Gas Regulation Bill 2013: Committee Stage

I wish to inform members that Deputy Patrick O'Donovan is deputising for Deputy Paudie Coffey, while Deputy Paul Connaughton is deputising for Deputy Brendan Griffin.

The meeting has been convened to consider the Gas Regulation Bill 2013. The purpose of the Bill is first, to allow and facilitate the sale of Bord Gáis Energy, a division of Bord Gáis Éireann; second, to restructure Bord Gáis Éireann and establish a gas network subsidiary company which cannot be sold; and third, to change the ministerial ownership and control provisions for Bord Gáis Éireann.

I welcome the Minister for Communications, Energy and Natural Resources, Deputy Pat Rabbitte, and his officials to the meeting.

As there are proposed amendments, groupings arise. I am requesting that all mobile telephones should be switched off.

Section 1 agreed to.

Amendments Nos. 1, 13, 18 and 21 are related technical amendments and may be discussed together by agreement.

I move amendment No. 1:

In page 6, line 35, before “European” to insert “the”.

These technical amendments are purely for the purpose of correcting minor typographical and grammatical points, and providing minor clarifications.

Amendment agreed to.
Question proposed: "That section, 2, as amended, stand part of the Bill."

As regards the definition of "assets", on Second Stage I raised the issue of the telecoms sector. Aurora Telecom is owned by Bord Gáis but I understand that it will not form part of the disposal. Prior to the Christmas recess, the Minister will be bringing forward far-reaching legislation on expanding the telecom sector. Hopefully, it will address the broadband deficits. We should have a single holding company for all the State's fibre assets. Can a facility be provided for in this Bill to allow the Minister, if he so wishes, to transfer Aurora Telecom and its broadband assets into one holding company? Issues have arisen concerning the transfer of these assets into one holding company. The Minister's Department has been repeatedly examining the matter for ten or 15 years. We now have an opportunity to provide facilitating legislation. It is imperative that broadband assets should be held in State ownership, but in one holding company so that all the fibre can be lit. That will ensure we have a backbone across the country that can improve broadband capacity so that constituencies like mine have an opportunity to access high-speed broadband equal to that of Dublin city centre.

I have had occasion, although not on this particular point, to have a different matter examined for me which parallels the point being made by Deputy Naughten. The advice I received from the Office of the Attorney General is that the purpose of this Bill is solely to facilitate the disposal of the energy business of Bord Gáis Éireann. Deputy Naughten has raised an interesting point that has already been raised about disparate control and ownership of the telecommunications network. We are taking great pains to ensure that in this case the networks are retained in State ownership.

As regards the Deputy's point on the telecommunications infrastructure, a few months ago we commissioned consultants to engage in a detailed mapping exercise of that part of the country that does not currently have a competitive service. In other words, the parts of the country the commercial sector has not provided quality broadband and is not likely to, as a commercial proposition. Therefore, in order to comply with European conditions in respect of State intervention, we have to engage in a detailed mapping exercise. That is being conducted on our behalf to the stage of mounting the procurement proposal that will go to Brussels. We could address the issue raised by the Deputy in that context.

There is a clear distinction, which ironically is a lesson arising from the telecommunications sector in terms of what happened when the government of the day sold Telecom Éireannn lock, stock and barrel. It had the effect of minimising investment in broadband at a critical time. As a result we have today's situation. However, the Attorney General has advised that the purpose of this Bill is to facilitate the sale of the energy business of Bord Gáis. It does not interfere with the networks. It strips out the networks, including Aurora Telecom.

I thank the Minister for his response and I am glad this mapping project is taking place. However, the Minister did not answer my question. We have five State-owned broadband networks and most of that fibre is unlit. Given that there are five separate holding companies, we cannot utilise those assets to the extent they should be used or have those wholesaled to commercial operators to provide competition. Some of that unlit fibre is going to some regions that do not currently have decent broadband capacity. We urgently need one State holding company to ensure that asset is used to the maximum degree. That should have happened 15 years ago. At this stage, we are splitting up the energy assets of Bord Gáis. The retail aspect will be sold off, while the network aspect will be hived off into Gaslink and will remain in State ownership. Gaslink will retain the existing fibre network. I am seeking a facilitating provision in the next piece of legislation for a single telecoms holding company to promote the development of that broadband fibre and to ensure that it is lit up.

As Gaslink rolls out its network, provision will hopefully be made to lay ducting for fibre.

Sadly, EirGrid is making no provision for this. Even though the ESB, the original holding company, rolled out fibre across its transmission network EirGrid will make no provision in this regard. This means there will be a new transmission line going through the Chairman's county but no provision will be made for broadband. This is one of the few towns of its size in the west of Ireland that does not have any fibre capacity.

It is no longer accurate to say, disparate and all as the ownership structure may be, that it is in the main unlit. Let us take for example the situation of the Metropolitan Area Networks. It is true that two years ago fewer than half of them were lit but this is no longer the case. I understand that only six remain unlit. The new owner of the franchise now manages the MANs.

In the case of the Chairman's county, interesting developments are happening there in terms of broadband infrastructure. It may not immediately run through Ballaghaderreen but it will run from Bellanaboy into Galway. What we propose to do in this regard is currently under examination at European level. Also, the National Roads Authority has been more facilitative in recent times than it was during the height of the road building boom. The Deputy's net question is should all of this be pulled together under single ownership? The Deputy would not believe the amount of work put into stripping out the energy side by my officials and the amount of paid expertise required to be taken on board by the company. I am happy that BGE networks, or whatever it will be called, will retain Aurora, which gives us the opportunity, when we get a fix on what proposal we will put to Europe in respect of the least densely populated parts of the country, to look at it in that context.

