mention was made of the Kyoto summit. However, we need to get a grip on ourselves. The Bill deals with the appointment of a regulator. I did not have a discussion with Deputy Dempsey. I accepted an amendment tabled by Deputy Sargent earlier in the debate which stated that the regulator, when appointed, would consult and bear all those matters in mind. However, this Bill has a narrow focus, which is its purpose. CHP was not mentioned when the original Bill was published on 4 December 1998 and my amendment will allow proper growth within the CHP regime and, obviously, as time goes by, there is no doubt it will grow. Why should it not? However, to allow a 100 per cent opening of the market, which is a gross distortion of what we said we would do, would be incorrect and an abuse of what we set out to do.
There is a need for lobbyists. It is proper in a democracy for meetings to be sought and granted and for debate to take place between people. However, it is wrong that lobbyists provide false information in the material they use to lobby. It is a negation and an abuse of democracy, and it has happened. I am not on a vengeful trail after anybody who did that because there are horses for courses and people go about their business in certain ways.
We cannot complain about the reportage of this committee because we are receiving full coverage, but I want it borne in mind that the aim is to appoint a regulator and to implement a 28 per cent opening of the market to eligible customers in February 2000. It beats me how we can suddenly equate that with the 100 per cent opening of the market because there is no equation to be made. Let nobody leave here and say the Government is not in favour of CHP. The proof of that is its inclusion in the Bill. There was no hue and cry when it was not included in the original Bill.
The AER is not in danger because arrangements are already in place for it to be bought by the ESB.
Were all of them cleared by the Commission?
Yes. Again, we are losing track of the fact that the only power plants that exist currently are owned by the ESB. Of course, there will be competition. It is the lifeblood of business and trade and I hope competition will be equally difficult for the ESB, Viridian and any other player. The planning permission applications from both companies to build power plants have been challenged and referred to An Bord Pleanála.
There is no doubt people have a right to challenge and, while we invest in fire and fury here, we do not know the result because it depends on the decision of An Bord Pleanála. That will be the deterrent for all future expansions but we hope it will work out. I did not visit the commission this morning but we are implementing the legislation which provides for a 28 per cent opening of the market. The first leg of that involves the appointment of the regulator and the second is the major legislation to be introduced in the autumn, which is currently being prepared.
Perhaps it would be more useful if I went into detail on specific points. I will deal first with paragraph (c) of amendment No. 59, which is the same as the original amendment. Let me eliminate the MTH part of the argument. I will give the view of Bord Gáis, which is not the most disreputable company.
I am sure it uses nice language in its more reflective moments.
Bord Gáis states that "CHP's electricity generation capacity in Ireland is limited by the demand for steam heat from the local host or customer". One must get heat to buy electricity. This is in the context of the inaggregate term in paragraph (c). Bord Gáis estimates that Ireland's electricity demand potential from CHP, excluding Aughinish Alumina, will be a total of 200 megawatts over the next five years, including new developments. That is less than 5 per cent of today's total market demand for electricity. The ESB said that if this were done the figure would be 100 per cent.
The issue regarding Aughinish Alumina is to supply a single premises which is mentioned in paragraph (d) of the amendment. Could that be refined to a single industrial site as well as to eligible customers? I support Deputy Stagg's amendment relating to the spill price and I made the point myself to the representatives from Aughinish Alumina. If one wants to use 40 or 50 megawatts of electricity from the heat and one has co-generation capacity of up to 250 megawatts, the electricity that is not sold to eligible customers must be sold at the spill price. I told the representatives I thought it was a fair price. I also met MSF about that matter, and I support Deputy Stagg.
MTH did not want that. I will explain my understanding of why Aughinish Alumina came into the equation so late. I also said its representatives appeared at the twelfth hour, but the company has a new owner from Switzerland. The last owner bought the plant for a fifth of the cost of building it. A total of 900 people are employed directly and indirectly and a high proportion of the local authority rates and the harbour dues are critical to the plant. It is a huge fish in the mid-west pond.
I am not saying it should be allowed to undercut the ESB, but it should be allowed into the 28 per cent of the market which will be opened up and it should be able to send unused electricity back to the ESB at the spill prices. That is a trade mechanism to be defined by the regulator. As I understand it, paragraph (d) excludes the company.
