I welcome the Minister of State and his officials to the committee. I suggest we continue without interruption until 6 p.m., suspend until 6.45 p.m. and then return and hopefully conclude. Is that agreed? Agreed.
Gas (Amendment) Bill, 2000: Committee Stage.
I think the intention is to complete Committee Stage today if at all possible.
I thank the Chairman and members, particularly Deputies Yates and Stagg, for their co-operation in this matter. It is very important that the legislation is processed as expeditiously as possible. I am very anxious to have the Bill enacted before the recess for two reasons, the first being the urgent need to provide certainty for prospective power producers about the availability of capacity in the natural gas network and the second being the need to level the playing field between Bord Gáis and others who wish to build gas pipelines. The provisions in the Bill will remove obstacles which currently exist on both fronts.
I wish to clarify the role of the commission for electricity regulation in the context of the Bill. Its role extends only to the provisions relating to capacity allocation. In that regard the role of the commission is to act as an independent adjudicator in deciding which of the applicants for capacity should be entitled to an allocation in accordance with the selection procedures set out in the Bill and its accompanying regulations. This selection procedure is quite prescriptive. The Bill does not extend the functions of the commission in relation to the regulation of the electricity market. Neither does it give the commission a function in relation to the regulation of the gas market.
Before proceeding with the amendments I wish to thank Members, particularly Deputies Yates and Stagg, for their constructive approach in tabling the amendments. I share common ground with them. While the wording of my amendments will differ in many instances from those of my Opposition colleagues, I feel many of their concerns will be addressed.
SECTION 1.
Amendment No. 1 is consequential on amendment No. 38 and amendments Nos. 2, 3 and 4 are related and these amendments may be taken together by agreement. Is that agreed? Agreed.
I move amendment No. 1:
In page 5, subsection (1), between lines 32 and 33, to insert the following definition:
" 'combined heat and power schemes' shall be defined as power generating capacity that is combined with heat production and shall not exceed a generating capacity of 25 megawatts;".
This group of amendments deals with the definition of combined heat and power schemes. I am seeking to define them and then exclude them from the scope of the Bill. As it stands, the Bill treats combined heat and power plants as power generation and thus could prohibit all new CHP building until 2004. I know this is probably not intentional, but CHP is a very efficient use of gas by industry and commercial businesses for the provision of power generation and heat as it involves the dual process. Its promotion is a central plank of the Government's greenhouse gas abatement strategy. As the Bill is drafted, CHP would be classed as a power station and would effectively be precluded from capacity on the gas system until September 2004 when additional gas is available. The definition in the amendment which excludes CHP addresses this issue.
Deputy Stagg's amendment mentions 20 megawatts while mine mentions 25 megawatts, the figure used by the Minister in his amendment, and I am not concerned which value is included. On the surface the Minister's amendment appears to address the issue.
Amendment No. 38 was suggested to me by Bord Gáis Éireann. I have been approached by an interest group in relation to all the amendments I have tabled. I believe the Opposition is the last conduit for these interest groups to discuss this issue. I am not saying I will push the amendments to a vote but I would like to have them debated so that we can decide what is in the best interests of the public and the consumers at the end of the day. I rest my case on that.
During the debate yesterday on the Estimates, I mentioned that during my recent informal discussions Tom Reeves indicated that we made a mistake in the way we dealt with the electricity liberalisation vis-à-vis CHP. If someone wanted to build an industrial estate, say, in Kildare and have a combined electricity and heating plant for that, effectively we have not allowed for it, even though it would be limited in size to 20 megawatts. It would not be selling electricity in the normal sense of the word, which is a pity, because this would reduce CR2 emissions and improve cost efficiency. Arklow business park would be ideal for a CHP. This is a pity because I do not believe it would distort the overall electricity market. This Bill will not deal with that issue but the amendment will deal with the problem of facilitating CHP plants getting gas, which is what this is all about.
I will not move my amendment in favour of the Minister's, which I believe is better than mine. We must ensure that the CHP sector of the industry can continue to prosper. I take the point that if the very avid promoters of CHP had not shot themselves in the foot during the electricity debate there might have been a different outcome to the Bill. This was very much their own doing, therefore, we should probably look at the issue again.
Like Deputies Yates and Stagg, I am very enamoured with CHP technology and I am on the record in this regard. I agree with Deputy Yates's sentiments vis-à-vis his conversation with Tom Reeves that it is a pity about the treatment CHP got at that time.
These amendments seek to ensure that smallscale CHP plants are outside the scope of this scheme. Deputy Yates proposes an amendment that defines CHP schemes, excludes CHP stations below 25 megawatts and proposes that BGE should not be prevented from entering a contract with CHP developers. Deputy Stagg also proposes an amendment to the definition of generating stations that would exclude stations below 20 megawatts from the allocation scheme. I know both Deputies share my interest in encouraging the development of the combined heat and power market in Ireland.
I have been advised that the most effective way of ensuring that smallscale combined heat and power generators are excluded from this scheme and are able to apply for capacity in BGE's network in the normal manner is by including its threshold in the definition of a generating station, which would be sufficient to exclude all smallscale CHP projects. My amendment sets a threshold of 25 megawatts. I have been advised this is required to cover all the smallscale CHP projects likely to come to fruition in the next few years. I ask that my amendment No. 2 be accepted, thereby eliminating the need for amendments Nos. 1, 3, 4 and 38.
In response to what the Minister of State has said, amendment No. 2 deals with the points raised in amendments Nos. 1 and 3. However, it does not deal with the point made in amendment No. 38. Will the Minister of State accept amendment No. 38 which reads, "Nothing in this section shall prohibit Bord Gáis Éireann from entering into any new contracts to provide gas capacity for the purpose of combined heat and power schemes"? I accept that a threshold of 25 megawatts is being created for power generating stations which would cover all smallscale CHP plants, therefore, I am happy to withdraw amendments Nos. 1 and 3 on that basis. However, I do not think the proposal in amendment No. 38 has been met. While smallscale CHP plants will be exempt following the Minister of State's amendment, there is nothing to affirmatively state that BGE can sell them gas. This should be stated explicitly in the Bill and I ask him to accept amendment No. 38 on that basis. Therefore, I will withdraw amendments Nos. 1 and 3.
I would have thought that the Minister of State's amendment excluding capacity below 25 megawatts excluded all generating stations below that level, therefore, the existing right of BGE to supply them would stand andwould not have to be restated. The difficulty with amendment No. 38 might be that someone other than BGE might want to supply to CHP stations in the near future and this would have to be stated also.
I can see a danger in mentioning specifically Bord Gáis Éireann for the reasons the last speaker touched on. I do not see why it is necessary to make this positive statement in Deputy Yates's words. I see a danger in doing so because, as Deputy Stagg mentioned, if some other supplier comes along at a later stage the legislation would have to be amended. I do not see the problem envisaged by Deputy Yates.
I am grateful for the comments on amendments Nos. 1, 3 and 4. There is concern in relation to amendment No. 38 but there is nothing in the legislation to prevent BGE from selling gas to CHP stations. Therefore, there is no need to state it in the Bill.
Now that I have been flushed out into reaching for my ammunition, I will read the briefing I received from BGE:
Section 9 of the Bill places a severe restriction on new gas contracts that may be entered into by Bord Gáis. It precludes Bord Gáis from being a gas supplier to the generators that win capacity in the scheme. This is not even in the interests of the successful power stations as their supply options are being unnecessarily and probably unintentionally restricted. As the Bill is drafted, there could be days when Bord Gáis has gas available that is required by power stations that it would be prohibited from selling. It also precludes Bord Gáis from supplying gas to other generators, including the ESB, even where such contracts have no impact on the rights of the capacity winners. Bord Gáis totally respect the need to ensure that the power generation plants that are awarded capacity on the allocation scheme must be able to secure capacity and gas suppliers as per the Bill. However, we see no need to restrict other transactions that do not impinge on their rights. We suggest, therefore, that the section be redrafted so that Bord Gáis can enter into contracts provided the rights of new capacity holders are protected.
I can allay the Deputy's fears and those of his clients.
A client is someone who pays one money for a service.
I do these things for nothing.
The amendments proposed to section 9 will completely eliminate BGE's concerns articulated by Deputy Yates.
Is the Minister saying this has been dealt with?
That is correct.
Amendment, by leave, withdrawn.
I move amendment No. 2:
In page 6, subsection (1), line 12, after "electricity" to insert ", the rated generating capacity of which is more than 25 megawatts".
Amendment agreed to.
Amendments Nos. 3 and 4 not moved.
I move amendment No. 5:
In page 6, subsection (1), to delete lines 19 to 25 and substitute the following:
"(b) so as to allow capacity made available by those means to a person selected to be withdrawn for reasons other than, or in addition to, those provided in the said code for-
(i) a period or periods not exceeding 240 hours in total in any period of 12 months, or
(ii) such longer period as the Commission may specify having due regard to the physical capability of the natural gas network at the location of the generating station concerned, in such circumstances as may be specified by the Commission for the purposes of this Act (which the Commission is hereby empowered to specify);".
I have been advised that the existing wording of the definition of "interruptible capacity" could be construed as meaning a single period of interruption of ten days duration. I have also been advised that it would be preferable if the period of time was expressed in hours rather than days because in the normal operation of the gas market interruptions can be for hourly periods rather than daily periods. The proposed amendment will meet these concerns.
In addition, in this amendment I propose that the Commission for Electricity Regulation should have discretion to allow for longer periods of interruption, on the basis of the information it will have at its disposal on the constraints that exist in the network in different geographic areas. A higher level of interruptible supply may be preferable for some generators.
Amendment agreed to.
I move amendment No. 6:
In page 7, between lines 19 and 20, to insert the following subsection:
"(3) References in this Act to a holder of relevant rights using, for the relevant purposes, an amount of the capacity of the natural gas network shall be construed as including references to the holder using, for those purposes, that amount through an agent (being an agent approved in writing for the purpose by the Commission before the agent makes such use of that amount on behalf of the holder).".
This amendment is necessary to allow the selected power generators who may wish to source their gas supplies from suppliers other than BGE to nominate their gas supplier or shipper to accept and use the capacity rights on their behalf. The stipulation that the commission will have to approve the nomination is proposed in order to prevent gaming, that is the possibility that the generators selected might seek to sell their capacity rights onto other persons who might use them for purposes other than power generation.
Amendment agreed to.
Section 1, as amended, agreed to.
SECTION 2.
I move amendment No. 7:
In page 7, lines 43 to 48, to delete subsection (1) and substitute the following:
"(1) In this section, 'relevant purposes' means-
(a) the purposes of supplying natural gas to a single generating station (construed by or on behalf of the person who, by virtue of being selected, is entitled to use the capacity of the natural gas network in that regard) for the purpose of providing energy for the generation of electricity at that station, and
(b) such other purposes involving the use of that capacity, being purposes which the Commission is satisfied are of a limited and special nature and approves in writing before that capacity is put to such use.”.
This amendment extends the meaning of "relevant purposes", that is the purposes for which the capacity rights awarded are to be used. The definition of "relevant purposes" in the Bill as published was essentially for the purpose of generating electricity. This amendment extends the definition in paragraph (b) of the amendment to include the possibility of the capacity rights being used for other purposes provided the commission is satisfied that these other purposes are of a limited and special nature.
After publication of the Bill a number of industry representatives expressed the view that the scarce capacity in the network which has been reserved for this allocation scheme should be available for other uses until the selected power generators are ready to take up their capacity rights. I agree with that view. It would be ridiculous effectively to freeze the capacity until the selected power producers were ready to use it. The amendment will allow for the efficient use and management of the available capacity until the selected power generators are ready to use their rights. It will not interfere with the rights of the selected people. Once they are ready to use the capacity they have been allocated it must be available for their exclusive use.
What does the Minister have in mind when he speaks of other purposes? I cannot envisage a situation where someone might want a supply of gas between now and the time when the power station is built and not when the generators are taking up their share of the market.
It might be used for testing purposes for the start up of a plant, for example. This use would be overly constrained if this provision were not made.
Amendment agreed to.
I move amendment No. 7a:
In page 8, subsection (3)(b), line 15, to delete “any period of 12 months” and substitute “any period of 12 months or less that is”.
This is a minor but important technical amendment. It is proposed that the periods for which selected persons can have rights may be for increments of less than 12 months. This amendment is necessary to ensure the commission is capable of allocating capacity for a period of less than 12 months if necessary. For example, if one of the successful applicants was to be allocated capacity rights and wished them to be available from June 2002, the commission would be able to allocate capacity for a period of 12 months from June 2002 to May 2003, 12 months from June 2003 to May 2004 and for a period of four months from June 2004 to September 2004, the last month for which capacity can be allocated. This is something which should have been seen in advance but is being put right at this stage.
Amendment agreed to.
I move amendment No. 8:
In page 9, subsection (7), line 10, after "gas" to insert "per day".
The words "per day" should have been included. This oversight needs to be corrected.
Amendment agreed to.
Amendments Nos. 9 and 10 are related and may be discussed together.