The advice from the parliamentary draftsman's office is that the purpose of this Bill is as set out in the foreword.

I want to flag that we will have this battle with the next piece of legislation.

The Deputy has made his point well.

This is the first occasion on which I have dealt with legislation in committee. Five of the amendments I tabled have been ruled out order as they are deemed to be in conflict with the principles of the Bill.

We will deal with those when we come to the sections under which they arise.

It is important to point out that I have no role in that regard.

I am not blaming the Minister on this one.

The Deputy's argument is with the Chairman.

I thank the Minister.

I will be making a suggestion before the end of the committee with which the Minister might agree.

Question put and agreed to.
Sections 3 to 11, inclusive, agreed to.
Question proposed: "That section 12 stand part of the Bill."

Section 12 deals with the transfer of the BGE and Gaslink network. I wish to raise again a concern which I raised on Second Stage in relation to the network. The Minister has received a detailed submission from the Western Development Commission regarding the use of part of the funds to be generated from the sale of this particular entity, Bord Gáis Éireann, for the extension of the third phase of the development of the network to towns in the west and north west that have not to date had access to gas. The Western Development Commission estimates that this would save businesses in the north west region approximately €16.4 million per annum. When Gaslink completed its assessment, in terms of the cost benefit analysis of bringing gas to the regions, it found the cost of bringing gas to a town like Carrrick-on-Shannon would be a negative of €1.12 million. If gas was available in Carrick-on-Shannon businesses there would save €7 million per annum. However, because of a shortfall of €1.12 million this will not now happen. The same argument could be made in relation to Longford, Sligo, Ballaghaderreen, Boyle, Roscommon and so on. The reality is that there is no money available to meet this deficit.

Gaslink carried out its assessment based on the criteria set out by the energy regulator. This legislation facilitates the sale of Bord Gáis Éireann, the money generated from which is to be used for job initiatives. Surely there is no better job initiative than the laying of a valuable infrastructure network that would sustain not only existing jobs but create additional jobs in a part of the country in which there has been a huge haemorrhage in terms of emigration and which is at a competitive disadvantage in comparison with other parts of the country. I will give an example. An employer with whom I spoke during the past fortnight, who currently employs 60 people, told me that he if had access to natural gas he could employ an additional ten people tomorrow. This is the difference access to natural gas would make to him. I do not believe that the west should be the only region in the country with no access to gas.

The reality is that if provision is not made in this legislation for between 7% and 10% of the funds generated from the sale to be used for expansion of the gas network this will not happen. If this cannot be done then the criteria laid down by the energy regulator in relation to the assessment of the cost benefit analysis in bringing gas to these regions should at least be reviewed. That towns like Carrick-on-Shannon are losing out in terms of gas provision owing to the unavailability of €1.12 million is unacceptable. There is a need for consideration of socioeconomic dividends and balanced regional development in this regard, none of which are taken into account in terms of the manner in which CER has laid down the criteria on which Gaslink is required to make its assessment. The cost could be paid off over a longer term by way of user charges following a variation of the criteria laid down by CER or, as suggested by the Western Development Commission in a document it published some years ago, a small proportion of the money generated from the sale of Bord Gáis Éireann could be ringfenced for expansion of the network not only to towns in the north west but to other towns throughout the country where there is a small margin in terms of it being financially viable to bring gas to them. This would be of huge benefit to businesses and industries in such towns and to the people currently employed therein.

There is no doubt the north west, in particular, is somewhat disadvantaged in this regard. I am familiar with the report from the Western Development Commission to which Deputy Naughten refers. Two difficulties arise in this respect. First, we cannot create a hypothecated fund or earmark funds for a particular purpose. The legislation derives from the history and background of the decision to dispose of State assets, starting from a point where it was the adamant view of the troika that all proceeds realised from such disposals should go towards writing down debt. Over a period of more than six months, the troika's position moved to one where it stipulated that 50% of such proceeds could be used for productive job investment, with the remaining 50% to be used ultimately to pay down debt. Theoretically, therefore, there is no reason that funding for Deputy Naughten's purpose could not come under the first category, other than that extensions of the gas network are based on an economic assessment carried out by Gaslink at the behest of and overseen by the Commission for Energy Regulation. Gas extensions proceed only where they pass this economic test. For example, a recent decision to extend the gas network to Nenagh was on a knife edge but was eventually brought across the line by two or three employers in the town. Employment prospects at one large creamery in particular were considered sufficient to warrant the extension of the networks to the town. However, the proposition that one would extend the gas networks to consumers who could not bear it for economic reasons would not be approved by the regulator.

Deputy Naughten's secondary request was that I examine the criteria the regulator brings to bear. This is complex terrain and while I am not opposed to carrying out such a review, as circumstances stand, I am not in a position, nor would I be a position even with the approval of the Minister for Finance, to earmark part of the probable proceeds for a stated purpose other than the generic one of creating employment. Even if I could so designate the proceeds, it would not change the criteria which are applied by the regulator in deciding where there is an economic proposition to extend the network.

