Dáil Éireann díospóireacht -
Thursday, 27 Oct 1960

Vol. 184 No. 2

Electricity (Supply) (Amendment) Bill, 1959—Second Stage.

Minister for Transport and Power (Mr. Childers)

I move that the Bill be now read a Second Time.

This is a Bill containing miscellaneous provisions in respect of a number of unrelated matters affecting the Electricity Supply Board.

The main purposes of the Bill are:

(i) to authorise the increase to £120 m. of the present statutory limit of £100 m. on the expenditure which the Electricity Supply Board may incur for capital purposes other than the electrification of rural areas;

(ii) to authorise the increase to £32 m. of the present statutory limit of £30 m. on the expenditure which the Board may incur on the electrification of rural areas, and

(iii) to provide for the assumption by the Minister for Lands of certain functions at present exercised by the Minister for Transport and Power and of certain new functions relating in each case to the fisheries vested in the Electricity Supply Board.

Other matters provided for include:—

(i) removal of the limit of £25 m. on the amount which the Electricity Supply Board may borrow by the creation of stock or other forms of security;

(ii) the clarification of the Board's powers in relation to fisheries and of the arrangements for compensation for interference with fishing rights;

(iii) matters relating to the form of the Board's accounts and appointment of members of the Board;

(iv) increases in pensions of the Board's supperannuated staff; and

(v) establishment of a superannuation scheme for wholetime members of the Board.

In the explanatory memorandum which was circulated with the Electricity (Supply) (Amendment) Bill, 1953, details were given of the Board's programme for the increase of their generating capacity from 629 Megawatts to 1,042.5 Megawatts by 31st March, 1961. The cost of completing that programme, including ancillary transmission and distribution equipment, but excluding work chargeable to rural electrification, was then estimated at £53.5m., and to make full provision for the programme would have entailed raising the authorised limit of the Board's capital expenditure for general purposes to £120m. The Act of 1954 authorised capital expenditure by the Board for general purposes up to £100m. It was intended that further provision would be made when the need arose, that is to say, when the total of the Board's expenditure and commitments was nearing this limit.

The 1954 programme envisaged the addition of 413 Megawatts to the Board's generating capacity during the following seven years. This programme was based on the assumption that the demand for electricity would continue to increase at the rate of about 13 per cent. per annum, then prevailing. This rate of increase did not continue however and it became necessary to curtail the programme early in 1956. Later the rate of expansion in demand showed a tendency to recover and the provision of some of the capacity which had been postponed was undertaken.

At present the installed generating capacity of the Board is 728 Megawatts and further plant, which I will describe in a moment, will be commissioned between now and 1964. Planning for the expansion of generating capacity must commence many years ahead because it takes up to five years to bring a new power plant from drawing board to full operation. The generating plant requirements of the Board for the years from 1964/65 onwards were approved at the beginning of this year and a new programme of construction for the five years to 1968/ 69 has been settled. The programme from 1964 to 1969 is based on an estimated growth in the consumption of electricity at an average rate of seven per cent per annum. This was the rate of growth in the two years 1957/58 and 1958/59. Consumption in the year ended 31st March, 1960 was about 10 per cent higher than in the previous year; this higher rate of increase is attributable substantially to specific industrial requirements of a non-recurring nature, particularly the new oil refinery. The Electricity Supply Board are keeping a close watch on the trend of demand and the programme will be subject to alteration if the trend of demand warrants it.

Before the first plants in the new programme come into operation in 1964/65, the Electricity Supply Board will have brought into commission in the meantime at Rhode, Co. Offaly, and Bellacorick, Co. Mayo, 80 megawatts of new plants, all of which will use milled peat. This will increase the total generating capacity of the Board's plant to 808 megawatts. The new programme envisages the addition of a further 340 megawatts of which 160 megawatts will be fired by milled peat and 180 megawatts by oil, and provides for the absorption by 1968/69 of the annual output of all the bogs which are at present considered economically usable for the generation of electricity. Oil-fired stations will be sandwiched between peat-fired stations so as to ensure maintenance of electricity supply in a year in which weather conditions were very adverse for either turf or water generation of electricity or both. To ensure continuity of bog development and employment by Bord na Móna, the oil stations will be used only to the extent that water and peat generation is insufficient to meet demand. For the development and exploitation of the bogs in connection with this programme, it is expected that Bord na Móna will provide additional employment for up to about 1,000 men each summer falling to about half that number in winter.