I move amendment No. 9:
In page 9, lines 17 to 25, to delete subsection (9) and substitute the following:
"(9) Regulations shall provide that a person who has been selected may, at any time after the determination referred to in subsection (3)(b) has been made in relation to him or her, request the Commission to vary the types of the capacity of the natural gas network, the subject of that determination in relation to him or her, by increasing the proportion of that capacity which is interruptible as distinct from firm in any particular period and that the Commission shall consider such a request and, if after consultation with the Board, it is satisfied that such an increase-
(a) is practicable from a technical standpoint, and
(b) will not adversely affect the relevant rights of the other persons selected or the rights of any other persons to use the capacity of the natural gas network, shall make such a variation and, accordingly, increase the said proportion of capacity by such amount as it considers appropriate.”.
The existing text in subsection (9) of section 2 provides that proportions of firm and interruptible capacity awarded to the selected power generators in any 12 month period must be the same as the proportion in the network. While the Commission for Electricity Regulation will initially allocate firm and interruptible capacity to the selected power generators on a proportional basis, this amendment will allow the power generators to seek the commission's approval for a larger proportion of interruptible capacity than that proportion initially allocated by the commission if that would suit the requirements of their proposed plant.
The commission may decide to grant such an increase if it is satisfied, having consulted BGE regarding the technical feasibility of allocating a larger proportion of interruptible capacity, that allowing such an increase would not have an adverse impact on the rights of other persons selected. Amendment No. 9 removes the need for subsection (10) of section 2 and it is proposed that it be deleted.
Amendment agreed to.
I move amendment No. 10:
In page 9, lines 26 to 32, to delete subsection (10).
Amendment agreed to.
I move amendment No. 11:
In page 9, after line 48, to insert the following subsection:
"(12) Regulations may provide for the Commission to have such additional functions in connection with capacity on the natural gas network as the Minister sees fit and may include such ancillary provisions in relation to those functions as appear to the Minister to be necessary or expedient.".
This is an enabling provision. Notwithstanding the Minister's introductory comments, with which I do not entirely agree, that the scope of the Bill be limited exclusively to the question of what the CER might do in the context of capacity allocation, we now have an opportunity to allow the CER to look at other functions. This amendment would do that. A number of other areas may develop in relation to new pipeline capacity and so on, and this would be a useful addition to the armoury of the CER if the Minister asked him to assess or examine other functions.
The EU gas directive is due to be implemented next August and its implementation has not been dealt with in primary legislation. It is not being addressed in this legislation and we will be behind other member states in implementing the directive.
This amendment is a modest attempt to insert in the powers of the commission additional functions in connection with the capacity of the natural gas network, as the Minister sees fit. That is reasonable and prudent and I ask the Minister to accept it.
I do not agree with the amendment. I am not enamoured with the so-called independent commission. As far as I am concerned, "independent" means it is not responsible to anyone and it should be. I would prefer to have the Minister as the accountable regulator than someone we would see occasionally. There is a danger that when the Minister would have a sticky wicket, pricing for example, to deal with he could pass it to the regulator. The democratic deficit would grow by the hour.
When Deputy Yates referred to Second Stage the words used by Deputy Stagg during that debate rang in my ears. I do not believe he wanted to give the regulator any powers at that stage. This amendment proposes to give the commission additional powers in regard to the capacity in the network in the regulations under the Bill and to provide for other ancillary provisions as the Minister sees fit.
My principal concern is for the introduction of an allocation scheme for scarce capacity in the gas network and to create a level playing field between BGE and private pipeline developers in the natural gas sector. I do not propose to give the commission any additional functions. The granting of powers in relation to the gas network will be addressed in the context of the ongoing restructuring of the natural gas sector. The Bill provides for the inclusion of ancillary provisions in the regulations.
I am reluctant to extend the powers of the CER in a piecemeal fashion. We would need to consider such issues comprehensively in the context of overall legislation to restructure the gas industry. That will be addressed in the future. Deputy Yates' suggestion, meritorious as it is, might be best considered in that context rather than in this limited and custom built legislation.
When is it intended to transpose the EU directive into national law? When is that Bill likely to be published? Will it dealt with at this point? Notwithstanding Deputy Stagg's phobia about regulators we need to be clear on this. The Minister as the body corporate is the shareholder of a monopolist BGE. The EU directive will oblige that inherent conflict of interest to be changed. I do not know of any plans to privatise BGE and I do not advocate that but this is the same position as applied to Telecom, aviation, transport and so on. There is a predictability and inevitability about it. I am in favour of greater accountability for regulators, especially to this House and perhaps this committee. I would be prepared to withdraw the amendment if I heard something more tangible about the Government's legislative intentions regarding implementing the directive. As we know, we start off with a consultation paper and then we have talks about talks and time slips by. As I understand it, we will be in default from August this year in terms of the target date for the implementation of the directive.
I assure the Chair, the committee, the Minister and Deputy Yates it is not a phobia in the form of an illness but a principled position of demanding that there be democratic accountability for public functions. The regulator, as we have established regulators, does not have the degree of accountability that I see as desirable. That creates a democratic deficit. We have a sufficient transfer of powers from this House to various quangos, including regulators and regulatory commissions, without enhancing that transfer of power from the people and their representatives. I also remind Deputy Yates that if he wants to sit where the Minister is, he will not do so without my support and he should take on board what I have to say on the matter. I am glad to hear he is against privatisation of Bord Gáis which is a new position for him and his party.
I said I was not advocating it.
There is no doubt but that the directive allows the Minister to retain regulation. If he wants to know how to do it all he has to do is look at what the French did with the directive. They have retained the regulation in the ministry. It is desirable to do so. We are in a programme of privatisation and will have the worst of both worlds. We will not have a shareholding in or regulation of the strategic companies on behalf of the people we represent. Whoever is in power, we need to examine where we are going with both the ownership of the companies and their regulation and control.
We are fortunate to be ahead of the game as far as the directive is concerned. It is largely in force already but we will be introducing comprehensive legislation to implement all its elements, hopefully in the coming year. It will address regulation of the gas industry.
Amendment, by leave, withdrawn.
Section 2, as amended, agreed to.
NEW SECTION
I move amendment No. 12:
In page 10, before section 3, to insert the following new section:
"3.-The Minister shall within 2 months of the passing of this Act report to each House of the Oireachtas on progress made towards the putting in place by the Board of a second gas interconnector.".
I tabled this amendment more for discussion purposes than to amend the Bill. The gas 2025 study recommended that Bord Gáis proceed immediately with the building of a second interconnector between Scotland and Ireland to provide the gas we need. Even if were to find a gusher in the Corrib field, and that has not been properly assessed yet, we would need a second interconnector to export the gas. I do not believe you can have over-capacity. It would be good for customers that other people could use it to import gas and compete with Marathon for the time being and the Corrib field and Enterprise Oil. It would be a good decision to have a second interconnector.
Consultants were appointed and they produced a report that is lying on the Minister's desk, although it is not doing so long enough to gather dust. I know the Department is looking at the various options but we cannot go wrong on this. Additional capacity can only be good for the end user. We should proceed with this decision and allow Bord Gáis deal with this matter now. If we find gas off the Mayo coast and have over-capacity we can export it. We do not have to pump all the gas out of a new well as soon as it is found. It can be used as it is sold and it will allow for competition. That applies to whatever else might be found.
It would be nice to think that at some stage we would be reversing the flow in our pipelines and exporting gas. Stranger things have happened. I like to think positively, as Deputy Stagg has said.
I have received a number of applications and notifications of intention to build new gas supply infrastructure, both within the State and to the State, from private operators and from BGE. The economic assessment which was carried out on the gas supply options recommended by the Gas 2025 report advised that we should await the outcome of the exploration of the Corrib gas findbefore taking any decisions on future supply options. I will make a decision one way or another on future gas supply infrastructure by the end of the year. We must do that. I have said I envisage making a decision by October, because I want to be conservative in that regard. One way or the another, we have to take decisions, and they will be taken by the end of the year.
I cannot accept the proposed amendment because it assumes approval for the construction by BGE of a second gas interconnector, and this is only one of a number of possible gas supply options to satisfy future requirements. If I accepted this amendment it might be seen as prejudicing the applications which have been made by other developers.
I think awaiting the outcome from the Corrib gas find is essentially a flawed position because it will allow John McGoldrick and Enterprise Oil to dictate to Government subsequently. He will have the whip hand. If an interconnector is in place, or even if there is a decision to build an interconnector, there will be options available to Government which will not be available if McGoldrick says he can supply the Irish market. He will dictate where pipes go and who will be supplied. He will be able to dictate the pace. That is why he is waiting. He could at this stage have declared whether the find is commercial, or at least have made an application to the Minister for a declaration in that regard. I appreciate the points the Minister of State made about my amendment. I will withdraw it, but the Minister of State should consider how restricted his options will be if he has made no decision on an interconnector and McGoldrick has gas coming in at the other end.
Amendment, by leave, withdrawn.
We now come to amendment No. 13. Amendment No. 15 is related. Is it agreed that they be discussed together? Agreed.
SECTION 3.
I move amendment No. 13:
In page 10, subsection (1), lines 5 to 7, to delete all words from and including "as" in line 5 down to and including line 7 and substitute "on which financial closure of project sanction is made on the contract execution for the project,".
This relates to section 3 of the Bill which deals with the commissioning date definition. It has been put to me that this raises a number of issues both for the definition and for the process. I am told commissioning can take up to six months to occur. During that period plant and all the relevant facilities are progressively tested leading to a reliability run which is typically for 30 days, only after which the handover of the plant from the EPC contractor to the owner takes place. What I am proposing instead is to put in a different term for the commissioning date which is "on which financial closure of project sanction is made on the contract execution of the project". Amendment No. 15 reads as follows:
In page 11, subsection (3) (b), lines 2 and 3, to delete “become commissioned” and substitute “will be financially closed or for which the contract for power generation has been executed”.
I am told the Minister's wording puts the Commission for Electricity Regulation in an invidious position because it will have to carry out a subjective role in assessing the anticipated timetable from financial closure to commercial start-up which reflects current industry practice, and a failure to meet the timetable by the persons taking up the contract would have serious financial implications for those parties in their own right and there would be a very strong motivation to achieve it. There are all sorts of other detailed arguments in relation to it.
I referred on Second Stage to a flaw in this Bill. If, for example, there were five applicants for gas, of which I were the fourth, and only three are going to get it, I would have a vested interest in trotting along to the courts to litigate on it, because it would hold up everyone until I could get into a position of equality. There is a real prospect of this ending up in the Four Courts and that is cause for concern. I have been advised that the CER has already made tentative moves to set up this process in anticipation of this legislation, and that one of the legal challenges would be on the basis that the CER had acted in an ultra vires fashion that was beyond its powers. Perhaps the Minister could clarify that point.
The definition of "commissioning date" set out in section 3 is another grey area. I could make detailed arguments here but perhaps I will allow the Minister of State or the other members of the committee to respond first. Broadly speaking, financial closure, which I am proposing, means project sanction. It is clear-cut and in the interests of all the relevant parties which are fully aligned towards a strict timetable leading to the earliest possible start-up of the commercial operation, and it means there will be no messing around with different dates.
Amendment No. 13 proposes the deletion of the definition of "commissioning date" in favour of the phrase "on which financial closure of project sanction is made on the contract execution for the project". I have considered this and I have concluded that the text proposed is too vague and does not appear to be sufficiently objective or easily measured. I am advised that in competitions of this type, it is important that the selection criteria should be objective and easily measured. The use of the commissioning date and rated generation capacity achieves the essential obligations of transparency and objectivity in the selection criteria because they are technical standards and because they can be readily evaluated.
Amendment No. 15 proposes the deletion of the phrase "become commissioned" in favour of the phrase "will be financially closed or for which the contract for power generation has been executed". That is in subsection (3) (b) of section 3. These amendments would eliminate ranking by reference to commissioning date.
I am advised that during the consultation process on this Bill regarding the selection criteria, none of the independent power producers supported this view. These proposals would amount to a radical alteration in the proposed allocation scheme, and I am not satisfied such a dramatic change at this stage in the process would be justified. I am advised that the existing proposals appear to be acceptable to the industry generally. I was a little surprised by what Deputy Yates said because I have a different interpretation. My understanding is that the CER is satisfied with the definition.
What about the ultra vires point? The question of litigation and ultra vires in terms of the CER is already in this process.
All the CER has done so far is to consult with interested parties about practical aspects of a selection scheme. It has made no decisions and everything it will do is contingent on enactment of this Bill. I am advised that prior consultation by CER is not ultra vires.
To progress matters, will the Minister examine his amendment between now and Report Stage? I will withdraw my amendments Nos. 13 and 15. I draw the Minister's attention to page 10 of the Bill which states that-
"commissioning date" means, in relation to an application, the date estimated by the Commission as being the date referred to in subsection (3)(b) . . .
Subsection (3)(b) refers to “estimating the respective dates by which it considers each of the applicants’ planned generating stations will become commissioned”. I ask the Minister to see if that can be tightened up because I am told that it can be as long as a piece of string and that there can be a number of factors to do with regulatory, technical or developer reasons, some of which they may have no control over, which might allow people to say they are operating within that, and it could be very loose. The Minister might consider finding some other way, other than the financial closures I have proposed, of tightening it up and on that basis I withdraw amendments Nos. 13 and 15.
Amendment, by leave, withdrawn.
