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Electricity Generation.

Dáil Éireann Debate, Tuesday - 8 February 2005

Tuesday, 8 February 2005

Questions (43, 44, 45)

Ruairí Quinn

Question:

81 Mr. Quinn asked the Minister for Communications, Marine and Natural Resources the details of the full scale Government review of the energy market here; the issues the review will address; the timescale of the review; if the review will ensure that the national grid and key generation infrastructure are retained in public ownership; and if he will make a statement on the matter. [3595/05]

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Trevor Sargent

Question:

104 Mr. Sargent asked the Minister for Communications, Marine and Natural Resources when he expects his proposed full-scale review of the energy market and the future structure of the ESB to be completed; the person who will carry out the review; and if he will make a statement on the matter. [3684/05]

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Bernard J. Durkan

Question:

274 Mr. Durkan asked the Minister for Communications, Marine and Natural Resources the extent to which he expects the ESB to play a central role in the generation, transmission and distribution of supply to consumers and the national grid; and if he will make a statement on the matter. [3759/05]

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Written answers

I propose to take Questions Nos. 81, 104 and 274 together.

The review I am proposing is focused mainly on the electricity sector. Internal reviews on renewable energy, CHP and biomass are nearing completion. While the review is being planned for some time, precise terms of reference are still being finalised. What is proposed is a comprehensive and strategic review of the institutional arrangements and market structures for the Irish electricity sector. This will include a detailed examination of the ESB's vertically integrated utility structure and its dominance in the sector, particularly in the area of power generation. The review will not extend to the existing structure, functions or responsibilities of the Commission for Energy Regulation.

While precise details will be made available shortly in the tender documentation, I can confirm at this point that the review will include a thorough assessment of the effectiveness and appropriateness of the existing arrangements and structures in the electricity sector. This assessment will cover issues such as the cost of electricity in Ireland and a benchmarking of the cost bases and efficiency levels of existing State-owned power stations and networks. It will also look at the position of new entrants and provide an assessment of current levels of competition, particularly in the power generation sector.

The position of renewable energy sources and the various roles of the ESB in the renewable energy market segment will also be included in the review. There are also outstanding issues around the unbundling of the distribution business as required by the most recent EU directive on the internal market in electricity. The review will need to take full account of forthcoming developments, such as the all-island energy market and the proposed east-west and North-South electricity interconnectors.

In regard to the position of electricity assets in State ownership, I have previously confirmed my opposition to the privatisation of the transmission and distribution systems which are critical national assets that should remain in public ownership. There is strong consensus about this. I have also previously stated my opposition to any privatisation that would result in the creation of a monopoly or near monopoly in the power generation sector.

Notwithstanding this, it is my intention that the review should examine all options in regard to the future shape of the ESB and, in particular, on how to deal with the company's dominance in power generation. The issue of the ESB's dominance is a critical one in terms of developing competition in the market and ensuring that the electricity sector contributes fully to national competitiveness. Finding an effective solution to these issues is critical if we are to achieve the orderly development of the market with appropriate opportunities for new investment, deliver good value for money to customers and ensure the security of energy supplies into the future.

As part of the conclusions to the report that is to be submitted as a result of the review, the relevant consultants will be required to identify a range of alternative institutional arrangements and company structures, including ownership models, for the ESB and, to the extent appropriate, for the electricity sector in general. They will also be required to make specific recommendations as to the most appropriate arrangements and structures. It is my intention that these recommendations will serve to inform my Department's policy decisions in regard to the future of the electricity sector. If the recommendations are leading towards any change in the structure of the ESB, I expect them to be supported by a detailed business case for any proposals.

It is my intention that the call for tenders be announced within the next fortnight. Due to the scale of the review, the call for tenders will be subject to EU procurement rules and to the timescales that these rules impose. The contract notices will be transmitted electronically to the Official Journal and the tender documentation will also be made available electronically on the Government's e-procurement website. The call for tenders will be open to all interested parties. Again, due to the scale of the review, it is estimated that it will take a minimum of six months to complete.

There is no threat to the existence of the ESB, which has served this country well for over 75 years.

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