While I accept that this issue has created problems in the north west, the manner in which that issue can be addressed is for another day's discussion. The issue arose in a different context in terms of natural gas coming ashore in north County Mayo. Deputy Naughten will be familiar with the proposals made by Mr. Peter Cassells in that regard. I have always believed that those who have taken a particular stance in the area in question have undersold the benefits that arose from the discussions Mr. Cassells held, which will make a significant contribution, at least in County Mayo. I accept, however, that as one moves up through County Roscommon and into County Sligo and further, a significant issue arises. However, under the economic criteria currently applied by the regulator, I am not enabled to do as the Deputy proposes.

I thank the Minister for his response, which I had headed off to some extent when I pointed out that we need to revisit the criteria that are laid down by the Commission for Energy Regulation. To refer again to the Chairman's home town of Ballaghaderreen, it has a massive creamery with the same ownership structure as the creamery in Nenagh and also has significant energy demands. Not only are we jeopardising jobs in Ballaghaderreen and similar towns, but we are also limiting the capacity of the region to capitalise on the potential growth that will emerge from the abolition of milk quotas in 2015. As a result, part of the country will not be able to secure the same level of economic growth as the south because it does not have access to natural gas, which is vital for processing liquid milk. It is frustrating to hear everyone argue the west is not nearly as efficient at producing milk as the south. Some people dispute that contention but the reality is that the west is far more efficient at producing milk than any other part of Europe outside of Ireland. We cannot avail of the potential for growth arising from abolition of quota 2015 because we do not have access to natural gas. The west would probably meet the regulator's criteria if one were to take into account this potential growth but we must first build the factories and demonstrate increased demand if the gas network is to be extended. Investors will not make investments on the basis of a hope that gas will be provided at some point in the future. We are at a disadvantage in this regard.

The Minister indicated he is not prepared to ring-fence part of the funding and set out reasons he is unable to do so. At a minimum, the criteria for the cost-benefit analysis by the Commission for Energy Regulation need to be reassessed to take into consideration the potential for economic growth and the need for greater balance in economic development. Such a regional balances is currently absent and towns such as Ballaghaderreen, Boyle and Roscommon are suffering as a result.

To try to progress the debate, I ask the Minister, on Report Stage, to make provision in the Bill requiring that once the disposal of the asset is complete, a report will be furnished to the House setting out how the proceeds will be distributed and what job initiatives will be allocated moneys. Every contributor on Second Stage noted that the purpose of the legislation is to create a vehicle for generating moneys for job creation purposes. The Minister has indicated his hands are tied in this legislation and he cannot set out priorities for job creation. The Bill is either a vehicle for job creation or it is not. If it is such a vehicle, the least that should be done is to provide in the legislation that a report will be furnished to the Oireachtas - depending on the outcome of the forthcoming referendum, it may be the Dáil only - setting out what criteria will be used in respect of the allocation of the funds that will be generated from the sale. This would allow us to identify what are the job creation strategies and how they will impact on the country, in particular with regard to balanced regional development.

I regret that this is our last opportunity to bring gas to parts of the country that do not have access to the gas network. The economic challenges facing our region will increase in the years ahead as industry declines and it haemorrhages jobs because local companies are not able to compete with other parts of the country. It will be a self-fulfilling prophesy as a result of the lack of provision of gas to the north west. We had to wait for a gas discovery off the coast before a gas network was established to export it. We should not have had to wait for this network.

On the issue of balanced regional development, I am concerned that some of the previous suggestions will be taken on board as to do so would tie the Government's hands in respect of where the money could and could not be spent.

I am not in favour of placing any geographical impediment on the sale by virtue of the fact that Deputy Harrington, I and other Deputies represent these areas. A gas main goes through my constituency but it does not serve communities, it serves an industrial output. Anyway, the fact that it is there suggests there is potential for the future. I am reluctant to suggest that strict criteria should be laid out in terms of what the Government should do in particular regions. I agree that ultimately, balanced regional development must come about in the first instance by putting the infrastructure in place but I do not believe the infrastructure can go in place on a willy-nilly basis either. There must be an economic stand-up for it. I have grave concerns in respect of anything that would tie the Government's hands in future with regard to the expenditure of a State asset for the purposes of trying to create jobs based on a geographical impediment alone, especially if it excluded my own region.

Deputy Naughten's argument about balanced regional development is well made, but Deputy Naughten knows as well as I do that we are discussing an independent function of the regulator. He knows very well that if it were open to me to intervene, which it is not, because the regulator is statutorily independent, it would get me into difficulties at European level. That is not to take from the argument he makes about the necessity of such infrastructure being available in his town and elsewhere along the north west.

My hands are not tied in terms of the proceeds of this sale, if it is successful, being used for investment purposes to create employment. I am suggesting my hands are tied from earmarking individual particular projects for that purpose. If the sale is successful, I suspect my colleagues around the Cabinet table would have views about how the proceeds are used.

Deputy Naughten requested that I would report back to the House or the sub-committee on this issue and I have no difficulty with that. Deputy Moynihan has tabled an amendment to this effect and it is an amendment I have a great deal of sympathy with. According to the advice given to me, it is not an amendment that needs to be enshrined in law but it is an amendment I am happy to honour in terms of coming back and reporting to the sub-committee or the Dáil proper and I can give Deputy Naughten the assurance that I am more than pleased to do that. However, substantial and sustained work would be necessary if the terms under which the regulator makes his decision were to be altered. That would require a good deal of technical input because the regulatory framework is independent of my meddling.