I move amendment No. 14:
In page 10, subsection (2)(b)(i), line 26, after “capacity” to insert “or its full capacity operating on a single cycle basis”.
All the new power stations are combined cycle gas turbines, CCGTs as they are called, which involve two elements of operation. The first is the gas turbine which burns the gas and produces power, that is single cycle. The second element collects the waste heap from the gas turbine, uses this to drive the steam turbine and then produces more electricity. When both gas and steam turbines are in operation, there is combined cycle. All the provisions of the draft legislation relate to commissioning of power plants to the full combined cycle operation of the station. It is quite common, however, to operate the station in single cycle first before adding the steam turbine to produce combined cycle. That is what happened in Poolbeg, for example.
What I am suggesting allows account to be taken of a station that is ready to be commissioned in single cycle. This can be achieved more quickly than combined cycle and therefore would prove very attractive in the prospectus. Deputy Stagg keeps telling us that the lights will go out in the winter of 2001-2. If this amendment were accepted it would facilitate the earliest possible operational activity. It is an option. It is a simple amendment and I ask the Minister to accept it.
This amendment proposes a change in the definition of rated capacity to include the phrase "or its full capacity operating on a single cycle basis". I understand that the phrase "rated capacity" as defined in section 3(1) means the capacity specified in the relevant application for capacity made by the power generator. The current definition does not preclude an applicant submitting an application based on a single cycle plant and therefore I consider that the proposed amendment is unnecessary.
What is the harm in it?
It would appear to be superfluous on the basis of what I have just said and having examined it in the context of the Deputy putting down his amendment.
Some legal people obviously disagree. Can the Minister see the point that one can get more readily into single cycle than combined cycle?
Yes.
I take the Minister's point that it is already facilitated.
Yes, that is the advice on this occasion.
I will consult with my people on this matter. I will withdraw the amendment and perhaps we can look at it again on Report Stage. I hope the Minister understands the point I am making. We want to get these people up and running as soon as possible.
Absolutely.
Amendment, by leave, withdrawn.
Amendment No. 15 not moved.
Section 3 agreed to.
SECTION 4.
I move amendment No. 16:
In page 11, lines 23 to 43, to delete paragraph (a).
This amendment seeks to delete all of subsection (a) and to reorder the subsequent paragraphs to a higher alphabetical order. This amendment removes the requirement to allocate gas preferentially to bigger stations in situations where commission dates are deemed to be identical. The proposal as laid out in section 4 unnecessarily ties the hands of the regulator and a more flexible solution would be to delete it. Subsection (a) concerns two identical situations. If there are, say, 300 megawatts remaining to be given out and two applicants came up to the tape together, the larger one will get it. It was put to me on the grounds of competition and of fairness that this is not a good idea where there is a dead heat of that kind. What is the argument in favouring the larger applicant? I appreciate that the chances of this happening are slim but I remain to be convinced that, in so far as there is a provision in the event of a dead heat, as it were, this would apply so perhaps the Minister could set out his stall as to the reason he is advocating subsection (a). Saying this is very unlikely to happen is not really an argument in favour of subsection (a), and that was the argument put forward this morning, which I did not really buy into.
Amendment No. 16 proposes the deletion of the text concerning the ranking in order of precedence by reference to commissioning dates in section 4(a). I am advised that it is necessary to provide a criterion which the commission would be able to use to decide between two applications which might have the same commissioning date. Although it is highly unlikely, as Deputy Yates said, that this might occur, it is necessary nonetheless to provide for such an occurrence. If the commission did not have this criterion to refer to, any decision it might make in such a scenario could be open to challenge. I also consider that it is appropriate to use the size of the generating plant as the deciding criterion in view of the fact that we need to ensure that there is sufficient electricity generating capacity available in the State. I do not propose to accept the amendment.
The first thing I want to say is, bring back the Minister, Deputy O'Rourke, because she had a very flexible attitude to amendments on Committee Stage but as we progress through the Bill the Minister of State has become more stultifying in his approach.
I am sure the Deputy's cup will be running over towards the end.
That is my knee-jerk reaction to the Minister's response. Why is one bigger better than two smaller? That is the bottom line. What is the answer to that question?
At this point we are not in crisis but we approach a crisis——
The Minister is not the only one saying that.
Absolutely. I have to be very careful about my language. All precautions are being taken so that we do not reach a crisis stage, and that includes what we are doing today.
Amendment, by leave, withdrawn.
Amendment No. 24 is cognate to amendment No. 17 and amendments Nos. 21a and 22a are related to amendment No. 17. Amendments Nos. 25a and 25b are related to amendment No. 24 and amendments Nos. 18, 19, 21 and 22 are alternatives to amendment No. 17. Amendment No. 25 is cognate to amendment No. 21. Amendments Nos. 17 to 21, inclusive, 21a, 22, 22a, 24, 25, 25a and 25b can be discussed together. Is that agreed? Agreed.
I move amendment No. 17:
In page 11, lines 44 to 47 and page 12, lines 1 to 8, to delete paragraph (b).
I did not receive the late list of ministerial amendments until now. I am sure it is my own fault. I had a fine speech ready but the new amendments have taken the legs from under me, as it were. Nevertheless, a principle is established in the Bill which represents a change of policy. Until now, the policy has been that the market would be opened to various degrees at various times but that everybody in the market, including the incumbent, would be allowed to compete for the open part. The ESB, for example, would be allowed to compete for the new section of the market that is opened. The same would apply to Bord Gáis and CIE.
However, there was an article about CIE recently which indicated that this new policy is being pursued with CIE as well. Bus Éireann would not be allowed to compete for new routes. That is a similar position. At the least the Minister's amendments exclude the possibility of a new power station in Ringsend with no gas and a possible shortage of electricity. However, the regulator now has the new policy in the Bill. He will be able to decide not to grant a licence to the best player if he considers that is not in the interests of competition. That runs contrary to the agreements between the social partners and the CER. The possibility of a future agreement within the ESB will be endangered by that change in policy.
I do not know if it is a deliberate change of policy or a method of hastening the introduction of competition. It probably would do that but the dangers of hastening it in that way are large. The Minister should look at it again before Report Stage and consider whether it is necessary to give this new policy directive to the regulator. It will allow him to turn down the best applicant. If after his consideration of the applicants he deems the ESB to be the best applicant, he can choose to give it to the second best because there is no danger of a power cut. He would have the power to do that under the Bill.
Perhaps the Minister will look at that again. He should also hold discussions with the social partners and with the management and unions in the ESB. Those unions have a tripartite agreement with the Department with regard to how competition was to be introduced. It did not exclude the ESB from any competitions. The regulator said that he had primacy of direction and insisted that he would look at competition above all other considerations. At least the Minister has included a rider on that and I welcome that change.
This is at the heart of Four Courts territory. In simple terms, there is 800 megawatts of gas to be given out. There is a potential queue. Everybody who wants to get into the electricity business, apart from wind power operators, want to use gas. This has a huge effect. The new independent competitors will say, "The ESB is a monopoly, yet who is first to get the new gas but a 50% Statoil and 50% ESB owned company, namely Dublin Bay Power; this thwarts competition, the rules have been made to suit the ESB" and so on.
The criterion for giving out the gas was first to market or, as the Minister put it, first up and best dressed. Selecting the operator who was ready to go first makes sense in terms of power cuts and, of course, the ESB is first up. However, there is a rider in section 4 which provides that the criteria will be not only first to market but also competition. We are promoting competition to an extent. This results in the possibility of Dublin Bay Power being idle because it would not facilitate full competition. This is the heart of the issue.
If Dublin Bay Power did not get the gas on the competition criterion, it would be a great incentive for the ESB to head to the courts. Its attitude could be, "If we do not get it, we will make sure our competitors do not get it either". The ESB will believe it is being treated unfairly because the electricity Bill provides that the CER shall not discriminate unfairly between different power companies.
Even in the name of competition.
Yes.
This could be a lovely mess. By the time it goes to the Supreme Court, the Minister will have been roasted in the Dáil, the lights will be switched off, the ESB will be unhappy, the IPPs will be disgusted because they will not have been operational and the gas will not be utilised. This will probably happen anyway and since I have put it into the record, the flagellation awaiting the Minister will be all the worse.
With regard to dealing constructively with this, the ESB's first position - I have had endless discussions with the company - was to delete the competition criterion. That was its opening gambit but, in fairness, it was not going to run. It then offered a new compromise which was not unreasonable. I have suggested that instead of the condition that the CER "shall" look at the competition criterion, the CER "may" look at it. That is dealt with amendments Nos. 25 and 21. I believe the commission could weigh that in the overall balance as opposed to putting competition before all else. The suggestion is reasonable for everybody concerned.
However, the compromise put forward by the ESB, which is in my amendment No. 18 and the associated amendments, seeks to insert after "where" the words "two or more applicants have a commissioning date occurring within a six month period of each other" and that, in accordance with the 1999 Act, there cannot be unfair discrimination and that such an applicant "would not have gas capacity available to meet its commissioning date if an allocation was made to a particular person with an earlier commissioning date that extended to and included the required commission date of the later applicant". The purpose of the amendments is to confine the alteration in ranking to the basis of the electricity regulation Act, that is, not to discriminate unfairly, and to ensure that a particular operator, ESB Statoil Dublin Bay Power, is not excluded from getting gas capacity in circumstances where other parties were not in a position to use capacity allocated to them and where by the time they would be in a position to use capacity, the shortage of capacity would have passed away.
There is a finite window of time in which this gas will be available. The ESB is arguing, not unreasonably, that there should not be a "dog in the manger" scenario, that if the CER allocates the gas to somebody and for whatever reason they cannot use it, that should not stop Dublin Bay Power from getting it, notwithstanding the competition criterion.
I do not understand the Minister's proposals because I did not get time to study them in depth. My position is as I outlined, the substitution ofthe word "may" for "shall". I am not pressing the deletions because the other compromises I have proposed are fairer.
We are aware of the potential litigation to which Deputy Stagg refers. That is why my officials have not had much sleep of late in an effort to ensure that we get the legislation right as well as ensuring it meets our objectives.
Has the Minister been sleeping soundly?
I have because I have such confidence in both my officials and my colleagues on the other side of the House. That potential is there if we get it wrong. However, we will get it right, given the work we are doing on it, and ensure it meets the objective that there will be a continuous supply of electricity. This is the vehicle to ensure that we get it right and that the supply is there.
Section 4(b) has caused much disquiet. Deputy Stagg in particular expressed serious concerns about this provision during the Second Stage debate. I will outline why this provision was included. The allocation scheme provided for in the Bill deals with the allocation of a scarce resource, that is, scarce gas capacity. The EU electricity and gas directives have entered into force and the electricity market has been open to competition since last February.
The Attorney General advised me on aspects of the Bill when it was being drafted, including the possible impact of the allocation scheme on the development of competition in the electricity industry. In particular, he advised that in allocating capacity to prospective power producers, the Commission for Electricity Regulation should have regard to competition criteria in selecting winners under the scheme. This view was also expressed by the competition directorate of the European Commission.
In the context of the opening of the electricity market, this was not an unusual precaution. It was never my intention to exclude the ESB from participating in the scheme and the Bill allows the ESB to apply for capacity rights in the same manner as any other party. However, I was mindful of the fact that the ESB already has a dominant position in the electricity market in Ireland. I was also acutely aware that the competition rules of the European treaties must be adhered to and, therefore, section 4(b) introduces a competition criterion to which the commission must have regard in ranking the applicants for network capacity. I still maintain this criterion would not have automatically excluded the ESB from being allocated capacity rights.
However, in view of the concerns expressed by Deputies Yates and Stagg and other representations made to me since the Bill was published, I tabled amendments to sections 4 and 5 which will remove any doubts which existed about the ESB's capacity to compete on equal terms with other applicants. The effect of amendments Nos. 21a, 22a, 25a and 25b is that, while I propose to retain subsection (b) in sections 4 and 5, which are necessary to comply with competition rules, there is a strong qualification that if the commission is of the opinion that the use of subsection (b), that is, altering the ranking of applications or excluding an application because of the adverse effect it would have on the development of competition in the electricity market, would jeopardise the security of electricity and continuity of electricity supplies in the State, then it can choose not to exercise the power conferred on it by subsection (b).
I reiterate that it is essential that subsection (b) is retained because of competition rules. However, amendment No. 22a will ensure that the competition criterion cannot be the overriding concern. The commission will first and foremost have to ensure that the State will have enough electricity generating capacity to ensure that demand is met. I am confident that the amendments, particularly amendment No. 22a and the other consequential amendments Nos. 21a, 25a and 25b, will satisfy all the concerns raised.
My proposal is that amendments Nos. 17 and 24, tabled by Deputy Stagg, and amendments Nos. 18 to 21, inclusive, and 25, tabled by Deputy Yates, should not be accepted but my amendments Nos. 21a, 22a, 25a and 25b should be accepted on the basis that they satisfy the aspirations of the Deputies in this regard, with which I fully agree.
If I withdraw an amendment, can I re-enter it?
Yes.