All the more important rivers have already been harnessed for electricity generation. Stations on the remaining rivers would be uneconomical in present circumstances, having regard particularly to the high initial capital costs and current high interest rates. The Electricity Supply Board, however, are continuing to collect data and investigate other rivers with a view to possible later development for hydro generation. The Board have in operation a 15 megawatt generating station at Arigna using native coal and considerable quantities of native coal are also used at Ringsend station. Although the use of nuclear energy for generating electricity is not foreseen in the immediate future, the Board is keeping in close touch with developments in this field.

The programme of capital expenditure other than that for rural electrification approved by the Board already exceeds £100 million and they will require shortly to enter into commitments exceeding the present statutory limit of £100 million. The Board have, therefore, requested that the limit should be increased to £120 million, which they consider the minimum necessary to cover expenditure and commitments for the next four years or so.

The Bill raises by £2 million to £32 million the total amount which the Board may spend on the electrification of rural areas. It had been estimated that a total of £30 million would be sufficient to complete the scheme but a wider response in some areas than had been provided for has resulted in increased expenditure and it is now expected that by the time the scheme has been completed, in about another two years, expenditure will approach £32 million. As the scheme nears completion, the rate of progress has slowed down slightly but, nevertheless, forty areas were completed in the year ended 31st March, 1960, and the same number is expected to be done in the current year. At 30th September, 1960, 708 areas had been completed and there were only 84 areas in which work had yet to commence. The raising of the limit of £30 million to £32 million involves increasing the total amount of the subsidy which may be paid to the Board by £1 million.

The Board, in their annual report for the year 1959/60, point out that when the programme of rural electrification was decided upon, it was accepted that it would be an unremunerative service and that a 50 per cent. capital subsidy by the State was the minimum necessary to enable the scheme to be initiated. The alteration in State policy in relation to subsidy in 1955, resulted in the Board having to bear capital expenditure amounting almost to £9.5 million which it had expected to be met by subsidy and this, as the report indicates, has involved a continuing burden of more than £500,000 per annum on the finances of the Board. Moreover, the rural areas now being developed are the more uneconomic areas and the subsidy of 50 per cent. of the capital cost, which was restored in 1958, is not sufficient to enable supply to be provided except at a continuing loss to the Board.

The aggregate of losses on the Board's rural account in the past five complete years has amounted to £2.73 m. The loss in the latest year was £888,000 and this figure is expected to increase still further.

Surpluses on non-rural account have helped to offset the losses on rural electrification, but a nett deficiency of £195,000 in the Board's revenue emerged in the year ended 31st March, 1958. The nett deficiency in the following year, that is, in the year ended 31st March, 1959, was £99,000.

In the year which ended on 31st March, 1960, the surplus on the Board's non-rural account fell short of the rural deficit by well over £500,000 and, as a result, the Board showed an overall deficiency for the third successive year, the sum involved, in that year, being £433,000. The Board, accordingly, indicated that to put their finances in order an increase in charges would be necessary.

The statute clearly sets out the duties and responsibilities of the Board in circumstances of this kind. It is entirely the responsibility of the Board under Section 21 of the Electricity (Supply) Act, 1927, to ensure that its revenue will be sufficient to meet outgoings. In discharge of this responsibility, the Board recently announced an increase in charges which, I understand, will add approximately five per cent. to its total revenue.

The amount of the increase and the decision to apply it are entirely the responsibility of the Board, and I have no statutory function in the matter. I have been struck, however, by the fact that the average price per unit for all electricity sold by the Board in the year 1959/60 was only 36 per cent. above the corresponding price in the year ended 31st March, 1939. This compares with increases in the costs of gas, oil and coal over the same period ranging from 145 per cent. to 218 per cent. and with increases of 164 per cent. in the consumer price index, 232 per cent. in the wholesale price index, and nearly 230 per cent. in average earnings per week in industry.

The comparisons I have quoted and indeed the general record and reputation of the Electricity Supply Board reflect the efficiency and devotion to the public interest with which the Board and their staff have discharged their responsibilities. The Board are not complacent, however, and take every opportunity to increase efficiency further and reduce costs. I am glad to know that in these respects, the Board, like other forward looking organisations, are making use of modern techniques such as work study.

The limit of £25 m. on the amount which the Electricity Supply Board may borrow from the public by the creation of stock is being withdrawn. When the Board was first authorised to seek finance from the public, under the 1954 Act, a statutory limit was set to the amount which the Board might so borrow. Experience has shown that this limitation is unnecessary and the present opportunity is being taken to remove the limit. The prior consent of the Ministers for Finance and Transport and Power will, of course, continue to be required to each public borrowing operation by the Board.