Surely the Minister does not expect me to make his job easy. For the record, I wish to clarify a point for Deputy O'Donovan. Naturally, I am articulating concerns in respect of the region I represent but the Gaslink phase 3 report covers several towns throughout the country. Deputy O'Donovan can see the towns in the report. They are situated throughout the midlands, the west, the east coast and the south. None of these towns in any part of the country will have the opportunity to avail of gas. The study has already been completed by Gaslink. It has done the cost benefit analysis. The issue is in respect of how to make up the shortfall or how to nuance the criteria to ensure that they fall in under the assessment of the cost benefit analysis. Rather than see the report gather dust, I am trying to ensure some mechanism is put in place to facilitate the connection of these towns throughout the country. Off the top of my head, I recall that Roscrea is one of the towns, for example.

Question put and agreed to.
Sections 13 to 20, inclusive, agreed to.

Amendment No. 2, in the name of Deputy Colreavy, has been ruled out of order but I will allow the Deputy to make a few comments.

I am opposed to the Bill in its entirety because I believe it is wrong legislation. The amendment I put forward is not an attempt to rerun the debate in respect of whether the legislation is good or bad, it is an attempt to mitigate what I regard as the worst impacts of the Bill. I am particularly concerned that ruling the amendment out of order would mean there is some reason the legislation cannot be consistent with the national gas directive. I do not understand why amendment No. 2 was ruled out of order.

I will give you the advice that I received. Amendments Nos. 2, 5, 8 and 27 form a composite proposal to retain public ownership of and association with the energy company. The purpose of the Bill is to provide for the disposal of the Bord Gáis Éireann energy business and for the reorganisation of the ownership of Bord Gáis Éireann. Therefore, these amendments are in conflict with the principle of the Bill as read on Second Stage and must be ruled out of order in accordance with Standing Order 131(1), which states that it shall be an instruction to all committees to which bills may be committed that they have the power to make such amendments therein as they shall think fit, provided that such amendments be relevant to the provisions of the Bill and are not in conflict with the principle of the Bill as read a second time. Effectively, the advice is that your amendments are in conflict with the Bill as read.

Perhaps there is a different way to handle it, with respect. For example, if we are discussing safeguarding the jobs and conditions of employment of existing employees, the Minister could make a statement that jobs would be protected in this process. If we are to consider energy security within Ireland, having a public interest representative on the board of the new entity, having worker representatives on the board or an assurance that the company would be open to trade union membership, then it is here that these types of issues needed to be listed. One way around this could be if the Minister stipulated certain requirements in the requests for tender or the proposals, or if the contracts were to be reviewed by the sub-committee before final publication. Perhaps the matters I have outlined could be contained in those documents rather than within the legislation.

Deputy Colreavy fairly said that it was his first experience of enacting legislation on Committee Stage.

It is not a decision for the Chairman or for me but is the advice from the Bills Office that the Deputy's amendments run exactly counter to the purpose of the Bill. In such circumstances - I spent a long time on that side of the room with Deputy Naughten and he will bear this out - the alternative is to oppose the section because, for the reasons the Chairman has read out, the amendment is not consistent with how members normally process legislation. However, the Deputy is perfectly free to oppose the section. If I can be helpful in dealing with some of Deputy Colreavy's points, that is a matter for the Chairman. I am willing to help, if I can.

Are there some issues that Deputy Colreavy seeks to have clarified?

I assume there will be a request for tenders or proposals emanating to initiate this process. I assume that a form of contract will be entered into between the Minister, on behalf of the Government, and the successful companies. Could those documents be viewed by the committee before being issued to the company or companies?

As the Minister pointed out, the advice I received is as I gave it. As Chairman, I must rule on that, which is the reason they were ruled out of order. Unless the Minister wishes to clarify matters in some way, that is the bottom line. It is not my decision but I reiterate it is the advice I got from the Bills Office.

There are the most strict procedures in terms of any Minister or Government disposing of State assets, with which I must comply and have complied. The bargaining process, although I am unsure whether that is the correct term, is at the final stages and obviously, as far as the different bidders are concerned, there are questions of commercial sensitivity in this regard. However, on the issues raised by Deputy Colreavy regarding the workforce and employment, there are no compulsory redundancies or job losses. The transfer of undertakings legislation known as TUPE applies in respect of the transfer to a new energy company. The terms and conditions are there and are well established and the new undertaking would be obliged to honour them. Consequently, there is no loss of employment and I sincerely hope there will be a positive addition to employment as a result of this development. A new private sector energy company will be on the landscape that presumably will have made this purchase because it can bring investment to bear on the growth of the company. Hopefully, this will lead to some increase in employment. It certainly will enhance further competition in the sector. As I indicated to Deputy Naughten, it is a reasonable request and I note Deputy Moynihan has tabled an amendment to the effect that whoever is in my job in 12 months' time will report back on these issues to the committee or to the House itself.

While we will move on to amendment No. 3, if, at the end of the section the Deputy wishes to press it-----

The Chairman can anticipate that.

Amendment No. 2 not moved.

I move amendment No. 3:

In page 14, line 22, after “Directive” to insert “during the period beginning on the transfer date and ending on the disposal date”.