I will withdraw amendments Nos. 17 and 24 but I intend to re-enter them if I do not receive information about the policy change that is inherent in the Bill between now and Report Stage. The Minister of State said it is necessary because of competition rules to make a clear statement in the Bill. However, I do not accept that. If competition rules exist, they do not need to be restated in the Bill and specifically applied in this case. In common with earlier amendments, if they are unnecessary, there is no need to insert them in the legislation.
Will the Minister of State reconsider that aspect? If 25% or 35% of the market is open, all players should be entitled to compete for it. The Bill creates a danger that the regulator, over whom we have very little control, will be given an additional power which he can use to say that one of the players will not be allowed to compete.
I am not sure of the position. Amendment No. 18 seeks to place a time limit on the position where two or more applicants are close together. Will the Minister of State clarify why that is not acceptable? I am not clear about what the regulator will do? Will the Minister of State explain amendment No. 25b in layman’s language? Is it the case that Dublin Bay Power will get the go-ahead if it is first up? Will it only get the go-ahead if there is pressure on the capacity of the national generator? What does it mean? What are the circumstances where Dublin Bay Power would or would not get gas?
I am advised with regard to amendment No. 18 that it could increase the possibility, to which the Deputy referred earlier, of a challenge to a decision that the CER might take. On foot of that advice, I am reluctant to open up that possibility.
Is this advice from the Attorney General?
Yes.
Will the Minister of State explain the circumstances that will give rise to a "yes" or "no" decision on the Ringsend proposal?
It means the ESB will get the go-ahead if it wins.
If it is first up?
Yes, and if it is not contrary to competition criteria.
That is what the Bill states, but what does subsection (c) mean? The Bill sets out first up criteria and competitive criteria.
This relates to the paramount issue of the prevention of gas shortages and, therefore, electricity shortages. Even if it is contrary to competition criteria, the ESB would get gas to prevent power shortages. Security of supply and power provision is the bottom line. This must be the paramount issue.
Competition criteria now mean the main player is excluded from competing. If there is no shortage of electricity next winter or the following one when the power station is ready and the ESB is first up and best dressed, it will be excluded by the competition criteria. That is the danger about which I am worried. That means nobody will use gas and it will not only be because of court cases but because of industrial action. The ESB unions cannot stand by and allow a situation to develop where the agreement it has with the Department that it will be allowed to compete for capacity as it comes on stream will be reneged on. This will be a serious situation because it will be challenged in court and through the industrial relations system. The Minister of State will say there will be a shortage of electricity, therefore the ESB will be allowed in. However, if the regulator says there is no fear of a shortage of electricity, the ESB will be excluded even if it is first up and best dressed.
We should not lose sight of what the Bill is about. It is for short-term consumption to deal with a particular situation. I know how strongly Deputy Stagg feels about this issue. I still maintain on the advice I have received that the competition criteria would not have automatically excluded the ESB from being allocated capacity rights.
The Minister should be aware that the politics of the adviser in this case might colour his legal opinion. Perhaps we should not cast aspersions, even sideways, on the Attorney General.
The Minister said that if there is any threat of power cuts Dublin Bay Power will get the gas. That is new in amendment No. 25b. The criteria of power cuts, shortages and capacity problems will now be injected into the existing criteria of first to market in competition. The Minister must reflect on this because he could have opened another can of worms. I have been told that some of the shortages, amber alerts and other issues have been allegedly contrived by the ESB.
The Deputy should give us his source.
I will develop the argument first. It has oil, coal and gas burning plants from which, with technical adjustments and better maintenance, it could get a further 50 or a couple of hundred megawatts.
It also has turf burning plants.
It suits the ESB to squeeze the Department and Deputy Stagg a little by saying it is terrible about the power cuts, therefore, it must have Dublin Bay Power. This is a huge political issue.
The chairman keeps telling the Minister there is no danger of power cuts.
I was told that in writing. I got a categorical assurance in that regard.
The Minister's amendment deals with power cuts. Is the amendment an open invitation for the ESB to contrive power cuts and amber alerts so it will get gas? We must remember it has a monopoly on the information about the supply, distribution and control of the network and it will be able to exaggerate this. Deputy Stagg will then demand in the House that Ringsend power station be opened up for gas. The Minister may say section 4 of the Bill provides for this. It is possible for the ESB to contrive power cuts because it has a monopoly on the distribution and supply of the system.
I cannot pre-empt the outcome of the selection process. Dublin Bay Power may not enter the competition.
Has the Minister any basis for saying that?
The Minister should give it the go ahead now.
There is no obligation on it to do so.
Perhaps the Minister could explain that because I do not understand.
It could wait until a new gas supply becomes available. It has already stated there is no gas capacity shortage.
Will we buy gas from Bord Gáis Éireann or from other sources?
As regards gas capacity shortage, there are wide sources of supply.
The chief executive of this little part of the ESB has a different remit from the statutory remit of the ESB which has a requirement to provide a sufficient supply to the entire country. This man only wants to be in charge of his empire of a power station in Ringsend, small as it may be. He does not care if he has to wait two years for gas because it will not cost him anything. I would not take his word on that.
To whom is the Deputy referring?
The chief executive of the ESB station. He is not worried about having to wait two years for gas. He will still have his empire of a little power station in Ringsend of which he and Statoil will be in charge when the two years are up. I would be inclined to take the view of the statutory provider who has a requirement under law to provide electricity to everyone in the country rather than one operative within that system who is separated from the main activity.
It may wait until new gas sources become available, which will happen soon.
What is the point in introducing the Bill if other gas sources will be available willy-nilly?
They will not be available willy-nilly. There is a view that the gap is tightening all the time and that, perhaps, this Bill will be seen to be unnecessary in the not too distant future. However, I am not willing to take a gamble by not taking the appropriate action now. We want to ensure the crisis we mentioned earlier does not materialise.
Deputy Yates said I could have opened another can of worms. I have used that expression from time to time in a different context. The Bill provides for the CER to have access to ESB records to determine their accuracy.
This is an open invitation to contrive amber alerts and power cuts. The CER will be in an impossible position. I am happy to withdraw my amendment because I have not been briefed by the interested parties on the Minister's amendments as a result of the timescale in which they were tabled. Whatever about litigation against the ESB, I understand Ringsend power station has a separate contract for gas with Alliance Gas Limited, which is a wholly owned subsidiary of Statoil. Whatever about the ESB's hesitancy to take litigation against the CER in this process, it is inevitable that Statoil will if it is deprived of it. I will withdraw the amendment in the interests of making progress. The Minister of State should be losing a lot more sleep over this because there is a need to tread very carefully.
The Minister of State has provided a safety net to meet the worries expressed by various interests and Opposition Deputies. I am only concerned about the size of the mesh at this stage. I welcome the fact that the net is in place.
I thank the Deputies for their co-operation in that regard. Deputy Yates referred to the reported wrap-around of electricity capacity. We have all heard those stories but I do not think we can count on them as a definite source of supply. That is not the first time I have heard that.
Maybe an audit could be done on that.
Yes.
Amendment, by leave, withdrawn.
Amendments Nos. 18 to 21, inclusive, not moved.
I move amendment No. 21a:
In page 12, paragraph (b), line 3, after “shall” to insert “, subject to the provision referred to in paragraph (c),”.
Amendment agreed to.
Amendment No. 22 not moved.
I move amendment No. 22a:
In page 12, between lines 8 and 9, to insert the following:
"(c) a provision specifying that the Commission, if it is of opinion that the exercise of that power would ultimately result in demand for the supply of electricity in the State not being met, shall not exercise the power as aforesaid to alter the ranking of a person or, as the case may be, not to select a person to such an extent as in necessary to ensure, as far as is practicable, that such demand is met,”.
Amendment agreed to.
Amendment No. 23 not moved.
Section 4, as amended, agreed to.
SECTION 5.
Amendments Nos. 24 and 25 not moved.
I move amendment No. 25a:
In page 12, subsection (2)(b), line 43, after “shall” to insert “, subject to paragraph (c),”.
Amendment agreed to.
I move amendment No. 25b:
In page 12, subsection (2), after line 50, to insert the following:
"(c) if the Commission is of opinion that the exercise of the powers referred to in paragraph (b) would ultimately result in demand for the supply of electricity in the State not being met, it shall select the first-mentioned person in that paragraph or, if it is not necessary that that person be selected in order to ensure, so far as is practicable, that demand as aforesaid is met, whichever person of the second-mentioned persons in that paragraph whose application ranks the nearest to that first-mentioned person’s application and whose selection will ensure, so far as is practicable, that such demand is met,”.
I do not agree with this amendment but I will not call a vote on it. I reserve my position on it.
Amendment agreed to.
Section 5, as amended, agreed to.
NEW SECTION.
I move amendment No. 26:
In page 13, before section 6, to insert the following new section:
"6.-In its application to any function conferred by this Act, section 9 (functions of Commission) of the Act of 1999 shall be deemed to be amended in subsection (4)(a) by the deletion of ’to promote competition’ and the substitution therefor of ’subject to subsequent paragraphs of this subsection and in particular paragraph (f) (sustainable energy), to promote competition’.”.
I am seeking here to restore to sustainable renewable energy the primacy we gave it in the 1999 Act. Recent statements by the all powerful regulator said that, on foot of the way we had set out the Act, the commission must have regard to competition, consumer demand, financial security of licence holders, safety and efficiency, guaranteed supply and sustainable energy. That, in my opinion, put no emphasis on which aspect was the most important. It is certainly not stated in the Act. He is reading that as giving competition the most important position in all his functions. I am seeking to correct that and to restore sustainable and renewable energy to the position we gave it. I think it is appropriate to do it in this Bill. I am not sure whether the Minister of State can accept this amendment. I know he shares my opinion on the issue of sustainable renewable energies.
The regulator said in an opinion paper he published that he may limit the amount of renewable energy - particularly wind energy, which is the most successful at the moment - in the interests of competition. I do not want to see that happen. I want to ensure we have legislation in place that prevents him having a licence to do that by his interpretation of the 1999 Act. I hope the Minister can respond positively to this.
Facilitation seems to be a one way street.
This amendment would create an imbalance in the carefully crafted duties of the Minister and the Commission for Electricity Regulation, as set out in section 9 of the Electricity Regulation Act, 1999. The proposed amendment would effectively make the requirement to promote competition in the generation and supply of electricity subsidiary to all the other provisions of section 9(4). As it stands, the requirements in subsection (4) are stated in a manner which does not give one precedence over the other.
That is not the interpretation.
I will try to elaborate on that for the Deputy. The requirement on the Minister and the CER to promote the use of renewable sustainable or alternative forms of energy in section 9(4)(f) is not weaker than any of the other requirements in subsection (4). It is a matter for the Minister and the CER to strike the appropriate balance between the requirements of subsection (4) in carrying out their duty under section 9(3), that is, to carry out their functions and exercise the powers conferred on them in a manner which does not discriminate unfairly between holders of licences, authorisations and the board or between applicants for authorisations or licences. The Minister or the commission, as the case may be, protects the interests of final customers.
The area Deputy Stagg is talking about is very wide with many considerations. A balance is needed. It is the duty of the commission, for example, to take account of the needs of rural customers, the disadvantaged and the elderly.
We have not seen much sign of that yet.
At least the provision is there. There must be no discrimination.
Perhaps the wording of my amendment is not suitable. I am trying to restate the very special position we gave to renewables in the electricity Act. All sides of the House were at one in doing that. We want to promote and develop that. I do not need to go into the many very good reasons for doing so because we went into them at the time. I ask the Minister of State to consider how we can restate that in this Bill, in the context of the regulator threatening our decision by his interpretation of the 1999 Act.
I assume Deputy Stagg is talking about the wind energy people. I met them and was very taken with their argument that Mr. Reeves and the CER had interpreted the legislation very negatively, from their point of view, had taken a minimalist approach to availing of wind energy, had capped them at the lowest level and so on. I met Mr. Reeves to confront him with these arguments. When I put them to him, his entire argument to rebut them was made on the basis of technical considerations, such as the amount of time the wind does not blow. I am not defending his decision. However, he said he had gone to the higher scale of what was technically advisable, in terms of what the wind energy people could deliver in the proposed time frame. I do not know if that is true and I am not able to adjudicate on who is right in this regard.
I support Deputy Stagg to the extent that it is the view of the committee, as expressed in the Electricity Regulation Act, that we support renewable energy and especially wind energy. Perhaps the Minister of State will report to the committee on the truth of the allegations made by the Wind Energy Association. It was argued that as much as possible was granted in terms of what it could deliver and what was safein the overall context of maintaining elec-tricity supply. I would like impartial information on that and perhaps the Department could assist.
Our decision was that there would be a 100% free market access for green energy without any curbs on it. That is what is in the Bill. Other sections, dealing with competition and so on, have been removed to impose limits. We deliberately did not impost any limits. The regulator was my adviser in this area for a long time.
And mine.
I am well aware of his negative attitude to the development of that area, except in a very limited way.
I take serious note of what the Deputies have said. Renewables should be given a special position. We have set the target high at 500 megawatts, but it is achievable. Professor John FitzGerald, to whom I spoke this morning, is heading an excellent group to look at renewables, the constraints placed on furthering them and how we can best go forward. It will concentrate, especially in the first instance, on wind energy. The group is due to report back to me in weeks rather than months. A six month timetable was put on it. I will take a serious look at the issues raised and will revert to Professor FitzGerald.
