The Commission for Energy Regulation (CER), which is a statutory, independent body, has, since 2002, been charged with all aspects of the assessment and licensing of prospective operators who wish to develop and/or operate a gas distribution system within the State under the Gas (Interim) (Regulation) Act 2002. I have no direct statutory function in relation to the connection of towns to the gas network.
The development and expansion of the natural gas network is in the first instance a commercial matter for Gaslink, which is mandated under Section 8 of the Gas Act 1976, as amended, to develop and maintain a system for the supply of natural gas that is both economical and efficient. The CER, in 2006, approved a new network connections policy, which created the opportunity to reassess the feasibility of connecting certain towns to the gas network. In order for any town to be connected to the gas network, certain economic criteria need to be satisfied as a prerequisite. The policy allows for the appraisal of a town either on its own or as part of a regional group of towns.
This policy ensures that, over a certain period, the costs of connecting the town, or group of towns, to the network are recouped through the actual economic consumption of gas and the associated tariffs. Otherwise, uneconomic projects will increase costs for all energy consumers.
Having regard to the CER policy on new towns connections, Bord Gáis Networks, and more recently Gaslink, have carried out a comprehensive review of towns not connected to the national gas network. In April 2010, Gaslink published its ‘New Towns Analysis Phase 3' report. The study is a comprehensive assessment of 39 towns not already connected to the national gas network. It was approved for publication by the CER following detailed economic analysis based on the criteria outlined in the CER's policy. The report reviewed the feasibility of connecting 11 towns in the West and North West region which are again the focus of the Western Development Commission paper, ‘Why Invest in Gas'. However, the Gaslink report found that none of the towns qualified for connection on economic grounds. Consequently, there would appear to be no case for connecting these towns to the network.
The analysis by Gaslink supports the results of a feasibility study, commissioned by my Department in July 2004. That study concluded that the extension of the Galway Mayo pipeline to Sligo and Donegal would require 100% subvention of the capital costs and would also require an annual subvention to offset the operational costs of the pipeline. Based on this cost benefit analysis, there would appear be no case for the investment of State funds to extend the gas network to the towns examined. In the meantime, Gaslink will continue to review towns which did not qualify for connection under the Study and other towns on an ongoing basis. The key factor which would qualify a town or group of towns in any future review would be a significant increase in demand for natural gas, probably resulting from the addition of a new large industrial or commercial facility.