Does the Deputy agree with paragraph (b)?
Yes, I have made a point about that in regard to Aughinish Alumina. The new Swiss owners of the company are the first to be interested in co-generation whereas all the previous owners were interested in aluminium. That is why it has entered the picture so late.
The position of Bord Gáis is that the maximum output of CHP will be 5 per cent of the market - 200 megawatts - and the ESB estimates that 300 megawatts of new generation will be required every two years. That fits in with the overall scenario and it is not a dire station for the company. They say that, leaving aside Aughinish Alumina, most of the CHP sites in Ireland are on a small or medium scale. The majority of electricity demand would be used on the site only in the locality.
It is a complex matter but they say that regarding the "in aggregate" term, the current proposal suggests that suppliers can supply electricity to final customers which is produced using renewable/alternative form or combined heating power which, in aggregate, does not exceed the amount of electricity available to the suppliers and produced using renewable/alternative energy or CHP. They continue that the inclusion of "in aggregate" would seem to suggest that the CHP renewable supplier is restricted from supplying its customers' total demand for electricity unless the electricity is sourced from renewables or other CHP units. While the intention of the amendment to limit CHP renewables from supplying final customers with only a small fraction of their customers' demand from CHP renewables, the amendment in its current form would mean that the ESB would then be the only supplier able to supply the non-renewable/CHP source top-up and/or stand by electricity to the final customers.
They continue that this has the effect, therefore, of, first, reducing the competitiveness of alternative producers by preventing them from meeting all the customers' needs and, second, of enhancing the competitive position of the ESB as a CHP and wind operator and generator by mandating it with an inherent competitive advantage in the market as the only player which could provide all the customers' needs. In practical terms, it adds complexity and diseconomy to the customer/supplier relationship as the customer would appear to need a duplicate contractual, commercial and other technical arrangement, possibly metering, first with the CHP supplier and, second, with the ESB.
They have suggested that the way to meet both points in the context of the 5 per cent is to add: "The holder of a licence granted under paragraph (c), subsection (1), may supply top-up and stand by electricity to its final customers from a generating source/supplier it finds most economic". This would limit it to that customer's needs. This may be a fair compromise and meet that point.
Regarding the single premises, it has been put to me that perhaps this could be marginally adjusted between now and Report Stage. I am not an expert on these matters but a single premises may be something which is all on the one meter.
My two points are that if the phrase "in aggregate" remains in the Bill, the effect will be that the ESB must be a dual supplier of electricity. Perhaps the wording suggested could be considered or the "in aggregate" phrase changed. I also ask the Minister to consider the single premises issue.
The Minister said the Bill was narrow. However, it has awakened a considerable amount of interest.
It started off with a narrow focus.
Either the regulator has a huge fan club or many other interests want to get involved.
I think the Deputy's latter suggestion is correct.
In literature published before the last election, the Minister's party gave a commitment that each Bill would be audited from an environmental point of view. I thought of Kyoto when I read that. The Minister said the Bill is narrow and does not need to be audited.
I took the Deputy's amendment on board.
I accept that and I thank the Minister. The matter was discussed at length and I do not want to rerun the debate. However, this issue will have a huge impact on our Kyoto obligations in terms of whether one type of generation will be favoured over another. I may have the preceding amendment, but I note that even in the latest amendment No. 59 there is still a tendency to try to constrain the development of renewable energy as if it may run away with itself. This problem can only be imagined because it is unlikely to happen.
There are clear policies in other countries, such as Germany, Denmark, the Netherlands and the UK, which I assume are governed by the same directive, where customers can opt for renewable energy supply in full or partially. It comes down to allowing this to happen in Ireland. I would favour the lifting of constraints on the development of wind energy until such time as we are threatened by a takeover by wind energy. However, this is highly unlikely and in the realms of fairy tales. Even if it happened, it would be constrained by competition. Is it necessary to impose restrictions and put a ceiling on the development of renewable energy?
I support Deputy Sargent's point. It would be much easier if the provisions of sections 13 and 27 were in the same section because they are interrelated and connected. There is a gap between them and the point covered by Deputy Sargent relates to the amendment to section 27.
I would have no difficulty taking them all together.