It is a policy rather than a technical issue and should be beyond the remit of the CER.
It is clearly a policy issue.
There is no difference between us on that from a policy and a future——
I should declare an interest in that my wife's betting shops have all signed up with Eirtricity on the basis of the cheaper wind electricity it provides. I do not support Deputy Stagg's position for that reason. I am seeking factual information on who is right in the argument.
I welcome what the Minister of State has said and will withdraw the amendment.
Amendment, by leave, withdrawn.
Section 6 agreed to.
Section 7 agreed to.
SECTION 8.
Amendments Nos. 28 and 29 are related to amendment No. 27 and amendments Nos. 27, 28 and 29 may be taken together by agreement.
I move amendment No. 27:
In page 13, subsection (1), line 34, after "rights," to insert "and with due regard to the interests of the Board and users of the network,".
Concern has been expressed understandably by BGE that it would be under the thumb of the regulator in an unacceptable way. Amendments Nos. 27 and 28 seek to broaden the terms so that a degree of independence from the regulator can be retained without inhibiting the regulator and his work. If the Bill was to be passed in its present form the regulator would be given powers he does not need. With regard to the judgment of safety issues, Bord Gáis is best placed to judge safety issues pertaining to gas. It has been excellent in doing that and it should continue to have that remit.
Amendment No. 29 in my name makes the same point as amendments Nos. 27 and 28. In a spirit of goodwill I hope the Minister of State will accept the amendments because I see no basis to do otherwise. I have also been approached by Bord Gáis on this issue. Section 8 provides very strong powers to the CER. They relate to the protection of the right of the holders of capacity regarding the allocation scheme. The Bill is concerned not with the allocation of gas, but capacity within the pipeline. All the rights are there for the protection of the holders of the capacity under the allocation scheme, but there appears to be no balance in favour of those who built and own the pipe and other generators, such as the ESB. A balance needs to be struck in the section and to that end my amendment proposes a new subsection (5) which provides that in carrying out its functions, the regulator would have regard to the rights of other users. Given that we have acquiesced to the Minister of State on every other issue I ask him to begin to reciprocate.
Section 8 gives the Commission for Electricity Regulation power to give directions to BGE concerning the use and management of the natural gas network solely for the purpose of ensuring that the selected power generators can enjoy the capacity rights awarded to them under the allocation scheme. It is envisaged that the commission would only have to resort to invoking this power in an emergency situation to ensure that the selected power producers were able to avail of their capacity rights.
I concur in broad terms with the sentiments of the amendments proposed by Deputy Stagg and Deputy Yates. As a compromise, I propose to introduce an amendment on Report Stage which will provide that the commission will be required to consult with BGE before giving any such direction. The amendment will be drafted to comply with the structure of the Bill. I believe that will satisfy matters.
On that basis I will withdraw my amendment.
Amendment, by leave, withdrawn.
Amendments Nos. 28 and 29 not moved.
Section 8 agreed to.
SECTION 9.
Amendments Nos. 30a, 35a and 37 are related; amendments Nos. 31, 32, 33 and 34 are alternatives to amendment No. 30a; amendment No. 35 is an alternative to amendment No. 35a and amendments Nos. 30, 30a, 31 to 35, inclusive, 35a and 37 may be taken together by agreement.
I move amendment No. 30:
In page 14, line 4, before "(1)", to insert the following subsection:
"(1) Where, in the opinion of the Board it would not be in a position to meet capacity requirements of a holder of relevant rights, the Board shall not enter into a contract (otherwise than pursuant to section 10) whereby it agrees to make available to any other person the use of an amount of capacity of the natural gas network for the purpose of supplying natural gas to a generating station for the purpose of providing energy for the generation of electricity at that station, provided always that the Board shall be entitled to enter into contracts that maintain the gas transmission capacity to the Electricity Supply Board for gas-fired generating stations that have been commissioned to generate electricity before the passing of this Act.”.
I am at a disadvantage because I only recently encountered these amendments. Will the Minister of State advise how the additional amendments relate to the others in the group?
Section 9(1) imposes a prohibition on BGE from entering into contracts for capacity, except with the persons granted rights under the Bill or where the contract amounts to a renewal of an existing contract. It also prohibits BGE from entering into supply contracts with power stations. This provision is restrictive and undesirable, as evidenced by the amendments proposed by Deputy Yates, Deputy Stagg and I. It would prevent BGE and the ESB from conducting their business in accordance with normal commercial practice of the sector.
Section 9(4) allows the Minister to lift the restriction on BGE entering into contracts only where there is, or is likely to be, an increase in the total capacity of the network. It does not cover a situation where capacity becomes available, for example due to a drop in demand, without total capacity increasing. Amendment No. 30a would allow BGE, subject to the prior written consent of the commission, to enter into contracts with power stations commissioned after the passing of this Act which have not acquired capacity rights under this Bill. It also removes the restriction on BGE contracting with the ESB for capacity or gas for existing power stations.
Amendment No. 35a would allow the Minister to lift the restrictions on BGE in relation to contracts for capacity and supply if he or she is satisfied that such contracts would not jeopardise power stations selected for capacity rights under the Bill. These amendments will address the matters with which the amendments tabled by Deputies Yates and Stagg are concerned.
There has been a great deal of argument about section 9 which deals with the thorny issue of the prohibition placed on the board to prevent it entering into certain contracts. Representatives of Bord Gáis indicated that the section places a severe restriction on new gas contracts which may be entered into by the board and that it precludes the board from being a gas supplier to the generators that win capacity under the scheme. They stated that this is not in the interests of power stations because their supply options are being unnecessarily and, probably, unintentionally restricted.
It has been pointed out that, under the Bill as originally drafted, there could be days on which Bord Gáis would be prohibited from selling gas it has available to power stations that require it. The company's representatives also pointed out that the Bill precludes Bord Gáis from supplying gas to other generators, including the ESB, even where such contracts have no impact on the rights of the capacity winners. It was stated that Bord Gáis completely respects the need to ensure that power generating plants are awarded capacity on the allocation scheme but they must be able to secure capacity and gas supplies as per the Bill. However, the company's representatives see no need to restrict other transactions which do not impinge on their rights. In effect, Bord Gáis wants to be able to enter contracts provided the rights of new capacity holders are protected. One of the amendments tabled in my name is designed to address this matter.
The ESB is also dissatisfied with section 9 and stated that the purpose of the amendments is to ensure BGE is not prevented from using capacity on the pipeline which, while allocated, is not being used by the party or parties concerned. This is what I refer to as the "dog in the manger" argument. The ESB also stated that existing stations will continue to have a gas supply. For that reason, the phrase "Where, in the opinion of the Board it would not be in a position to meet the capacity of a holder of relevant rights, the Board shall not enter into a contract . . ." is used in amendment No. 30.
I was informed by representatives of another operator that they believe there is sufficient interruptable capacity, in addition to the capacity which is proposed to be reserved for the allocation scheme under the Bill, which should be made available for commissioning purposes as requested by prospective generators. They pointed out, however, that it will be necessary to take steps to ensure that such capacity will be made available for these purposes if requested.
It appears that, in the opinion of the various operators, it is the right of Bord Gáis to sell gas and not be restricted in the way outlined in section 9. However, amendment No. 30a states that the board shall not, before 30 September 2004 - by which time three new gas pipelines will be in operation - without the prior written consent of the commission enter into a contract whereby it agrees to make available to any other person the use of an amount of the capacity of the natural gas network for the purposes of supplying natural gas to a generating station. That appears to give the commission the power to veto any proposal by the board to enter into another short-term contract. For that reason, I do not believe this amendment solves the problem to which I refer.
In amendment No. 35a it is stated that “The Minister may only make such an order . . . ”, which means the Minister will be empowered to make an order that gas capacity can be made available. This amendment solves the problem but it requires the Minister to become involved. What will happen if the Minister and the CER disagree?
The Minister be responsible for making the final decision.
Do I take it the Minister could make an order? Will the Minister of State indicate the circumstances in which such an order would be made?
Amendment No. 35a proposes that the Minister could lift the restrictions on BGE in relation to contracts for capacity and supply if he or she is satisfied that such contracts would not jeopardise power stations which are selected for capacity rights under the Bill. Having given careful consideration to people’s concerns and to the amendments tabled by Deputies Yates and Stagg——
Amendments Nos. 30 and 32 give the board a role in this area and suggest that it could sell gas without interfering with the rights of the winners of the competition. However, under amendment No. 35a, the Minister, not the board, will be obliged to become involved. On what grounds does the Minister of State object to the board having a role in this area?
I am advised that matters could become complicated and that a conflict of interests could arise if the board became involved. It was suggested that we take the route outlined in the amendment to avoid any difficulties.
I welcome the Minister of State's amendments which, as far as I am concerned, go further than our amendments in terms of resolving any difficulties in this area. As a result of amendments Nos. 30a and 35a, the regulator will not have a veto - the opposite may appear to be the case on reading one of the amendments - and the Minister has clawed back power from the regulator in respect of this matter. The amendments in my name and that of Deputy Yates suggest that the board should be given power to make decisions but I welcome the fact that this power will be retained by the Minister. I would also welcome it if the Minister of State could introduce similar amendments in respect of other areas.
Will the Minister of State indicate the grounds on which he objects to amendment No. 31, which advocates inclusion in section 9(1) of the phrase "Save for any contract entered into in compliance with a general directive given to it under section 11 of the Principal Act, the. . ."? I understand section 11 of the Principal Act deals with directives the Minister may give.
The Minister may, from time to time, give the board general directives. However, he or she may not issue specific directives. Acceptance of amendment No. 31 would lead to a situation where the Minister could be seen to be interfering with the daily operations of the board. We have no intention of allowing that to happen
Amendment No. 35a will give rise to the situation to which the Minister of State refers.
We had thought amendments Nos. 30a and 35a would deal with the concerns expressed by the Deputies.
I will consult my advisers and give further consideration to this matter. We are dealing with a controversial area.
It is extremely controversial.
The net point is that Bord Gáis should not be prohibited from reserving gas that may not be utilised by the winners of the competition. If such a prohibition is introduced, gas that could otherwise be utilised will be frozen. I do not know from whom the Minister of State will obtain advice on this serious matter. However, there will be a need to exercise a degree of flexibility. It would be in the national interest to ensure the board is allowed to make optimum use of its gas pipelines. The Minister might look at that carefully.
Amendment, by leave, withdrawn.
I move amendment No. 30a:
In page 14, lines 4 to 17, to delete subsection (1), and substitute the following:
"(1) The Board shall not, before 30 September 2004, without the prior written consent of the Commission, enter into a contract (otherwise than pursuant to section 10) whereby it agrees to make available to any other person the use of an amount of the capacity of the natural gas network for the purposes of supplying natural gas to a generating station, commissioned after the passing of this Act, for the purpose of providing energy for the generation of electricity at that station.”.
Amendment agreed to.
Amendments Nos. 31 to 35, inclusive, not moved.
I move amendment No. 35a:
In page 14, lines 22 to 29, to delete subsection (4) and substitute the following:
"(4) The Minister may only make such an order if it appears to him or her that, at the time of the making of the order, the available capacity of the natural gas network is such as will allow the Board to enter into contracts of the kind referred to in subsection (1) without any likelihood of prejudice to the rights or obligations of persons under any of the contracts entered into pursuant to section 10 thereby arising.”.
Amendment agreed to.
I move amendment No. 36:
In page 14, between lines 29 and 30, to insert the following subsection:
"(5) Section 11 of the Principal Act is amended by the deletion of subsection (4) and the substitution therefor of the following subsection:
'(4)(a) Any general directive given by the Minister shall not have effect to the extent only that it requires the Board to enter into a contract whereby the Board agrees to make available to any person, other than in accordance with the Gas (Amendment) Act, 2000, any part ofthe total available capacity which is subject to relevant rights each as defined in that Act.
(b) Nothing in this section shall be construed as enabling the Minister to exercise or delegate the exercise of any power or control in relation to a price to be charged by the Board in a particular case or in relation to the transmission on behalf of another person by the Board of gas through pipelines under its control in a particular case, provided that the Minister shall be entitled to exercise or to delegate the exercise of any such power and control to the extent only that effect is thereby given after 1st August 2000 to the provisions of Directive 98/30/EC of the European Parliament and of the Council of 22 June 1998 concerning common rules for the internal market in natural gas.’.”.
Sitting suspended at 4.05 p.m. and resumed at4.20 p.m.
Amendment No. 36 is related to the concerns already discussed. Will the Minister of State accept the amendment?
I appreciate the contributions of Deputies Yates and Stagg which improved the Bill and particularly thank them for highlighting important concerns which required attention. The Bill is drafted in a very technical manner so, unfortunately, I have not been in a position to accept the texts of their amendments as tabled. However, in maintaining my amendments I had to take account of legal advice but ensured the sentiments, concerns and substance of the Deputies' amendments were fully addressed.
Amendment No. 36 proposes the amendment of section 7 of the Principal Act, as amended by the 1995 Act, concerning the giving of directions by the Minister so that such directions would not affect the rights of selected persons to the total available capacity, or to allow the Minister to delegate powers on pricing, except to the extent that such delegation is to give effect to the provisions of the EU gas directive after 1 August 2000.