Again, this amendment is fairly straightforward and technical. It is to provide a sunset clause regarding the ministerial oversight function in respect of the memorandum and articles of the energy company. The ministerial oversight will cease to have effect from the date of the disposal of the energy company.

Amendment agreed to.
Question, "That section 21, as amended, stand part of the Bill", put and declared carried.
Section 22 agreed to.

Amendments Nos. 4 and 6 are related and may be discussed together.

I move amendment No. 4:

In page 15, line 1, to delete “in order to transfer” and substitute “for, or ancillary to, the purposes of the transfer to that company of all, or part, of”.

This is a technical amendment for consistency and clarity that aligns the text with section 21.

Amendment agreed to.
Section 23, as amended, agreed to.
Section 24 agreed to.
Question proposed: "That section 25 stand part of the Bill."

I oppose this section, which provides for "the transfer of assets, licences, rights and liabilities".

Question put and declared carried.

Amendment No. 5 has been ruled out of order, being in conflict with the principle of the Bill as read a Second Time. It is the same issue as previously. Does the Deputy wish to comment?

No, because there is no point in rehashing that debate again but I will oppose the section.

Amendment No. 5 not moved.

I move amendment No. 6:

In page 15, line 22, to delete “in order to transfer” and substitute “for, or ancillary to, the purposes of the transfer to that company of all, or part, of”.

Essentially, it is the same point as I made in respect of amendment No. 4 and is purely technical.

Amendment agreed to.
Question, "That section 26, as amended, stand part of the Bill", put and declared carried.
Sections 27 and 28 agreed to.

I move amendment No. 7:

In page 16, between lines 9 and 10, to insert the following:

“29. Any disposal by BGÉ of its shares in an energy company shall not result in an increase of the ratio of net debt to shareholder’s equity of BGÉ.”.

I believe this amendment will prevent the unfair distribution of the current debt of Bord Gáis, which is approximately €1.8 billion or €1.9 billion, onto the new State company. The distribution of the debt from the current company must be divided in a way that reflects the ability of the new companies to build to carry or to service the debt.

I intend to press this amendment.

If I may, I will explain why I must oppose the amendment. It seeks to alter fundamentally what we are trying to achieve in the Bill, namely, the sale of the Bord Gáis Energy business. In November 2010, the memorandum of understanding agreed between the then Government and the EU-IMF-ECB in the bailout programme committed "to setting appropriate targets for the possible privatisation of state-owned assets". Following lengthy and tough negotiations with the troika, the current Government has been able to agree a position whereby the quantum of State asset disposals is less than that initially demanded by the troika. The use of the proceeds will assist economic recovery - as we have been debating - and key strategic assets, such as the gas transmission and distribution systems, will be retained in State ownership. To deliver on our troika commitments and, more important, to fund our programme for jobs and economic recovery, we must proceed with the sale of the company's energy business. Therefore, I cannot accept the amendment that seeks to delete section 29, the provision that empowers BGE to sell the energy business, subject to ministerial consent.

Nevertheless, I do not disagree with the sentiment advanced by Deputy Moynihan when he mentions trying to ensure there is no unfair distribution of debt. I accept it is very important that the residual company, Bord Gáis networks, is geared to do its business, which remains crucial. The point the Deputy is trying to bring to attention is one that has featured very much in the considerations we have had internally within the Department as well as in the considerations the parent company has brought to bear in this matter. The point is uppermost in the minds of those handling the transaction which, although it is obviously being done at arm's length from me, I know to be high up on the priority list.

Is the Deputy pressing the amendment?

Amendment put and declared lost.

Amendment No. 8 is thereby ruled out of order. Does Deputy Colreavy wish to speak?

No. We would have the same discussion.

Amendment No. 8 not moved.
Question, "That section 29 stand part of the Bill", put and declared carried.

Amendment No. 9 is ruled out of order.

Amendment No. 9 not moved.

I move amendment No. 10:

In page 16, between lines 13 and 14, to insert the following:

“30. BGÉ shall not dispose of the assets of Irish Water.”.

We are discussing the privatisation of Bord Gáis, so this is important. Commentators are asking whether we are also gearing up Irish Water, a subsidiary of BGE, for privatisation. The amendment is to ensure there would be a section in the Bill that would prevent any future plans for such privatisation.

I assure Deputy Moynihan it is the absolute intention of Government that the Irish water business will not be privatised. As with the gas networks, our water assets are critical national infrastructure. Irish Water was established therefore as a fully State-owned subsidiary of BGE and there is no intention, now or in the future, to dispose of it or its assets. As the Deputy is aware, my colleague, the Minister for the Environment, Heritage and Local Government, Deputy Phil Hogan, will bring a new water services Bill to the Oireachtas in the coming months. I understand that an outline of the draft scheme of that Bill has been published on the departmental website. I am advised that the matter raised in the Deputy's proposed amendment is a matter more properly addressed by the forthcoming water services Bill. On this basis, I regret I cannot accept the amendment to the Gas Regulation Bill.

Amendment put and declared lost.

I move amendment No. 11:

In page 16, between lines 13 and 14, to insert the following:

“30. The Minister shall, within 12 months of the enactment of this Act, bring forward a report which shall assess whether or not the State received value for money from the sale of an energy company (Bord Gáis Energy).”.