Under existing provisions the Board have made two issues of stock totalling £15 million.

The Bill also makes provision for the assumption by the Minister for Lands of certain powers and functions in relation to the fisheries vested in the Electricity Supply Board. Some few provisions in existing legislation in regard to the Board's fisheries provide for the consent of the Minister for Transport and Power in certain cases, but, in general, the Minister for Transport and Power has no function in regard to the Board's fisheries nor has he available to him the information and technical advice which he would require to deal with any matter which may arise in regard to them, either in the Oireachtas or elsewhere. It is desirable, therefore, that the Minister for Lands, to whom the necessary information and technical advice are available, should be more closely associated with the administration of the fisheries and that the occasional questions which may arise should be dealt with by that Minister.

In the administration of the fisheries under their control, the Electricity Supply Board have concentrated mainly on the development of angling and commercial salmon fisheries and commercial eel and oyster fisheries. The position in regard to the trout and coarse fishing under the control of the Board has, accordingly, been under consideration by the Minister for Lands. Under existing legislation, the Board have extensive powers in the matter of awarding leases of trout and coarse fisheries but have comparatively rarely exercised these powers and, in the opinion of the Minister for Lands, the rights which the Board find possible to grant are inadequate to enable the lessees to develop these fisheries in a proper manner. The Minister for Lands desires that, in any case where it would be in the national interest for the Board to grant a lease in respect of trout or coarse fishing to the Inland Fisheries Trust or some other suitable body, he should have power to influence the Board in the matter. He considers that angling for trout and coarse fish should be on an agreed plan, in the devising of which he will seek the advice of a joint Committee representative of his Department, the Inland Fisheries Trust, Board Fáilte and the Electricity Supply Board. If the development of particular fisheries can best be achieved by leases of certain waters, the Minister for Lands should be in a position to indicate the term of years the lease should run so as to allow of adequate development and protection in each case. The Minister for Lands has made it clear that in the matter of leasing of Electricity Supply Board fisheries, the object would be to ensure as far as possible the full development of these fisheries. In this, due regard would be given to the salmon fisheries and their primacy recognised. I am satisfied that the arrangements now proposed will not compromise the management responsibility laid on the Electricity Supply Board and a provision has, accordingly, been included in the Bill to meet the desire of the Minister for Lands.

There are also three minor provisions in the Bill to repair defects in the legislation relating to the Board's fisheries:

(a) New Fisheries arising in E.S.B. waters:

Under existing legislation, the Board have powers to manage fisheries which they have acquired but they have no general power to manage new fisheries which have arisen, mainly in the reservoirs of hydro-electric schemes. Construction of the schemes was bound to destroy existing fisheries by submersion in the reservoirs and otherwise, and the Board had no option but to acquire them under Section 7 of the 1945 Act. On the basis that the fisheries would be destroyed no provision was made for their management. New fisheries have arisen and it is now proposed that the Board be given power to arrange for their preservation and maintenance.

(b) Compensation for interference with fisheries:

The destruction of fisheries interfered with the livelihood of a number of persons employed in fishing and Section 18 of the 1945 Act was designed to provide for the payment of suitable compensation to them. The measure of compensation laid down in the Act is such as is considered reasonable for total loss of profits or earnings and all persons who have so far received compensation under that Section did in fact suffer total loss of their profits or earnings. The Act did not, however, provide for partial compensation for persons whose profits or earnings were merely reduced but not extinguished. The establishment of an electricity generating station on a river may not immediately affect the earnings of such persons, but progressive diminution in the run of fish, attributable to the establishment of a hydro-electric station, may later occur and the earnings of such persons may be reduced. To provide for the case of such persons, the Board is now being authorised to pay compensation to them in proportion to the measure of their loss and to make further payments to them in the case of any subsequent losses until the total of payments reaches the compensation appropriate to total loss of earnings.

(c) Board's title to Shannon Fisheries :

The purpose of the third minor provision in regard to fisheries is to repair a defect in the Board's title to the Shannon Fisheries. It was intended that the Shannon Fisheries Act, 1938 would transfer these fisheries in toto to the Board but the relevant provisions were not effective to transfer any State-owned fisheries which might have existed in the waters of the Shannon. The present Bill proposes to confirm the title of the Board to all fisheries in the waters of the Shannon.