This amendment deals with a number of concerns arising from section 9 as at present drafted. In particular, these proposals are intended to resolve the difficulty created for other new power stations that may be built and may require electricity to test the station or to generate electricity for supply. This involves CHP stations and other users of the BGE system. We have dealt with these concerns separately and I am confident my amendments to section 9 deal with the concerns underlying this amendment.
Amendment, by leave, withdrawn.
Amendment No. 37 not moved.
I move amendment No. 38:
In page 14, between lines 29 and 30, to insert the following subsection:
"(5) Nothing in this section shall prohibit Bord Gáis Éireann from entering into any new contracts to provide gas capacity for the purpose of combined heat and power schemes.".
Amendment No. 38 was discussed with amendment No. 1.
When we discussed this amendment, Chairman, you said it may be taken with another amendment.
The Deputy said he was reserving his judgment on the amendment.
The Minister of State indicated he might have some additional comments.
We left it open to the Deputy.
The amendment refers to BGE's concerns. I will be brief as we have already discussed this area. Previous amendments dealt with the definition of CHP schemes. This amendment is fairly self-explanatory and states, "Nothing in this section shall prohibit Bord Gáis Éireann from entering into any new contracts to provide gas capacity for the purpose of combined heat and power schemes". Amendments Nos. 1 to 4, inclusive, dealt with exemptions but this amendment deals with the explicit situation whereby BGE can freely enter contracts for CHP schemes as the network develops. There is a difference between excluding CHP schemes and allowing them to sell.
Yes but, as I already stated, there is nothing to prevent them.
Amendment, by leave, withdrawn.
Section 9, as amended, agreed to.
SECTION 10.
Amendments Nos. 39 and 42 are related and may be taken together by agreement. Is that agreed? Agreed.
I move amendment No. 39:
In page 15, subsection (4), line 10, after "behalf" to insert "within 14 days from the date of his or her being notified by the Commission that he or she has been selected; any such requirement made of the Board otherwise than in accordance with this subsection shall be invalid".
It is considered desirable to impose an obligation on the selected power generators to request the board to enter into a contract within a specific timeframe of 14 days. The current wording could potentially lead to a situation where a selected power producer who might wish to, perhaps, frustrate the process could choose not to take up its rights immediately. As additional electricity generating capacity is desirable as soon as possible this amendment is required to prevent unnecessary delays.
Amendment agreed to.
Amendments Nos. 40, 41 and 43 are related and may be taken together by agreement. Is that agreed? Agreed.
Amendment No. 42 is related. I am clear on what I am trying to do but I am not clear on what the Minister of State is trying to do. Perhaps he would elaborate on amendment No. 42 before I begin?
Amendment No. 42 is different. We are discussing amendments Nos. 40, 41 and 43.
Amendments Nos. 39 and 42 are related.
Yes.
I move amendment No. 40:
In page 15, between lines 26 and 27, to insert the following subsection:
"(6) The terms and conditions specified in any statement referred to in subsection (5) and any contract entered into pursuant to subsection (6) or (7) shall not, save at the express request in writing of the holder concerned made to the Board and subject to the agreement of the Board, provide that capacity of the natural gas network shall be made available by the Board to the holder concerned, or that such holder would be required to accept or use or pay for any such capacity, during any period other than the period specified in the regulations as being the period for which the relevant rights of the holder concerned are to be enjoyed.”.
Amendment No. 40 proposes the insertion of a new subsection in section 10 to provide that the selected persons may not in effect be locked into a capacity contract with BGE, other than for the period set out in the regulations, unless the selected persons so request. This amendment is unnecessary as the timeframe for the exclusive rights to capacity will be specified in the regulations.
The statutory terms and conditions, and BGE's terms and conditions, are modified to take account of the statutory terms and should operate to preclude BGE from taking advantage of competition winners by locking them into long-term contracts. The detailed appeals mechanism to the commission involving an independent arbiter should be sufficient to prevent abuse by any party. However, if both sides agree, it does not preclude the parties from entering a contract for a longer period than that envisaged for the guaranteed rights.
On the conclusion of the period whereby the selected persons have a right to capacity, they must compete equally with other participants in the power generation market for capacity in the BGE network, or other gas pipelines which may have come into existence by that time.
Amendment No. 41 proposes the insertion of text to allow disputes as to whether the terms and conditions of contracts as modified by BGE to take account of the statutory terms and conditions to be referred to the commission. I am advised this is a consequential amendment. I also understand that disputes of this type may be referred to the commission under the Bill as drafted, for example, in accordance with section 10(8).
Amendment No. 43 proposes to delete the word "nothing" in subsection 10(12) and replace it with the words "without prejudice to subsection (6)". I am advised this is also a consequential amendment and in the light of my comments on amendment No. 40 it is deemed unnecessary.
Amendments Nos. 40, 41 and 43 relate to new companies providing gas pipelines entering the market, for example, from Corrib or Premier Transco. Are people who have contracts with BGE locked in, effectively debarring others from having any prospect? People are happy to deal with BGE while it has an monopoly, but they want the freedom of manoeuvre and do not want to be locked in. Regardless of the normal terms and conditions, BGE should not be able to impose an obligation on a selected person to enter into a contract the term of which is longer then the period of the selected person's relevant rights. Such a power would not be justified by the entitlements of the selected person and would discourage competition in the market for gas transporters.
The Minister referred to appeals and disputes. I am seeking to avoid appeals and disputes and to provide commercial freedom so people are not locked in. The Minister accepts the argument that there could be disputes, and is making provision for resolution in section 10(8). Will the Minister accept one of the three amendments as a way of avoiding companies becoming locked in in this regard?
Deputy Yates is referring to disputes or potential disputes in relation to contracts. These are referred to the commission and adjudication on any such difficulties, disputes or arguments will take place in advance of a contract being signed. This deals with the issue raised by the Deputy.
Does section 10 oblige a person who enters into a contract with BGE over a term which is longer——
Absolutely not.
It will not run until September 2004?
Absolutely not.
Some of my people say it does.
It has been amended to provide for periods shorter than one year.
Okay, I have bigger fish to fry on section 11 so I will withdraw the amendments.
Amendment, by leave, withdrawn.
Amendment No. 41 not moved.
I move amendment No. 42:
In page 16, subsection (11), line 30, after "section" to insert "(other than subsection (4))”.
Amendment agreed to.
Amendment No. 43 not moved.
Section 10, as amended, agreed to.
SECTION 11.
Amendments Nos. 45, 46, 47 and 48 are related to amendment No. 44; amendments Nos. 44 to 48, inclusive, may be discussed together by agreement. Is that agreed? Agreed.
I move amendment No. 44:
In page 17, lines 11 to 18, to delete subsection (1) and substitute the following:
"(1) Regulations may include a provision requiring each person who is selected to effect a bond (in a form approved by the Minister) with another person providing for the payment by that other person to the Minister of specified amounts under the bond (not exceeding in aggregate the amount referred to in subsection (2)) in the event that the planned generating station in relation to the first-mentioned person is not capable, on the commissioning date in relation to that person’s application, of sending out an amount of electricity, up to its rated generating capacity, to the transmission or distribution system, being amounts related to the number of days that elapse after that date for which the station continues not to be so capable.”.
Section 11 proposes that the selected power producers will have to effect a bond payable to the Minister in the event that their proposed plans are not commissioned on the commissioning date. Amendments Nos. 47 and 48 in the name of Deputy Yates deal specifically with the size of the bond and when it will fall due for payment. I am sympathetic to the concerns which the Deputy's amendments seem to address and since the Bill was published a number of industry representatives have expressed their concerns to me about the bond. The main concern was that the strict cut-off point for the bond was very onerous. In the amendments I am proposing I feel confident that the concerns of the Deputies and of the industry are being met. I propose having the facility to call in the bond in stages rather than on a single occurrence of failure to have the plant capable of exporting electricity on the commissioning date. The approach proposed in my amendment will allow for progressive calling in of the bond on a daily basis after the commissioning date.
In addition, the amendment proposed means that if the capacity rights are forfeited or caused to be forfeited following the commissioning date, liability for bond payments will cease from the date of forfeiture. This will encourage a generator who has been allocated capacity rights and who may run into serious trouble after the commissioning date, which they fail to meet, to trigger the forfeiture procedure at the earliest possible date. I suggest this meets the concerns outlined in amendments Nos. 47 and 48.
I have a serious problem with this and have two approaches, namely, to oppose section 11 and to modify it. The formula used for the bond is set out in section 11(2) - £5 million, multiplied by C divided by 100M, where C is the rated generating capacity of the planned generating station expressed in megawatts and M is a megawatt. The effect of this in layman's language is between £15 million and £20 million. A company which intends setting up a power station will have to pay very considerable investor costs right along the line and it is probable that other performance bonds in the electricity sector will be necessary. This provision is totally unreasonable and unnecessary bearing in mind that the successful parties will already have taken out substantial bonds in relation to their electrical and gas connections and perhaps other aspects of their projects. There is already a provision in the Bill for the regulator to impose a levy on successful applicants to recover the Department's and the commission's costs relating to the gas allocation process. It has been put to me that this is entirely unfair and that the process is a result of poor planning and administrative delay by the Government and the ESB.
Applicants are paying the penalty for poor planning which has resulted in a potential shortfall in power generation. The industry feels some of these costs should be borne by the Government given the dilemma in which we find ourselves. The levy would amount to between £300,000 and £400,000 per station and even if the costs were levied on the industry the burden would not be exclusively borne by the selected applicants. This is in effect punishing the IPPs who advance their projects most and who could be much further on were it not for the Government delay and the ESB gaming. The Minister has two bites at the cherry. The levy is included in section 2 and he is now including a bond with which I have a fundamental problem.
My other objection is that the proposed bond is too high. In the UK, for example, there is a commitment to take up gas transmission capacity as currently set by the operator in terms that relate to the anticipated transport tariffs to be generated by the use of that capacity over a set initial period. Therefore, I propose in my amendments that the bond should be related to the booked transmission capacity, set at a significant level but not a punitive level, that is, one year full tariff payment due under the relevant standard transportation agreement. The bond should be payable in part for failure to achieve the agreed target data for first commercial operations other than for reasons of force majeure. In the formula put forward by the Minister of State, it seems there will be 100% penalty for every day if one is 180 days out of line. I can see some justice in graduating it.
In summary, what the Minister of State is putting forward is more benign but it still represents a £15 million to £20 million bond as opposed to a couple of million pounds bond. This does not seem to take cognisance of the overall commercial position in respect of other gas and bonds that will have to be provided to all the parties contractually. The Minister of State has nottravelled enough of the road to meet the points made.
The levy will cover the administration costs of the selection process. The CER would not be able to meet these costs otherwise. The bond reflects the need for IPPs to be serious about meeting demand for the supply of electricity. The effect of Deputy Yates's amendments Nos. 47 and 48 would prove more onerous on developers than my amendments because they do not provide for progressive calling in of the bond. My amendments, as the Deputy recognises, are more benign.
They are not more onerous than the original Bill.
They appear to meet the concerns expressed to me by the industry. Market players have already told me their concern about the bond relates to the circumstances in which it can be called in, not to the bond itself. In other words, if D-day were passed by a day, heretofore the bond could be deemed to be called in, which would be pretty hard stuff. The progressive calling in now proposed is much more benign. This would appear to address the concerns expressed to me.
To make progress, I am prepared to withdraw amendments Nos. 47 and 48. However, I am inclined to oppose section 11, even though it is now more benign. Arising from what the Minister of State said, is there any provision for a force majeure situation either through an act of God or some circumstance whereby, through no fault of anyone, the bond and timeframe of 180 days would not be called in? In other words, will the Minister have discretion to say something has happened which was unforeseen by anyone? Will he be able to put his hands in the air and say, “I am sorry, my hands are tied because it is prescribed in the legislation that for every day that passes, if 180 days go by, you will have to pay the full bond”? The Minister of State made the point that in the representations he received the drawing down of the bond was the issue. Is there some flexibility for force majeure situations being in-built in his amendment?
Deputy Yates is correct to raise the matter of force majeure. I give an undertaking to take the matter on board and come back with an amendment on Report Stage.
I am still opposed to the section. I do not necessarily oppose amendments Nos. 44 and 45. I will withdraw amendments Nos. 46 and 47. Is the Minister of State accepting amendment No. 48?
We will include a provision on Report Stage to deal with the matter.
Amendment No. 48 deals with the issue because it reads, "This bond shall only be payable in the event of failure to achieve the agreed targets for first commercial operation (other than for reasons of force majeure).” Has the Minister of State goodwill towards that amendment?
Yes.
Amendment agreed to.
I move amendment No. 45:
In page 17, between lines 18 and 19, to insert the following subsection:
"(2) Such a bond shall not be effected otherwise than with a person who has been approved for the purpose by the Minister.".
Amendment agreed to.
I move amendment No. 46:
In page 17, between lines 18 and 19, to insert the following subsection:
"(3) The provision referred to in subsection (1) shall provide that if the relevant rights of the person concerned stand forfeited under the provision of the regulations referred to in paragraph (a) or (b) of section 2(6) no amounts shall be payable under the bond referred to in that provision on or after the date of such forfeiture.”.