With what amendments are we dealing? I do not understand. Which amendment will be taken first?
We dealing with amendments Nos. 59, 60, 61, 64 and amendments Nos. 1, 2 and 3 to amendment No. 59.
The amendments to the amendment will be taken first.
It is not my job to counter arguments made by another Opposition spokesperson but I do not agree with the points about Aughinish Alumina. The comments do not reflect reality. In its representations, Aughinish Alumina was looking forward to 100 per cent opening of the market where it could sell to any customer in the State.
It told me this would give it 100 per cent.
It does not involve 100 per cent opening of the market. That probably will happen eventually, but it may never happen. When European countries review this in 2005, they may decide there is enough opening of the market. There is nothing to stop national governments opening 100 per cent of their markets if they wish, but we have decided that 28 per cent is our objective——
In the first year.
——and to have CHP and green energy in addition. The Minister is trying to ensure that it is CHP and not something masquerading as CHP which wants to sell to 100 per cent of the market.
The arguments about Aughinish Alumina do not stand up. The single premises is clearly defined in the legislation as one or more buildings or structures occupied and used by a person where each building or structure is adjacent to or contiguous to the other buildings or structures. The Aughinish site is one premises under that definition. There is no problem with it having to have different criteria for different parts of its plant. It is considered as a single premises under the agreed definition. I do not understand the problem regarding Aughinish. I support the Minister's argument and we should progress the matter because we are going around in circles.
Which amendment to the amendment will be taken first?
Amendment No. 1 to amendment No. 59.
It relates to paragraphs (c) and (d) in amendment No. 59, which is the starting point.
The Deputy's amendment and not mine is being taken.
The Minister's amendment is being taken.
The amendments to the amendment will be taken first.
They are taken together for debate purposes.
Which amendment will be voted on first?
We have not reached the stage of a division. I made some detailed comments, for example, in relation to "in aggregate", to which the Minister has not replied.
Are we going to continue discussing it?
I made points to which the Minister did not respond. Deputy Stagg tried to answer them but the Minister did not respond.
That is incorrect.
The Minister did not respond to my point about "in aggregate". I painstakingly read out the views of Bord Gáis.
That is the view of Bord Gáis and it is entirely correct to put it forward. I have no complaint with that. It is a fine company which is well worth supporting. I am standing by my amendment - is it being taken now?
No, we have to take the amendments to the amendment first.
I have put points to which theMinister has not responded. She has not dealt with the new material I included relating to the holder of the licence, and I am waiting for her to reply.
They will be able to buy at the "top up" and "spill" rates, if that is what the Deputy is worried about. We will come to that under another amendment.
It has been suggested to me that the phrase "in aggregate" in paragraph (c) of the Minister's amendment No. 59, means the company could not exceed the amount of electricity available to the supplier in using renewable or alternative energy or CHP. I suggested a way of meeting this and gave a profile of what was involved, excluding Aughinish Alumina. I suggested providing that the holder of a licence granted under paragraph (c) may supply top up and stand by electricity to its final customers from a generating source or supplier which it finds most economic. Does the Minister agree or disagree with that?
What the Deputy says is correct but they can still purchase "top up" and "spill".
Before we make a decision I will not move my amendment No. 2 to the amendment in favour of the Minister's amendment which states the same basic principle in a better way. My amendment No. 3 would insert an additional subsection to make the supply of electricity of the board subject to section 27. That would enable the "spill" from CHP to be sold at "spill" prices. Am I wrong about that?
That would create a new licence.
Is it possible, without it, to allow the spill from CHP to be sold?
I will not press that amendment also.
- Deputy M. Brady,
- Deputy M. Brennan,
- Deputy P. Carey,
- Deputy B. Kenneally,
- Deputy T. Killeen,
- Deputy D. Roche,
- Deputy E. Stagg,
- Deputy N. O’Flynn,
- Deputy M. O’Rourke (Minister for Public Enterprise).
- Deputy S. Coveney,
- Deputy I. Yates.
I move amendment No. 62:
In page 13, subsection (2), line 11, to delete "shall" and substitute "may".