The Electricity Supply Board, being the first of our semi-State bodies to be set up, were inevitably burdened with some unduly rigid procedural obligations which later experience has shown to be unnecessary. Two of these are being modified in the present Bill. Firstly, the cumbersome procedure which requires members of the Board of the Electricity Supply Board, on the occasion of any alteration in their remuneration or allowances, to resign and be re-appointed, is being abolished. Secondly, it is proposed to abolish the requirement that the Minister for Transport and Power, with the consent of the Minister for Finance, should prescribe by regulation the time, place and method of conducting the audit of the accounts of the Electricity Supply Board, the accounts to be furnished to the Minister and the accounts to be published and put on sale. Modern practice has been to allow the responsible Minister to give an informal direction in such cases, and it is now proposed to bring the position of the Electricity Supply Board into line.

Further provisions of the Bill will allow the Electricity Supply Board to grant to their pensioners increases similar to those allowed to public service pensioners in 1959 and 1960.

The opportunity of the present Bill is also being taken to bring the legislation in relation to the superannuation of whole-time members of the Board of the Electricity Supply Board into line with legislation, enacted since the passing of the Electricity Supply Board (Superannuation) Act, 1942, in regard to the superannuation of whole-time members of the boards of semi-State bodies. The Bill provides that the Minister for Transport and Power, with the concurrence of the Minister for Finance, may make a scheme or schemes covering the superannuation of whole-time members of the Board. The schedule to the Bill sets out details of matters to be provided for in any superannuation scheme made under the provision.

I confidently recommend this Bill to the House. The Electricity Supply Board is one of the oldest of our semi-State bodies and one of the most effective. The success which has attended its efforts over the years, on which the management and staff deserve our most sincere congratulations, has in large measure contributed to the economic advancement of the nation in general. The enactment of this Bill will enable the Board to continue their good work.

Mr. Cosgrave

The House generally will welcome the proposals in this Bill which provide statutory authority to increase the borrowing powers of the Electricity Supply Board so that it may continue its development programme. I have no doubt that there is general recognition throughout the country that the Electricity Supply Board has played a most significant part in the economic development of the country. So far as I am aware, it was the first State company established here. Not alone has it pioneered the way in that sphere, but, as the body responsible for the general electricity supply since the Shannon Scheme was established, it has played a unique part in the economic development of the country.

The Board and the staff deserve the commendations which the Minister has expressed, as well as the many commendations they have received on numerous occasions for the skill with which they have applied themselves to the development of the electricity network which has provided light and power to an ever-increasing extent.

There is general recognition that the Electricity Supply Board is efficiently and competently managed. That being so, it is to be expected that all the actions and decisions taken by the company have been taken on the basis of the most careful and competent consideration. It is a fact that the recent announcement that E.S.B. charges were to be increased came as a shock to the public generally. For that reason, the public expect the E.S.B. to continue to make every effort to effect economies wherever possible and keep costs to a minimum.

While I anticipate that that is so, there are certain figures in the published accounts which were circulated earlier for the year ended 31st March, 1960, which require some comment and probably some elucidation. On page 24 of the Annual Report for the year ended 31st March, 1960, particulars are given in the appendix of the performance of generating plant for the year ended March, 1960. This may be a technical matter and there may be certain reasons for it, but in view of the fact that losses were incurred and that as a consequence the charge for electricity has to be increased, it is pertinent to examine these figures in order to ascertain if any avoidable expenditure was incurred. I notice in that Table that for three stations, Portarlington, Allenwood and Lanesboro, the total expenditure on sod peat amounted to £1,265,000 and on the figures which were quoted, the equivalent fuel of either coal or oil used in the stations of either Marina and Ringsend would have cost a sum of £400,000 less. Similarly, in the case of milled peat at Ferbane which amounted to £599,433, an equivalent fuel cost at Ringsend would have amounted to about £120,000 less. It is significant that in the plant load factor which is mentioned there, a higher contribution from the turf-fired stations I have mentioned was made. The plant load factor for Portarlington was 63.5; that for Allenwood, 59.2; Lanesboro was lower, 29.9. However, in the case of Ringsend and Marina, one was 39.1 and the other was 32.8.

As I understand it, it is necessary on particular occasions in the case of an excessively wet year to have available stand-by facilities which enable either oil or coal-fired stations to be put into production, but it does seem from the figures quoted that the production costs were higher because of the use of turf-fired generating capacity. While everyone is anxious to see the maximum possible development of our own resources and the development of electricity from these resources, it does seem that in the case of a very large generating programme and in circumstances in which losses have been incurred, according to the accounts, over a period not of one year but of three years running, which will mean in the near future an increase in charges, the most careful consideration should be given to the switching into production of generating capacity which involves an increase in the cost of production.