It is vital that the Houses of the Oireachtas and this committee should be kept informed and that a report would be brought to the Houses within 12 months of the enactment of this legislation. We are accountable to the people and to bringing such information to them via the Houses of the Oireachtas. This would assess whether the State was getting value for money in the sale of this asset. In the past, State companies were sold and that was the end of it, with no following reports. I intend to press this amendment.

I am entirely in sympathy with the spirit of this amendment. As I stated in the earlier debate, the proposition that the Minister should be held accountable by reporting back to the committee is one with which I fully agree. I am entirely disposed towards committing to do precisely that. The advice I have is that I am able to give that commitment without it being enshrined in primary legislation. There is a number of reasons for this but primarily because this transaction is being handled at arm's length from me, for reasons everybody present will understand. I do not know the particular commercial sensitivities or the terms of the deal and all of that, but what I do know is that the fundamental point of Deputy Moynihan's amendment, namely, that I must be accountable for what happens and must report back to this committee within 12 months, is something I am willing to take on board.

On that point, although the Minister states it is not necessary to enshrine this commitment in primary legislation, would it not be, for want of a better phrase, a belt and braces job to ensure the commitment is therein enshrined? The legislation would give the commitment that the outcome would be reported. Although the Minister accepts the spirit of his office reporting, would it not be better to have it in the legislation?

It is important to explain that a process is in train into which a great deal of work has been put. The coalface bargaining is at arm's length from me and I am very sensitive about tripping across it.

In this regard it would be very unusual - I do not know of any precedent that so requires in primary legislation - if the Government of the day was to commit to doing what the Deputy requests in terms of a Minister presenting before the committee and subjecting himself or herself to questioning about the transaction, what has happened since and, as Deputy Naughton said, where did the money go, what were the purposes for which it was used as against the stated objects at the time. That is about as fulsome as I can be.

I thank the Minister for his comments. If the Minister was sitting on this side that would be a fair one for him to swallow. I have no doubt about his bona fides on this issue and I have no doubt that if he is Minister for Communications, Energy and Natural Resources this time next year, after the sale, he will appear before the committee and elaborate as stated. We have been told there will be a reshuffle during the summer and the reality is that he may not be the Minister for Communications, Energy and Natural Resources this time next year. He may have a higher portfolio at that stage. There is no guarantee that whoever is in his position this time next year will appear before the committee. There is precedent for this but I am not sure if it was in this portfolio. The late Séamus Brennan gave a commitment which was put into primary legislation that the disposal of Aer Lingus would not be approved prior to the authorisation of both Houses of the Oireachtas. That condition was inserted in the legislation because there were concerns regarding landing slots at Heathrow Airport. The Minister can check the file but so far as I can recall the Attorney General's office spent some time trying to ascertain if there was any possible way of getting around that condition without having to come back to the Oireachtas to receive the authorisation.

The condition Deputy Moynihan seeks to have inserted needs to be elaborated on but we are all agreed on the principle that the Minister of the day should report back on the sale of the assets and how the money is going to be utilised. The question is whether it should be enshrined in primary legislation. The reality is that once the Minister of the day goes out this door and it closes behind him, all bets are off. I do not doubt his bona fides but the reality is that we have had other Ministers who may not have been as sincere as the Minister. There is no guarantee that in 12 months time the Minister, Deputy Rabbitte, will be the Minister in charge of this brief. If there are questions over the disposal of the assets the Minister of the day may not be as anxious to appear before the committee. That is why it is fundamentally important that it is written into the primary legislation, to ensure there is an onus and responsibility on the Minister of the day to come back and report and justify how and why he or she went about the sale in order that we do not have a continual series of parliamentary questions, leaks to the media, and a series of issues being raised on Leaders' Questions and the Order of Business before the Government of the day concedes to a parliamentary inquiry. We would then be back to square one with the rubbish we have seen in the past in respect of some of the parliamentary inquiries. Let us be up-front and insert it in the legislation. Let us make provision for the Minister of the day to come back and elaborate on the issues we all agree need to be elaborated on and which are part of the Bill. The question is whether it should be enshrined in legislation. I urge the Minister to look at the issue and come back on Report Stage with an amendment that articulates exactly what he has said here today.

There is precedent in other Acts but not exactly in respect of the sale of State assets. In some instances, the Minister of the day in various Departments has to come back in accordance with legislation. Specifically in the Department of Agriculture, Food and the Marine, the Minister has to come back each year in respect of a certain section of the Animal Diseases Act passed 20 to 25 years ago. I understand there is precedent in primary legislation for a Minister to come in to give a report. Perhaps the Minister would examine what kind of provision can be enshrined in the legislation.

It is unconscionable to suggest that whoever is the Minister would be behind the door in accounting for a transaction of this size. We have never had a forced sale in these circumstances since 1922. This is a significant transaction with its origins in the bailout programme and the fact that we have to borrow money in the fashion that we are all aware. Deputy Naughten has somewhat more time on his hands these days than I have. I may be getting into trouble here but I seem to recall in the Dáil reform package announced last week a section that requires Ministers, following the enactment of legislation, to come back 12 months later to account to committees on whether the particular legislation has served the purpose for which it was designed and if there are parts of it not invoked and so on.

I understand that provision is not retrospective.

It should apply to legislation being enacted from here.

We can make provision for it in the primary legislation to ensure that happens, if there is any doubt in regard to it.

If we have a Government-wide commitment to do that and it encompasses the Deputy's amendment, my colleagues should accept my word on it.