This is a simple issue. Section 13 states that the commission shall grant to the board, the ESB, a licence to generate and supply electricity to eligible customers subject to terms and conditions as may be specified in the licence. Everybody else may or may not get a licence but the word "shall" applies only to the ESB and not to its competitors. I suggest that to have a level playing field the word "may" should apply here instead of "shall" and should equally apply to all licence applicants.
This amendment would remove the obligation on the commission to grant the ESB a licence to supply eligible customers. There has been a fair amount of debate on this matter, not only among those in our Department but I am sure among Deputy Yates and his advisers and the media in general. The suggestion is that the Constitution could or would be invoked if the word "shall" remained in the legislation. Claims have been made also that it is anti-competitive as it treats the ESB differently from others who might wish to be granted licences. Whether we like it or not the ESB is different from other prospective applicants as it already has a statutory mandate to generate and supply electricity to all customers under the Electricity Supply Act, 1927, and taking account of that it is difficult to see why it should be refused. This matter was brought to my attention by way of letter, in spoken communications and from what I read in the newspapers. As a result, we asked the Attorney General for his advice and he has advised that while the word "shall" in the Bill is not unlawful, changing the wording from "shall" to "may" is agreeable. I accept the amendment.
I move amendment No. 63:
In page 13, subsection (2), lines 11 and 12, to delete "generate and".
This amendment removes the need to license the ESB for generation. The ESB has a statutory mandate to generate electricity under the 1927 Act. However, the requirement for the ESB to be licensed for supply is being kept in the Bill. The ESB currently supplies everyone at the public tariff. When the ESB is also licensed separately for supply to eligible customers, it will be able to tailor its supply tariff to those eligible customers so that it can compete fairly with any independent power producers who may enter the market.
A moment ago the Minister accepted an amendment to insert the word "may". At that time "generate" was included. The proposed wording now is "may" supply. Therefore, the ESB will retain an absolute right under the original legislation to generate.
They have that under section 27.
Congratulations Minister. I support the amendment.
I move amendment No. 65:
In page 13, between lines 13 and 14, to insert the following subsection:
"(3) Any licence granted under this section shall be deemed to contain a condition that it shall be subject to modification for the purposes of compliance with any enactment implementing, whether in whole or in part, Council Directive No. 96/92/EC of the European Parliament and of the Council of 19 December, 1996 concerning common rules for the internal market in electricity.".
This amendment proposes to ensure that a licence granted under the Bill will be subject to any modification necessary to comply with further enactments which implement the EU electricity directive.
I move amendment No. 66:
In page 13, subsection (4), line 18, after "any," to insert "as appropriate to the class of electricity generation concerned,".
Was what I am proposing in my amendment the intention of the Department because the section states "as the Commission may determine". I am interested to know what basis there might be for such a determination. I believe there would be considerable interest among those who feel, particularly in the renewable sector, that there is considerable importance attaching to the different types of classes of electricity generation. The scale of the operations are hard to compare because they are so great and small, as the case may be, that to be lumped together as just generating electricity could be seen as discriminatory. I would like to hear the Minister's views.
In general, it would make sense that a big application would have a big fee and a small application a smaller fee because the scale, scope and expense would vary greatly. The principle of the Deputy's amendment is not at variance with the intention of the Bill. The thrust of the amendment can be accepted and we have asked for the legalities to be clarified. The wording of the amendment introduces the term "class of electricity generation" which is not defined in the Bill. A different wording which would achieve the same aim as this amendment could be inserted after the word "determine" in line 19, such as "to be appropriate and the Commission shall make information on such fees available on request". This would mean that the commission would have the flexibility to determine different fees for different types of electricity generation such as wind, hydros, CHP or fossil fuel, if it deems it appropriate. I accept the thrust of the amendment which could be tabled on Report Stage or this wording could be included on Report Stage.
I will withdraw my amendment, subject to clarification of what will happen on Report Stage. Is there an amendment in the Minister's name which could express what I am trying to say?
If the above wording is agreed it could be read into the record. I have a wording which reads, "In line 19, after the word "determine" to add 'to be appropriate and the Commission shall make information on such fees available on request"'.
That is a lot less specific than what I was proposing.
I agree with the Deputy. It would be better to table an amendment. This would have more precision as to what the Deputy desires. I believe the thrust of the amendment would not mean everyone would have to pay the same fee. Bigger applications should cost more than smaller applications and this must be put into legal language.