On the basis of the figures which I have quoted and on the comparative costs of electricity generated from either oil or coal, it appears to me that the additional fuel costs which were incurred in 1959-60 amounted to something in the region of £600,000. That, in a total generating capacity such as the E.S.B. has, may not seem a very significant figure. But when account is taken of the actual losses and the fact that it is possible to switch in and switch out as the case may be with peat stations, very serious consideration should be given to the question of using the low cost generating capacity.

There is no better case for subsidising one form of power here than there is, as has been repeatedly said, for subsidising public transport, and from the figures quoted it appears that turf-fired generating capacity is bearing, or securing to some extent, a subsidy from the other stations. I should be glad if the Minister would have that matter examined because, as I say, if essential costs of production increase, and there, is no way of avoiding them, at any rate the public should understand the need for increased charges. If, on the other hand, as appears from the figures I have quoted, that in the year ended 31st March the load factor from the turf-fired and milled peat stations appears to have been heavier and the cost was consequently higher, the public are entitled to some explanation.

The other matter about which I thought the Minister might have given more information was in regard to the future generating programme. As I noted the present generating programme is based, as it must be based, on a certain number of years ahead in view of the length of time which it takes to plan a scheme from the drawing board stage to actual production. In that connection, I thought the Minister gave us very little information. It would be interesting to ascertain from the Electricity Supply Board what consideration has been given to the question of providing electricity from atomic energy and what comparative cost figures are available on the cost of the production of electricity from such stations.

Some years ago I understood, because the Electricity Supply Board were represented on a committee established to consider the offer made by the United States Government to provide a nuclear reactor, that these matters were the subject of study by the Board's technical advisers. In view of the pending completion of the hydro-generating station programme and the projected schemes of development for further peat stations and also the coal-fired stations which have been established at Arigna, it seems we are in sight of reaching the end of the generating capacity from existing resources. It is, therefore, important to consider what are the possible prospects from atomic energy.

The changes in regard to the provision of increased pensions for members of the staff, which are included in the Bill, will be welcomed generally. It is also desirable to make suitable arrangements for pension proposals for full-time members of the Board. I have no doubt that the skill and ability which has characterised the development of this undertaking since its establishment will be reflected in the further progress of the Electricity Supply Board. For that reason we welcome the proposal to extend the authority of the Board to increase its capital programme because the money which has been invested in this undertaking has not only been employed to the maximum possible extent but has reflected itself in a general economic improvement throughout the country.

Mr. Ryan

As Deputy Cosgrave has already indicated, the Fine Gael Party is only too happy to give its support to the proposals in this Bill. At the same time, we feel we have an obligation to sound a note of warning and to ask for some caution in relation to any activities of the Electricity Supply Board which may contribute to the rather serious and disappointing losses which the Board has shown in recent years. We appreciate that the principal reason for the Board's losses has been the distribution of electricity in some rural areas where it is uneconomic to do so and where it can only be done at a prohibitive cost to the consumer.

We are all anxious that the amenities of modern civilisation, by way of light, heat and power, should be communicated to all our people, but I have the feeling that we are at the stage in relation to rural electrification where it would be much wiser to stop the extension of the rural electrification scheme and substitute a scheme of bottled gas such as has been promoted in the Aran Islands. I think this is particularly desirable since I understand we are now in a position to supply our needs of bottled gas from our own oil refinery. Therefore, it would be every bit as patriotic to provide light and heat by bottled gas as by electricity which in recent years has been coming from imported fuels.

We are all glad of course that the Electricity Supply Board is taking up such a large percentage of Bord na Móna's output. It is an excellent thing that our power industries should be co-operating with one another to use our own native sources of power. We must, however, be sensible in relation to this, and we should not do so where the price we are asked to pay is too heavy in proportion to the return. There are times, of course, when we would be compelled to pay an uneconomic price even in relation to our own resources, but there are other times when other fuels are available and when it is very bad policy economically to use a disproportionate amount of a costly fuel.