Amendment agreed to.
Amendments Nos. 47 and 48 not moved.
Question, "That section 11, as amended, stand part of the Bill" put and declared carried.
NEW SECTION.
I move amendment No. 49:
In page 18, before section 12, to insert the following new section:
"12.-Nothing in this Act shall deny independent power procurers in the electricity generating market from being free to contract with new domestic Irish gas production at some future date, by mutual agreement, should this be available from a source other than the Board at any time.".
This amendment was suggested to me by one of the interested parties. It will provide flexibility to any potential electricity generator to contract new supply. We had a discussion earlier whereby in the course of the lifetime of this provision, up to September 2004, we may bring ashore gas. In fact, the entire "wait and see" policy is predicated on bringing ashore gas from the west coast. I am sure this will mean a big photo opportunity for some person. Mammy will probably take that one over.
Alas, probably a different Department.
That will not stop Mammy.
If the provision is watertight, bringing gas ashore could be greatly inhibited by a lock-in situation here. To be frank, the promoters of those who will bring gas ashore have expressed their concerns to me on the issue. Therefore, I ask the Minister of State to give some consideration to the amendment.
Does the mover of this amendment intend to deal only with new domestic Irish gas production? If there is a North South interconnector we will also have a supply from that area. Does he mean it to apply to any available supply?
I see no problem in principle with what Deputy Stagg is saying. My understanding is that certain provisions of the code operations and the terms of the standard transportation agreement require urgent review with a view to modifying them. These relate primarily to the reservation and holding of capacity. If the capacity now to be allocated is not to constrain the growth of the gas markets in Ireland it is important that arrangements are introduced to allow capacity to be released and transferred on a firm basis and/or on a basis capable of being interrupted, among gas shippers, without permitting gas capacity to be hoarded or traded for profit. In the context of the current proposals for capacity allocation, this is of particular importance.
I propose that the first independent power producers should be free to contract for domestic Irish gas production at some future date or for the supply of gas from Northern Ireland. This would release interconnector capacity but would not be achieved if the capacity now awarded and the tariff implications could not be released. If the serious intent of all the applicant IPPs is satisfactorily established by the evaluation process the risk of capacity gaming will be adequately addressed. If additional domestic gas production is established there will, however, remain a need for access to interconnector capacity for contractual security purposes.
It is in the interest of all parties and the energy markets as a whole that this capacity is efficiently used and maintained. In part this will be achieved on a commercially contracted basis but the process of assessing capacity capable of being interrupted within BGE's system is a necessary prerequisite.
My amendment fully encompasses the question raised by Deputy Stagg. What the Minister is proposing runs a serious risk that the winners of this competition could trade their licence to someone else. Amendment No. 49 seeks to ensure that nothing in the Bill will prevent IPPs from being free to contract with new Irish domestic gas production - and I do not mind if that can be rewarded - or new supplies of gas that become available within the State, by mutual agreement.
This amendment proposes the insertion of a new section to ensure that the Act does not preclude independent power producers from buying gas from a person other than BGE if such a supply of gas should become available in Ireland. Nothing in the Bill prevents this and the amendment seems to be unnecessary.
That said, the case has been well made by Deputy Yates and I am inclined to accommodate the amendment. There are difficulties which I hope we can overcome. The terminology of the amendment may have to be altered somewhat. Third party access under the 1995 Act already allows for what the Deputy is trying to achieve.
What is the position with regard to capacity gaming?
I will deal with that matter in a moment. We must review the text of the amendment.
I am happy to withdraw the amendment on that basis.
In general, what is the position with regard to capacity gaming? Is it prohibited or could it happen? If someone won the competition could he sell his capacity to the ESB or someone else.
I will deal with that matter shortly. Let us deal with the matter of the text of Deputy Yates's amendment. It will be necessary to review the text in order to avoid discrimination. The salient words "new", "domestic" and "Irish" are presenting a difficulty. We must be in line with the directive.
Would "Irish" include Northern Ireland?
Deputy Stagg has raised this point. The word "domestic" is causing a difficulty.
What about capacity gaming?
This was dealt with in amendment No. 6. That amendment was necessary to allow the selected power generators who may wish to source their gas supplies from suppliers other than BGE to nominate their gas supplier or shipper to accept and use the capacity rights on their behalf. The stipulation that the commission will have to approve the nomination is proposed in order to prevent gaming, that is the possibility that the generators selected might seek to sell their capacity rights on to other persons who might use them for purposes other than power generation. We dealt with the matter which is of concern to the Deputy at an earlier stage.
On that basis I withdraw amendment No. 49 and I look forward to discussing it further on Report Stage when the Minister has reviewed the text.
Amendment, by leave, withdrawn.
Section 12 agreed to.
Sections 13 and 14 agreed to.
SECTION 15.
I move amendment No. 50:
In page 19, between lines 43 and 44, to insert the following subsection:
"(2) Section 32(3)(a) of the Act of 1999 is amended by the deletion of ’High Court which leave shall only be granted where the High Court certifies that its decision’ and the substitution therefor of ’High Court or the Supreme Court which leave shall only be granted where the court certifies that the decision of the High Court’ ”.
I apologise for the obtuse legalese used in the amendment but I am advised by the person who assisted me in drafting it that the terminology is correct and exactly the same as that in an amendment which was recently accepted by the Minister for Public Enterprise to the Aviation Regulation Bill, 2000.
The effect of the amendment would be that a person who challenges a decision of the commission would be able to apply to the Supreme Court for leave to appeal if refused leave by the High Court. At present this is not possible although it is now normal practice in appeals against decisions of regulators and should be so in this case. If the Minister is unable to accept the amendment I ask him to examine it between now and Report Stage.
Amendment, by leave, withdrawn.
Section 15 agreed to.
Section 16 agreed to.
SECTION 17.
I move amendment No. 51:
In page 20, between lines 13 and 14, to insert the following subsection:
"(3) The Commission may make recommendations to the Minister in relation to the business activities of the Board and the duty of the Commission to promote competition in electricity and gas and the Minister shall, in consultation with the Minister for Finance, take account of those recommendations in consenting to activities under subsection (1).”.
Section 17 enlarges the powers of Bord Gáis Éireann and frees BGE to do almost anything it likes, with the Minister's approval. I propose an additional subsection which would allow the regulator to become involved where BGE is proposing to engage in activities which might not be helpful to the regulator in promoting competition in energy markets. This would give the Minister the final say. The amendment allows the regulator to have an advisory role and to express an opinion.
An earlier amendment relating to the role of the CER was rejected by the Minister on the grounds that it did not come within the scope of the Bill. However, this function could reflect on the scope of the capacity allocation question. I do not know how well the Minister is disposed towards this. It has been suggested that, as BGE progresses, all may not be rosy in the garden. Just as the ESB is very interested in competition in telecommunications but not in electricity, BGE may be very interested in competition in electricity but not in the gas market. This is how monopolists tend to operate. It would be prudent to have a caveat which would allow Mr. Reeves to advise the Minister on how he might operate in the narrow context of this aspect of the functions of BGE.
This amendment strikes me as being in much the same category as the one we discussed earlier. This Bill is intended principally to provide for a scheme to allocate scarce gas capacity in the gas network and to take account of competition requirements in the implementation of the scheme. It is not the purpose of the Bill to give the commission any other additional functions. It is more appropriate that such matters be considered in the context of future legislation on restructuring the gas sector.
I take the Minister's point but this is slightly different. It has to do with how far he might go given the remit and powers of BGE and is quite prescribed. Perhaps the Minister might look at it between now and Report Stage.
We will do that.
Amendment, by leave, withdrawn.
Section 17 agreed to.
Section 18 agreed to.
Sitting suspended at 5.10 p.m. and resumed at 5.20 p.m.
SECTION 19.
Amendment No. 53 is an alternative to amendment No. 52. Is it agreed to discuss amendments Nos. 52 and 53 together? Agreed.
I move amendment No. 52:
In page 20, subsection (1), to delete lines 21 to 28 and substitute the following:
"(a) without having given previous and reasonable notice to the Minister before 27 April 2000, or
(b) if no such notice was given before that date, without the consent of the Minister,”.
I propose this amendment to clarify the position under the new section 40 of the 1976 Act as proposed in section 19 of this Bill. The new text introduces a requirement that persons wishing to construct gas pipelines must first obtain ministerial consent. This will place private operators in the same position as BGE.
I am aware of the concerns that have been expressed in relation to the current wording. I wish to amend the text to clarify the position. I note that amendment No. 53 from Deputy Yates also proposes to address these concerns. I recommend to the committee that it should accept amendment No. 52 which deals with the Deputy Yates's concerns.
I thank the Minister of State for his amendment No. 52. It is almost identical to the wording in amendment No. 53 which was tabled in my name. The position is that there is an old consent procedure and a new one. My intention was to level the playing pitch so there will be no inconsistency in the application of the legislation. I am happy to accept the amendment and will withdraw mine.
Amendment agreed to.
Amendment No. 53 not moved.
Amendment No. 55 is an alternative to amendment No. 54, in the name of Deputy Yates. Is it agreed to discuss amendments Nos. 54 and 55 together? Agreed.
I move amendment No. 54:
In page 21, lines 11 to 30, to delete subsection (2) and substitute the following:
"(2) Section 40A of the Principal Act is amended-
(a) by the deletion of subsection (1)(a) and the substitution therefor of the following:
'(a) A statement of the likely effects on the environment (hereinafter referred to as an “environmental impact statement” of a proposed pipeline of a class for the time being specified under Article 24 of the European Communities (Environ-mental Impact Assessment) Regulations, 1989, or under any provision amending or replacing the said Article 24 and such other documents and information as the Minister may reasonably require-
(i) shall be submitted with, or within a reasonable time after the submission of, an application to the Minister-
(I) by the Board for his consent under section 8(7) of this Act, or
(II) by a person other than the Board for his consent under section 40(1) of this Act, in relation to the proposed construction of such pipeline;
and
(ii) shall be submitted with a notice given to the Minister by a person other than the Board under section 40(1) of this Act in relation to the proposed construction of such pipeline,
and the Minister shall not be obliged to consider an application preferred in subparagraph (i) until an environmental impact statement and such documents and information have been submitted'.".
This amends section 40A of the 1976 Act to provide that the environmental impact statement and certain other documents may be submitted after an application for consent to build a pipeline under section 40 of the Principal Act. It is essential in practical terms that a proposed pipeline operator would have the powers set out in section 26 of the 1976 Act for the purpose of preparing an environmental impact statement which is required by the Bill, and a number of other documents which would be required by the Minister to be submitted with an application for consent.
The issue here is getting access onto lands to survey, inspect and carry out tests on the land. The purpose is to get a level playing pitch for BGE and any other new pipeline operator. My understanding is that the present section 19 would give no rights to go on land to do necessary works preparatory to laying a pipe. Therefore, my amendment, which I understand is virtually identical to the Minister of State's amendment gives the same powers so that there would in effect be a level playing pitch between a new pipeline layer and BGE.
I thank Deputy Yates for putting forward amendment No. 54. I have tabledamendment No. 55 to deal with concerns on the subject.
The amendments relate to section 40A of the 1976 Act. That section implements European Communities (Environmental Impact Assessment) Regulations 1989 to 999. It is a text that has been amended a great many times. The current text provides that applications to build pipelines should be accompanied by an environmental impact statement. This can cause practical problems that both Deputy Yates and I would like to resolve by giving applicants a reasonable time after the submission of their application to submit an EIS. This is also addressed in my amendment. However, there is a difference in the text because this amendment envisages the submission of other information or documentation within a reasonable time.
As I mentioned, section 40A gives effect to the European Communities (Environmental Impact Assessment) Regulations, 1989 to 1999. These regulations are not concerned with the submission of information other than the EIS and for this reason I prefer not to incorporate the reference to such material in this text. For this reason, amendment No. 55 is perhaps more satisfactory.
To explain my point further I will briefly outline the contents of section 40A. The section provides for prior consultation on the contents of an environmental impact statement, the submission of the statement, the submission of subsequent information if required by the Minister, public consultants, and discussion between member states where a proposal affects two jurisdictions. From this brief outline, the committee will appreciate that there are other opportunities to submit further information when necessary in relation to the EIS. The inclusion of references to documents not mentioned in the European regulations may complicate an already complex process so I would prefer if the committee agreed to amendment No. 55.
I accept the Minister's point. I withdraw amendment No. 54 and agree to amendment No. 55.
Amendment, by leave, withdrawn.
I move amendment No. 55:
In page 21, subsection (2), lines 12 to 24, to delete paragraph (a) and substitute the following:
"(a) by the substitution of the following paragraphs for paragraph (a) of subsection (1):
'(a) A statement of the likely effects on the environment (hereafter in this section referred to as an “environmental impact statement”) of a proposed pipeline of a class for the time being specified under Article 24 of the European Communities (Environ-mental Impact Assessment) Regulations, 1989, or under any provision amending or replacing the said Article 24-
(i) shall be submitted with, or within a reasonable time after the making of, an application to the Minister-
(I) by the Board for his consent under section 8(7) of this Act, or
(II) by a person other than the Board for his consent under section 40(1) of this Act,
in relation to the proposed construction of such pipeline, and
(ii) shall be submitted with a notice given to the Minister by a person other than the Board under section 40(1) of this Act in relation to the proposed construction of such pipeline.