This would avoid solicitors having to argue this point among themselves.
I move amendment No. 67:
In page 13, subsection (6)(c), lines 29 and 30, to delete "section 27” and substitute “section 28”.
This is a technical amendment which is required to rectify an incorrect crossed reference due to a clerical error. A reading of the text will make it clear that the reference in this subsection to section 27 should, in fact, read section 28.
Amendment No. 101 is consequential on amendment No. 68 and will be taken together by agreement.
I move amendment No. 68:
In page 13, between lines 30 and 31, to insert the following subsections:
"(7) The holder of a licence granted under paragraph (a) of subsection (1) may supply electricity to the holder of a licence granted under paragraph (b) or (c) of that subsection or to the Board.
(8) A licence granted under paragraph (b) or (c) of subsection (1) shall not authorise the supply of electricity to an eligible or final customer until after the 19th day of February, 2000.”.
This includes the definition of main heat customers in section 13. This is added at the end of the section. Subsection (7) is being changed as a consequence of the new amendment No. 59.
I move amendment No. 69a:
In page 13, between lines 30 and 31, to insert the following subsection:
"(7) The Commission shall monitor licensees to ensure that they continue to conform to all the conditions and requirements of their licences.".
Because of the fears expressed concerning the misuse particularly of CHP we should give specific powers to the Commission to monitor licensees to ensure that they continue to conform to all the conditions and requirements of their licences. That power is implicit in the Bill but this puts a requirement on the Commission to do this also.c
I agree. It is implicit in the Bill that they monitor the licensees. However, if it is made more explicit by this amendment, I will be pleased to accept it.
Amendment No. 98 has already been discussed but we had to postpone the section. Amendments Nos. 99 and 100 are related and will be taken together by agreement.
I move amendment No. 101:
In page 20, lines 14 and 15, to delete subsection (4).
I move amendment No. 102:
In page 20, subsection (5), line 17, after "subsection (3)” to insert “or (5)*”.
This refers to the Minister having to give notice of the order made under this section. The original text omitted to mention orders the Minister may make under subsection (6).
Amendment No. 110 is consequential to amendment No. 103 and amendments Nos. 104, 105, 106, 107, 108 and 109 are cognate alternatives. Amendment No. 1 to amendment No. 103 and amendment No. 112a are related. Amendments Nos. 103 to 110, inclusive, amendment No. 1 to amendment No. 103 and amendment No. 112a are to be taken together by agreement.
I move amendment No. 103:
In page 20, lines 21 to 31, to delete subsections (1) and (2) and substitute the following:
"(1) The Minister, after consultation with the Commission, may, from time to time, prescribe the total amount or amounts of electricity from renewable or alternative forms of energy or from combined heat and power which may be supplied to final customers under section 13(1)(c) in any specified period and different amounts may be specified in respect of different types of renewable or alternative forms of energy or combined heat and power.”.
This amendment is in substitution of amendment No. 103 on the original list of amendments. My purpose in this is to remove the references to CHP in the original amendment, as the proposed amendment No. 59 would remove that need. Combined heat and power would be self-limiting since it is already limited to the single largest heat customer of the plant. This is a consequence of amendment No. 59, taken today.
Deputy Sargent raised this issue earlier and I am sympathetic to the point he is making. We are now talking about wind energy, waste energy——
Wind, wave and solar.
I suppose waste would be included there. I do not know why we would put a cap on this.
It is very small.
Nobody has made a case for a cap being put on this. I accept if there were a cap, it would have to be separate, otherwise wind would take the whole lot. If we got 500 megawatts of alternative energy in the next two or three years, that is about what we would reach. There is potential for more than that and we should encourage growth. None of the major players is fretting about this and the cap will limit the potential to develop.
I take the Deputy's point. I got percentages in Europe and they are mind boggling, though they are now a couple of years old. The percentage of wind, wave and solar or biomass energy in this country is very small. I think Denmark supplies 13 per cent of its energy through alternative sources.
It is 40 per cent.
They are aiming for that. We are the lowest in the league for alternative sources and the idea of a cap is ludicrous because of that. It may be ten generations before there is a breakthrough, although I hope not. On reflection, I am disposed to taking away this and I can do so on Report Stage.