As the referee here, the bets are that it will be as the Minister suggests. The bookies will stop taking bets on it at this stage.

Perhaps the Minister would go to the bookie shop, have a think about it and come back to us on Report Stage.

We have had the discussion.

Amendment put and declared lost.

I move amendment No. 12:

In page 16, between lines 13 and 14, to insert the following:

"30. The Minister shall, within 12 months of the enactment of this Act, bring forward a report which shall outline a review of the retail energy market in Ireland, assessing whether or not sufficient competition and regulation is in place to ensure prices are kept low for consumers."

Again this amendment seeks that the Minister brings forward a report in respect of the retail energy market in Ireland. One has to question the role of the regulator in respect of the continuous increases in energy prices in the Irish market even with competition. It would be helpful if the Minister were to bring forward a report, in view of the sale of Bord Gáis Energy or part of it, on what is happening in the retail energy market. I ask the Minister to consider this amendment in the same light as the previous amendment.

This is an important point being raised by Deputy Moynihan. I wish to take a minute to explain the reason I am not minded to accept the amendment as expressed for the reason that information on the retail energy market is already being reported on and published on an ongoing basis by the Commission for Energy Regulation. As Minister, I am regularly updated by the Commission for Energy Regulation on developments and the state of competition in the market.

I have no statutory function in regard to the regulation of either the electricity or gas markets. Responsibility for the regulation of those markets is a matter for the regulator which is an independent statutory body.
The functions of the Commission for Energy Regulation include protecting the interests of final customers, including the disadvantaged and the elderly. The regulator is also responsible for promoting efficient, orderly, fair and competitive markets and for monitoring competition. Many of these regulatory functions originate from the regulator's obligations under European law.
Prices in the electricity retail market are fully deregulated. Prices in the gas market are also deregulated with the exception of gas prices charged by Bord Gáis Energy to its domestic customers. Therefore, customers can avail of competitive offerings from a number of suppliers. Prices are set by suppliers and are commercial and operational matters for them. I have no statutory function in the setting of electricity or gas prices.
With the deregulation of electricity and most gas retail prices, the primary focus of the regulator, in so far as prices are concerned, is its joint oversight with the Northern Ireland regulator of the all-island single electricity market, its scrutiny of electricity and gas network costs, which feed into retail prices, and its general consumer advice and protection role. The regulator is accountable to the Oireachtas, and the commissioners have appeared before the committee on a number of occasions on a range of issues.
The regulator is required to report on an annual basis to the European Commission detailing its economic role and associated policy developments. The report includes details of developments in regard to competition in energy markets. In addition, in carrying out its consumer protection and marketing monitoring roles, the regulator presents to me, on an annual basis, a report on the development of competition in the market, including prices and commentary on developments. All these reports are publicly available on the website of the regulator.
Electricity and gas costs in Ireland are influenced by various drivers, with global gas and oil prices being the most significant factors. Among other drivers, over which we have little or no control, are exchange rate movements, the cost of capital, our small size, our geographic location, our low population density, our population dispersal, EU legislative obligations and unfavourable international events. Given the scope of these diverse drivers and their upward impact on prices, it is clear that there is limited potential scope for protecting Ireland from external energy price shocks.
Amendment put and declared lost.

I move amendment No. 13:

In page 16, line 23, after “7B” to insert “(2)(e)”.

Amendment agreed to.

I move amendment No. 14:

In page 18, line 32, to delete “, by substituting for subsection (3) the following:” and substitute the following:


(i) in subsection (1) (as amended by section 9(a) of the Energy (Miscellaneous Provisions) Act 1995 by substituting “with the prior consent of the majority-shareholding Minister, given where the majority-shareholding Minister is not the Minister for Finance with the approval of the Minister for Finance” for “with the prior consent of the Minister given with the approval of the Minister for Finance”, and

(ii) by substituting for subsection (3) the following:”.

The amendment has been proposed to address a ministerial consent provision in the 1976 Act which was omitted from the Bill but will now be provided for. The consent provision aligns with the other majority shareholding Minister consent in the Bill.

Amendment agreed to.

I move amendment No. 15:

In page 19, lines 13 to 21, to delete all words from and including “—” in line 13 down to and including “consulted” in line 21 and substitute the following:

“with the consent of the majority-shareholding Minister given (where the majority-shareholding Minister is not the Minister for Finance, with the approval of the Minister for Finance) after having consulted with the Minister, the Minister for Public Expenditure and Reform and any other Minister of the Government who, in the opinion of the majority-shareholding Minister having regard to the functions of that other Minister, ought to be consulted”.

The amendment is purely technical. It is proposed in the interests of clarity and certainty.

Amendment agreed to.
Section 30, as amended, agreed to.
Sections 31 to 33, inclusive, agreed to.

Amendments Nos. 16 and 17 are related and may be discussed together.

I move amendment No. 16:

In page 22, line 42, after “he” to insert “or she”.

These are purely technical amendments to correct the gender imbalance.

Amendment agreed to.
Section 34, as amended, agreed to.

I move amendment No. 17:

In page 23, line 6, after “his” to insert “or her”.

Amendment agreed to.
Section 35, as amended, agreed to.

I move amendment No. 18:

In page 23, line 39, before “by” to insert “subject to paragraph (b),”.

Amendment agreed to.
Section 36, as amended, agreed to.