(aa) The Minister shall not be obliged to consider an application referred to in paragraph (a) of this subsection until an environmental impact statement has been submitted in relation to the application.’,”.
Amendment agreed to.
I move amendment No. 56:
In page 21, subsection (2)(d), line 30, to delete “ ’another person” ’ and substitute “ ’or another person” ’.
Section 19(2)(d) is a consequential technical amendment to section 40A of the 1976 Act. It is to take account of the introduction of a requirement to obtain ministerial consent for the construction of pipelines. Amendment No. 56 is necessary to correct a typing error in the existing text.
Amendment agreed to.
I move amendment No. 57:
In page 21, between lines 30 and 31, to insert the following subsection:
"(3) In carrying out the functions under this section, the regulator shall evaluate various proposals for gas pipelines and report to the Minister on its recommendations relating to any strategic considerations for the development of infrastructure.".
This amendment amends the Principal Act and it seeks to give the CER a role in evaluating the various proposals for gas pipelines and report to the Minister on its recommendations. Reference has been made to the fact that we are on the threshold of major infrastructural development, be it in the form of a Dublin-Belfast pipe, a gas discovery off the west coast and bringing that ashore or in relation to the roll-out of the An Bord Gáis national network to the north-west, the south-west and so on, and then there is the question of a second BG pipeline. These are critical questions and while from time to time the Department has engaged various consultants, such as the 20-25 study and so on, I am seeking to provide for the regulator to evaluate various proposals for gas pipelines and report to the Minister on its recommendations. It is purely consultative but the expertise and knowledge of the CER should be deployed to this effect and should be done fairly rapidly.
I can tell what is written on the Minister's note, that it is not part of the functions of this legislation to go beyond that but he has told me today, and this is an important point, that the amendment to the Principal Act to develop the functions of the CER will not happen until next year and that he will make decisions on the pipeline by the end of this year so there is no way that will meet my point, if I might pre-empt what the Minister will say. I am getting my retaliation in first. This is in a different category time-wise to the other points and it should therefore be accepted.
I agree it is different. This amendment proposes the insertion of an additional function for the commission to report to the Minister on strategic considerations for development of infrastructure and carrying out its functions under section 40A of the 1976 Act. The committee may recall that section 40A is concerned with environmental impact statements only and the commission has no functions under section 40A of the 1976 Act. As the Deputy has said, I mentioned this matter already today but in the interests of clarity I will reiterate that this Bill does not propose to confer any such functions on the commission. It is possible that a function of this type may be delegated in future legislation to implement the gas directive, and I did say that it would be in the next year. The point can certainly be considered at that time.
I am sure the Minister can understand that if one thinks about it, the earliest possible date we will have the legislation to give extra functions to the CER will be the spring of 2001. The Minister will have already decided on a second BG pipeline, the Belfast proposal or whatever. The Minister will know where he stands at that stage.
That is true.
I take the Minister's first point that in the context of amending the Principal Act perhaps this amendment is not worded in the right way in terms of EIS; it is not the right access point. Let us be frank about this. The Minister's main man in the Department to advise him on these issues relating to energy was the former Assistant Secretary, who is now the CER, and he will have access to ongoing information. It is not as if I were asking the Minister to accept his advice but he might be able to advise him and he might welcome having an independent crutch to lean on if a controversy arises. This is a reasonable, prudent measure. I accept there may be a problem textually but it is self-evident that in terms of the functions of the CER, implementing the EU gas directive and the whole gas liberalisation, it willbe all done and dusted on pipelines, according to the Minister's own commitments.
The Deputy is right; it is the timing. We will have a look at it and talk to the Deputy again about it.
Amendment, by leave, withdrawn.
Section 19, as amended, agreed to.
SECTION 20.
Amendment No. 58 is in the name of the Minister. Amendment No. 59 is an alternative so the proposal is to discuss Nos. 58 and 59 together, by agreement.
I move amendment No. 58:
In page 21, lines 31 to 35, to delete subsection (1) and substitute the following:
"(1) In this section, 'relevant person' means-
(a) save to the extent that this section has application to section 26 of the Principal Act, a person-
(i) in respect of whom the Minister has imposed a requirement under section 40(2)(a) of the Principal Act, or
(ii) who has obtained the consent of the Minister under section 40(1) of the Principal Act, in relation to the construction or operation of a pipeline,
(b) to the extent that this section has application to the said section 26, a person who has notified the Minister in writing of his or her intention to give a notice or make an application for the Minister’s consent under section 40(1) of the Principal Act in relation to the construction or operation of a pipeline and in respect of which notification the Minister provides a certificate to the person, after having made such inquiries, if any, as the Minister thinks appropriate, stating that the notification demonstrates a bona fide intention on the part of that person to give such a notice or make such an application.”.
The text of this amendment is proposed in place of section 20(1) of the Bill. This section is intended to define the type of person who is the relevant person who may enjoy the same rights of access to and acquisition of land as BGE. The amendment also proposes to distinguish between the definition of the relevant persons for the purpose of section 26 of the 1976 Act because access to those types of powers is necessary for the earlier stages of the application process and the EIS procedure. Deputy Yates has also proposed an amendment to section 21 and I understand that the sentiments underlying both our proposed amendments are effectively the same. While the texts are very similar, there are some additional features in my text that may facilitate both the exercise of these powers and also offer protection to landowners in relation to the exercise of the powers. In this regard I am proposing that only bona fide applicants who have received a certificate to that effect, subject to such inquiries as I may direct, shall enjoy powers of access to land for the purpose of section 26 of the 1976 Act.
In addition, because section 26 deals with compulsory purchase, it is not possible to exclude persons who have notified the Minister of their intention to build a pipeline before 27 April 2000, as proposed in amendment No. 59, because access to land is also necessary for the completion of detailed engineering in relation to a gas infrastructure project. Accordingly, I ask that amendment No. 58 be accepted.
I welcome the Minister's amendment No. 58. It meets the point and fine-tunes what I had proposed. The issue is the same as that addressed earlier. It is to ensure there is not discrimination between the process of the notice regime and the new consent regime and this amendment adequately meets the point. I withdraw my amendment.
Amendment agreed to.
Amendment No. 59 not moved.
Amendment No. 60 is in the name of the Minister. Amendments Nos. 61 and 62 are related so the proposal is to discuss Nos. 60, 61 and 62 together, by agreement.
I move amendment No. 60:
In page 22, lines 1 to 3, to delete subsection (4) and substitute the following:
"(4) Section 26(1) of the Principal Act is amended-
(a) by the substitution in paragraph (a) of ’under this Act’ for ’for a purpose of this Act’,
(b) by the substitution in paragraph (b) of ’over the land,’ for ’over the land.’, and
(c) by the addition of the following paragraphs:
'(c) if the purpose, or one of the purposes, for which any such land or right is being so acquired or is being considered for such acquisition, is in connection with the construction or operation of a pipeline, for carrying out thereon any investigation or examination preliminary or incidental to the making of an application for consent under section 8(7) or 40(1) of this Act or, as the case may be, the giving of previous and reasonable notice under the said section 40(1), in relation to that construction or operation, and
(d) in case the land is in the vicinity of land which, or a right over which, is being so acquired or is being considered for such acquisition and the doing of any of the things referred to in paragraph (a), (b) or (c) of this subsection in respect of that land or right cannot be accomplished without entering on thefirst-mentioned land in this paragraph and, as the case may be, doing thereon any thing necessary to ensure a thing as aforesaid is accomplished, for those purposes.’.”.
This amendment is necessary to take account of the fact that the provision for access to land for the carrying out of surveys, etc., in section 26 of the 1976 Act is linked expressly to compulsory acquisition. Accordingly, additional amendments to section 26 of the 1976 Act are required to make necessary powers of access to land available for the purpose of preliminary project design, the preparation of an EIS and the type of detailed engineering necessary in the context of building gas infrastructure. This amendment meets these needs and, in addition, ensures that access to land in the vicinity of the land under examination is also available to the bona fide applicant.
As I mentioned during our discussion of amendments Nos. 58 and 59, I have taken steps to ensure the bona fides of persons who may exercise rights under section 26 of the 1976 Act. This amendment entails a number of consequential technical amendments necessary to give effect to this amendment.
With regard to amendment No. 61, section 20(5) was introduced to amend section 32 of the 1976 Act and to give private operators the same powers as BGE with regard to the acquisition of land. However, it appears that due to an oversight, the text set out in this amendment was left out of the original subsection (5) and was excluded from the Bill. Accordingly, this amendment is necessary to remedy that oversight.
Is the Minister happy with amendments Nos. 60, 61 and 62 as they stand? He does not propose to amend them again?
No. Amendment No. 62 is in the Deputy's name.
Is No. 62 being discussed with these?
Yes.
I will address amendment No. 62. There was a fear on the part of Bord Gáis that if there were a legal challenge against the CPO powers of one of the new gas pipeline operators, some of its powers would be under legal question. In other words, Bord Gáis would be drawn into a dispute that had nothing to do with it.
The amendment proposes that nothing in the Bill would undermine the existing legal status of the CPO and other powers of BGE. When a case goes to court under this legislation, there could be a fallout which would have a ricochet effect on a proposed extension of the gas pipeline by BGE. Therefore, BGE asked me to put down an amendment to prevent that. Do the Minister of State's amendments meet that point? Amendment No. 61 appears to deal with a separate oversight. Amendments Nos. 60 and 61 deal with the points outlined by the Minister of State but he does not appear to have done anything to meet the point made by BGE.
This amendment proposes that the extension of BGE's compulsory purchase powers to private operators should not undermine the existing powers of BGE in relation to the laying of pipelines. I am not sure the amendment would necessarily achieve what I understand to be its objective. I cannot put BGE in a different and more favourable position from other operators. That would not be compatible with the EU gas directive.
The proposal has been put forward because of concerns that a court challenge to the exercise by a private operator of these powers would affect BGE. The Department sought legal advice on proper procedures to be followed in the consideration of applications to build pipelines, the evaluation of such applications and environmental statements. The answer to the concerns underlying this amendment can best be addressed by ensuring that the procedures adopted and implemented by my Department comply fully with constitutional obligations, in particular, to respect the rights of persons to natural and constitutional justice, access to the courts and private property rights. These procedures must also comply with the decisions of our courts in relation to these fundamental issues.
If these key legal requirements are respected in full, the potential for a legal challenge to the extension of these powers, with consequential effects on BGE, is substantially reduced. I am not willing to accept the amendment.
The Minister's arguments are not convincing. The point being made by BGE is the way the Minister sets about giving the equal powers. Including it in the same section could have an effect on BGE that is not intended. The Bill amends sections of the 1976 Act to award CPO powers to pipeline builders other than Bord Gáis. It attempts to achieve this by amending the Act in a way that places both powers, those of Bord Gáis and others, within the same section of the Bill. This creates a risk that any challenge to one pipeline constructor might also impact on others. Such a challenge could impede Bord Gáis from connecting new power stations. This runs counter to the main object of the Bill.
Will the Minister of State consider inserting it in a different section on Report Stage?
We are discussing the creation of a level playing field. We will get further advice on it.
Amendment agreed to.
I move amendment No. 61:
In page 22, subsection (5), line 12, after "section 20”, to insert “and, subject to the following provisions of this section, the Minister may make an acquisition order in relation to the land or right over land”.
Amendment agreed to.
Amendment No. 62 not moved.
Section 20, as amended, agreed to.
NEW SECTIONS.
I move amendment No. 63:
In page 22, before section 21, to insert the following new section:
"21.-(1) Section 27 of the Principal Act is amended by the insertion in subsection (1) after 'section 8 of this Act' of ', or, as the case may be, section 40(2) of this Act,'.
(2) Section 42 of the Principal Act is amended by the insertion in subsection (2)(b) after ’of this Act’ of ’or a condition has been attached by him under that section to a consent in respect of the pipeline’.”.
Amendment agreed to.
I move amendment No. 64:
In page 22, before section 21, to insert the following new section:
"22.-Section 72 of the Registration of Title Act, 1964, is amended by the substitution in subsection (4) (inserted by the Principal Act) of the following paragraph for paragraph (a):
(a) pursuant to an agreement in writing is granted to or by the Irish Gas Board or a relevant person (within the meaning of section 20 of the Gas (Amendment) Act, 2000), or pursuant to an acquisition order within the meaning of the Gas Act, 1976, is granted to that Board or such a person, and’.”.
Amendment agreed to.
I move amendment No. 65:
In page 22, before section 21, to insert the following new section:
"23.-Section 8 of the Principal Act is amended, in subsection (8) (inserted by the Gas (Amendment) Act, 1993)-
(a) by the substitution in paragraph (b) of ’by the Board,’ for ’by the Board.’, and
(b) by the addition of the following paragraph:
'(c) a condition requiring the Board to obtain the prior approval of the Minister in respect of the price or prices to be charged for the transmission of gas through the pipeline.’.”.
Amendment agreed to.
Section 21, as amended, agreed to.
Sections 21 to 23, inclusive, agreed to.
Title agreed to.
Bill reported with amendments.