I see the point. Wind or solar power might advance and a differentiated cap might be needed for each. However, as of now it is not needed. Let us say we thought wave power should be promoted. That could be done at the expense of solar or wind power, but we are not in that league yet.
It reflects the thinking I recall in the Department. I recall the AAR competition, where we imposed limits for no good reason. They were hugely oversubscribed - in one instance we had four times the figure we originally set and we had to agree to take more than we originally agreed to. A cap will put a damper on the possible development of renewable or alternatives.
There are already considerable restraints, apart from our dependence on variations in wind. We also depend on the planning process, which has produced many arguments in this area. I am informed that technical developments in the area of the grid mean it will in future be more like a telephone system than the traditional single line grid. There will be a lot more two way flow and accessibility will be improved for smaller generating opportunities. It allows us to look differently at the regime of electricity generation we have had up to now.
This is a technical area on which I do not feel qualified to comment, but I am informed that in some areas this field is changing faster than we can legislate for. I am delighted the Minister has reflected on the merits of this and I hope we can ensure on Report Stage that there is no cap and, thus, encourage the renewable sources rather than putting obstacles in their way.
I move amendment No. 1 to amendment No. 103:
To delete all words from and including "renewable" in the third line down to and including the last line and substitute the following:
"combined heat and power which may be supplied to final customers under section 13(1)(c) in any specified period. Where this electricity is supplied to the Board the price to be paid for this electricity will be the same as the Spill Price for Independent Power Producers (IPP’s) to be decided by the Commission under section 8(1)(a).”.
That provides what the Minister now says she is going to do. It puts a cap on CHP. The amendment seeks to have the Bill read:
The Minister, after consultation with the Commission, may, from time to time, prescribe the total amount or amounts of electricity from combined heat and power which may be supplied to final customers under section 13(1)(c) in any specified period. Where this electricity is supplied to the Board the price to be paid for this electricity will be the same as the Spill Price for Independent Power Producers (IPP’s) to be decided by the Commission under section 8(1)(a).
There may not be a continuing argument for a cap on CHP, given our earlier debate. However, there is a strong case in favour of CHP being allowed to spill and to be paid for spill where that is a possibility. It may be a small spill, but it will give CHP a safeguard if it has excess electricity.
Deputy Yates raised that point earlier. I will leave this until Report Stage to figure it out further.
I am still afraid of the abuse of CHP and, as a result, I am still in favour of a cap on it. Someone mentioned a figure of 5 per cent.
I would like to see if this equates with what we did earlier
This puts a cap on.
I support amendment No.1 to amendment No. 103. I would have tabled a similar amendment but this one was submitted while I was away. I met a delegation from MMF2, engineering people from within the ESB, and I was very impressed by their independence and their balance of engineering efficiency with public assets. Amendment No. 59 caused the ESB to become alarmed at the prospect of CHP generators having access to 100 per cent of the market. The amendment we are now discussing supports the bona fide people. Some CHP people told me that the spill price was no use to them because, at two pence per unit, it would not pay them. For the bona fide CHP people who have waste heat which they are converting to electricity, the spill price is economic. Therefore, this is a market mechanism to distinguish bona fide CHPs from others. The spill price will be determined by Mr. Reeves, as regulator. A balance will be struck between the needs of someone who simply uses heat in the office and a fair price. There is considerable merit in this proposal and it is the right way to cap CHP.
Let us assume, for example, that the new Swiss owners of Aughinish Alumina decide to build a co-generation plant for 250 megawatts. If they can sell 20 megawatts to eligible customers and need 40 megawatts for their own use in Aughinish, they will have 190 megawatts for sale. Aughinish Alumina will secure the jobs in its plant, it will have cheaper electricity because its CHP plant will use heat which otherwise would go up the chimney, the region will be supported economically and the ESB will not be undermined because it can buy back 190 megawatts of electricity at the spill price. There is much to commend this amendment. Whatever one may say about the authors of various amendments, this comes from a source which cannot be criticised on those grounds.
I am not in favour of having a cap on genuine renewables. There is no need for it. None of them will be rampant. I wish they were, but they are not capable of beingrampant.
The Minister is encouraging rampaging.