I move amendment No. 19:

In page 25, lines 40 to 42, to delete all words from and including “—” in line 40 down to and including “refusal” in line 42 and substitute the following:

“consult the Minister, the Commission and the Board and where the majority-shareholding Minister refuses consent, he or she shall provide reasons for the refusal”.

The amendment is technical and is proposed in the interest of ensuring clarity with regard to steps the majority shareholding Minister must take in the event that he or she intends to refuse consent for an investment in a pipeline development. It clarifies that, in advance of taking a final decision, he or she must consult the Commission for Energy Regulation and the Minister with responsibility for energy, having regard to their respective roles in relation to ensuring the security and competitiveness of gas supplies. It also clarifies that if, following this consultation, the majority shareholding Minister refuses consent, he or she must provide a reason for doing so.

Amendment agreed to.
Section 37, as amended, agreed to.
Section 38 agreed to.

I move amendment No. 20:

In page 28, between lines 14 and 15, to insert the following:

“Transfer of certain capital stock issued by BGÉ under section 7B(2) of the Act of 1976

39. On the date on which the Government first appoints a Minister of the Government to be the majority-shareholding Minister by order under section 7B(2)(e) of the Act of 1976—

(a) any capital stock referred to in section 7B(2)(c) of the Act of 1976 that has been issued to the Minister for Public Expenditure and Reform or which stands transferred to that Minister pursuant to section 16(4) of the Ministers and Secretaries (Amendment) Act 2011 stands transferred to the majority-shareholding Minister, and

(b) half of any capital stock referred to in section 7B(2)(b) of the Act of 1976 that has been issued to the Minister stands transferred to the Minister for Public Expenditure and Reform.”.

I am promoting the deletion of section 39 as it stands and its replacement with this one. The amendment is intended to provide for the transfer of the majority of capital stock in Bord Gáis Éireann to the majority shareholding Minister and for the retention of a 5% minority shareholding by both Ministers: the Minister for Communications, Energy and Natural Resources and the Minister for Public Expenditure and Reform. The shareholding arrangements are necessary to ensure compliance with EU obligations in regard to the unbundling of the transmission systems operators.

Will the amendment have implications? Will it limit this Government's discretion to use any company profits at any stage in the future? Are we putting into primary legislation something that will be used for the establishment of a company but could then be called upon as the company becomes operational?

No. Essentially, the provision brings us into compliance with complex European obligations related to what is known as unbundling. A new architecture must be put in place in terms of the Minister who is the primary stockholder in the company. Up to now, that has been the Minister with responsibility for energy, the Minister for Finance and, latterly, the Minister for Public Expenditure and Reform.

In compliance with the unbundling obligations on us, this new arrangement is being put in place where the majority shareholding Minister has the majority State ownership and there is a smaller nominal holding by the Ministers for Communications, Energy and Natural Resources and Public Expenditure and Reform. It does not curtail us in the way feared by the Deputy.

I have some concerns over that and will oppose the new section because I do not believe we have been given enough information in respect of possible consequences.

Is the Deputy opposing the amendment?

Amendment put and declared carried.
Section 39 deleted.
Section 40 agreed to.

I move amendment No. 21:

In page 29, line 6, after "Board" to insert "or the relevant person".

Section 41, as amended, agreed to.

Amendment agreed to.
Sections 42 to 44, inclusive, agreed to.
Schedules 1 and 2 agreed to.

Amendments Nos. 22 to 26, inclusive, are related and may be discussed together by agreement.

I move amendment No. 22:

In page 36, to delete lines 13 to 17.

Schedule 3 of the Bill relates to the transfer of assets, licences, rights and liabilities of Bord Gáis Energy to the energy company. Amendments Nos. 22 to 26, inclusive, are technical amendments and are proposed to provide greater clarity to parties as regards the transfer of assets, licences, rights and liabilities.

Amendment agreed to.

I move amendment No. 23:

In page 36, to delete lines 26 to 30.

Amendment agreed to.

I move amendment No. 24:

In page 36, line 33, after "Act" to insert "and this Schedule".

Amendment agreed to.

I move amendment No. 25:

In page 36, line 34, to delete "and this Schedule".

Amendment agreed to.

I move amendment No. 26:

In page 36, line 36, after "document." to insert the following:

"No provision of any contract shall operate or become exercisable or be contravened by reason of the enactment or operation of this Act.".

Amendment agreed to.
Schedule 3, as amended, agreed to.
Schedule 4 agreed to.

Amendment No. 27 is in conflict with the principle of the Bill as read a Second Time. Does Deputy Colreavy wish to comment a second time?

I promised that I would oppose it at every Stage and I keep my promises. I presume I will have an opportunity to object to the legislation at the next Stage.


Amendment No. 27 not moved.

Question, "That the Title be the Title to the Bill", put and agreed to.

I thank the Minister and his officials for attending and members for considering the Bill at short notice.

I also thank the Chairman and members for their contribution to processing the Bill. The Bill will now enable or facilitate the completion of the sale of the energy business of Bord Gáis Éireann. In parallel with hopes for the company in private sector ownership to grow employment and market share, the parent company will be developing Irish Water. Hopefully, that will see the largest employment increase in the company - larger than we might have envisaged. Hopefully, it will be a win-win situation in terms of employment, the networks being retained in State ownership and the development of Irish Water in the immediate future. I thank the Chairman and committee for their co-operation.

It is good to end on a positive note.

Bill reported with amendments.