I am encouraging rampaging. I had better mind my language. If the huge number of megawatts, as outlined by Deputy Yates, were being given to the ESB at the spill price, this could lead to stranded assets. There is a need to limit spill.
Arising from earlier amendments, we now have a confined genuine CHP and, therefore, spill will be very limited.
I suppose that is so. Deputy Yates was talking about 150 megawatts.
The amendments passed earlier will ensure there is very little spill.
We must have a safety net and an additional commercial encouragement for genuine CHP generators.
Bearing in mind the useful contributions that have been made to this debate, I will return to this matter on Report Stage.
There is very little difference between the Minister's amendment No. 103 and the proposed amendment to it. Can the Minister explain this difference? She has changed her mind four times on this section.
Deputy Yates has changed his mind 44 times.
The Minister is always flexible.
Like a credit card, I am your flexible friend.
The Minister's brother coined the phrase, the futility of consistency.
And he was right.
Amendments Nos. 104 and 105 cannot be moved.
Amendment No. 103 has been withdrawn. Is this the basis on which amendment No. 104 cannot be moved?
Yes. The Minister has said she will return to amendment No. 103 on Report Stage. Amendment No. 104 may be moved then.
If the Minister, after consultation with the commission, were to set a cap on renewable fuels, she should also consult with the renewable fuels industry.
I will require the commissioner to consult with the renewals industry, no matter what happens.
If there is no cap he will have no need to consult them on it.
He must consult them anyway.
Amendment No. 111 is in the name of Deputy Yates, and No. 112 as an alternative, and, therefore, they can be taken together by agreement.
I move amendment No. 111:
In page 20, between lines 37 and 38, to insert the following subsection:
"(5) Recognising that renewable energy is intermittent in supply, and that it is the intention of this Act to allow suppliers of renewable energy access to all electricity customers, the Board, in the case of its customers and holders of licences or authorisations except renewable energy licence holders, shall be obliged to supply the balance of electricity not supplied by the renewable energy supplier.".
This is when the wind would not blow.
I am told there is a problem relating to amendment 59(c), which was taken previously. The wind caused a problem because it does not blow all the time. It was put to me that the inaggregate business caused the problem. Wind is the only player in the renewables field in 1999.
What about the wave?
The wave is a long way behind, as is waste. The megawattage is insignificant, but I do not want to criticise it. If we are serious about supporting the wind option, this amendment should be considered sympathetically. It is self-explanatory and recognises that the wind blows about 40-50 per cent of the time. It would allow suppliers of renewable energy access to all electricity customers, with the ESB supplying the balance. For instance, a green customer might want to go to a wind supplier, but might also want the light on at night when the wind is not blowing. The ESB may refuse to give the customer a back-up supply because he or she is using a wind electricity supplier. I am not saying it would do that, but it could. This amendment would oblige the ESB to supply the balance. There should be an obligation on the ESB to provide the balance of the power - the 60 per cent - so that people who wish can buy green, even if they pay a little more for it.
Amendment No. 112 is slightly different, but it stresses similar matters to those stressed by Deputy Yates. Subsection (5) is regarded as being the key to the development of renewable energy. The wind sector would have the strongest lobbying power. It would sound the death knell not to have it. That is what it believes.
The wind sector, which is the loudest lobbyist in the renewable area, has expressed its concerns in this regard. It is important that the Minister takes into account the technical reasons it sees this as critical. It is also critical from a marketing viewpoint. As Deputy Yates said, it allows a customer to make a conscious decision to use the maximum amount possible of renewable energy in his or her premises. That will not happen unless there is a sympathetic view taken of subsection (5).
The wording can be discussed later, but the principle should be accepted because wind and the renewable sector regards it as critical that the balance should be provided by the ESB or conventional power. The Danish electricity industry has shown how this can be done. We are not inventing the wheel with this amendment.
I support the principle of this. During one of the AER rounds, the Government decided that green electricity would have access to any customers.
That was part of the Government decision of 1996.
The ESB frustrated that decision to the point where not one single unit of green electricity was sold. It did this in two ways, namely, with spilling charges so outrageous that nobody could use them or by not telling customers how much the spilling charges were or the cost of transporting electricity from one point to another. It also refused to give this top-up or supplementary supply to a customer who was using green electricity. It deliberately frustrated a government decision.
That was a former Government decision.
These amendments would make it illegal for the ESB to do that.
We are talking about supplementary supply or the balance. It is like a mother breastfeeding a baby who finds she has to supplement it with a bottle. The thrust of the amendments is correct, but they would have to be subject to the trading mechanism which will be part of the remit of the Bill. I will reorganise those and put them forward on Report Stage, but subject to the trading mechanism.
For the Minister's consideration on report stage, the method used in other countries is that the customer receives two invoices at the end of the billing period. The ESB could facilitate that as the technology exists and is easy to install in the customer's premises. The actual transmission, supply and connection to a house, which is within the monopoly of the ESB, is where they can choke this.
I do not know who is going to get it or how many invoices are going to come out.
There is no other way it can be done.
I am going to say "subject to the trading mechanism", but I am going to put forward the best of what the Members suggested. We will all view it on Tuesday.
Amendment No. 112a has already been discussed with amendment No. 103.
I move amendment No. 112a:
In page 20, between lines 37 and 38, to insert the following subsection:
"(5) The Minister, after consultation with the Commission, may, from time to time, prescribe the total amount or amounts of electricity from combined heat and power.".
The earlier discussion highlighted that there is a difference between putting a cap on CHP and renewables.
Yes, that is right.
I will withdraw the amendment because a conclusion will be produced on Report Stage.
We will produce the proper formula for all that.
I move amendment No. 195:
In page 5, lines 7 and 8, after "ESTABLISH" to insert "A BODY KNOWN AS AN COIMISIÚN UM RIALÚ LEICTREACHAIS OR IN THE ENGLISH LANGUAGE".
The amendment is self-explanatory.
Amendment No. 196 has already been discussed with amendment No. 39.
My amendment No. 196 states:
In page 5, line 15, after "CUSTOMERS," to insert "TO PROVIDE FOR THE INCREASED SUPPLY OF ELECTRICITY GENERATED FROM RENEWABLE AND SUSTAINABLE SOURCES,".
This amendment was discussed with amendment No. 39 but the Title is of slightly different relevance than the body of the Bill, in that it states to a person viewing the Bill for the first time what they could expect to see in it. As the Cathaoirleach has already mentioned, we have already stated that this subject has come up in the course of the Bill. In light of the pre-election commitment by the largest Government party to vet all its policies from an environmental point of view, it would be an excellent follow-up to that commitment to have a reference to "the increased supply of electricity generated from renewable and sustainable sources" included in the Bill.
I am not in a position to accept that amendment, thus putting that wording in the Title of the Bill. I have been informed by the Attorney General's office that it would be inappropriate to insert the wording in the Title of the Bill.
The fruits of much of what we have done will mean that in years to come people will be using more renewable energy sources. I cannot state the obvious in the Title of the Bill.
There is no cogent reason the Minister cannot do so. The Bill does not contain the aspiration, it contains the intent, the Title. That is why.
It was worth a try.
Deputy Sargent has won many a try.
It was worth a try and I would like to see the wording inserted.
Deputy Sargent takes Fianna Fáil's pledges far too seriously.
I have become disillusioned in the course of the debate.
The Minister kindly arranged for us to have a meeting with her officials tomorrow at 11.30 a.m. In view of the complexity of the Bill with its 196 amendments - and amendments to the amendments - can the Minister's officials present to us at some appropriate time the amendments we should withdraw on the basis that they are agreed? There have been a number of cases where the Minister accepted our wording to avoid repetition. On Report Stage I usually resubmit all the amendments I have withdrawn on Committee Stage so that I will not miss anything. I am aware of at least 12 amendments that the Minister has accepted. If we were so advised there would be no need for us to re-table some of the amendments.
I will agree to that.
In that way we will just have the net issues of disagreement left.
It would be of huge assistance to us if we could have the transcript of the committee meeting before Report Stage.
Where do we obtain it?
I do not know.
I cannot help the Deputy with that. That is up to the committee. We have everything except yesterday's committee proceedings.
I have not received any yet.
The Department has them.
Can the Chairman talk to the Clerks about this because of the urgency involved? He should try to get the transcripts or report for us.
I am told that the Debates Office has them.
I know they were working on them yesterday evening.