On more than one occasion in this House I have been attacked, and I hope I shall not provoke another such attack today, when I have argued that it was unfair that urban areas should be asked to pay for some economic activity down the country. No matter how desirable it is to keep our people on the land, no matter how desirable socially, economically and culturally speaking it may be to keep our people distributed throughout the provinces, I feel we are imposing an undue burden on one section of the community when we ask them consistently to subsidise uneconomic industries and activities in other parts of the country. It is undesirable that we should do so, certainly when the cost is as enormous as it now is on the people who live in cities and towns, when one adds up the various things they are subsidising, such as transport and, in recent years, obviously fuel and power. It is an unnecessary burden on the urban community that they should be asked to pay £500,000 a year, that they should be asked to pay an extra five per cent. on their electricity bills, when there appears to be a reasonably cheap form of fuel for heating, lighting and cooking in bottled gas.

I appreciate that the E.S.B. may not want to undertake a new scheme of bottled gas as it is a separate function which has nothing to do with the production of electric power; but I am quite certain that there are ample private interests in the country only too ready to embark on a co-operative scheme to supply bottled gas. I should like to see that kind of thing encouraged, principally because it would be more economic and, secondly, because it would remove the unfair burden from the remaining consumers of electric power. It is something which deserves more attention and I should certainly like to see it being done. It is not a question of trying to deprive the E.S.B. of some necessary moneys or investments they need; it is simply trying to make the best of our resources and not to do something patently uneconomic, when there is a reasonable alternative available.

Mr. Dillon

Before the Minister concludes, I think it is very important that the idea which Fianna Fáil appear to be anxious to promote that rural electrification has created a deficit in the E.S.B. should be dissipated. There was a slight deficit in the total account of the E.S.B. up to the end of the year ending 31st March, 1958, as set out in paragraph 12 of the Minister's speech where he speaks of a net deficiency of £195,000. The net deficiency in the following year, the year ending 31st March, 1959, was £99,000 and it is in that context where the Minister had been speaking of rural electrification and the increased capital necessary for it that the Minister mentions these deficiencies.

In a large undertaking like the E.S.B., of course one can attribute a net deficit to anything one likes but I think before determining that rural electrification is the source of that deficiency in the Board's accounts, it is right to have regard to the fact that a policy decision was taken by the Taoiseach, when Minister for Industry and Commerce, to give priority to the user of turf in the power stations of the country. The result has been that with the increased power station erection for the use of turf as fuel, we have had a parallel programme of stand-by stations based on oil or coal. That parallel system is necessary in order to ensure that in any season when turf cannot, be won in sufficient quantities, the whole electricity system will not break down, but the fact is that it means a vast additional capital expenditure which has to be financed for the stand-by stations which spend a great deal of their time idle.

One can fairly estimate that the increased capital cost of these stand-by stations would be approximately £500,000 a year which is a charge that would not fall on the revenue of the E.S.B., if these stations were used to their full capacity, instead of being used exclusively as stand-by stations. A number of other policy decisions have been taken from time to time which have involved the E.S.B. in substantial additional overhead charges and we have the sod peat stations at Portarlington, Allenwood and Lanesboro. I think it is reasonable to estimate that the fuel cost which in these stations amounts to about £1¼ million, produces a volume of electricity which could have been produced for approximately £800,000 if the electricity was produced through using oil or coal. Probably the milled station in Ferbane, which had a fuel user in the last year, I think, of about £600,000 produced a volume of electricity that could have been produced for less than £500,000 at Ringsend. Then, there are the small stations, Skreen, Milltown Malbay and Gweedore which produce a volume of electricity which, I believe, might have cost £120,000 less, if it had been produced at Ringsend or one of the other big oil or coal burning stations.

I imagine that it is not unreasonable to say that the user of turf, sod turf, milled and hand-won turf, as fuel for the various peat stations that have been erected, has involved the E.S.B. in an additional cost of £600,000 or more per annum. That was a policy decision taken by this House, but if you add to that the approximate additional overhead charges of £500,000 for interest, depreciation and repayments in respect of the standby stations which we are not using but which we must have to provide against the possibility of a seasonal shortage of turf, you must face the fact that the E.S.B. are finding from their resources more than £1,000,000 a year to help Bord na Móna.

As the Minister says, that provides employment for 1,000 men at the peak of the season, falling to 500 men at the lowest period of the turf-winning season, but this House should face the fact that there is a substantial additional building programme in hand and I understand we are to provide plant to produce 160 kilowatts from milled peat in the future. For all that production, or for the greater part of it, additional stand-by plant will also be required. Nearly half of that total capital investment will be idle but will remain a substantial charge on the revenue of the E.S.B.

Therefore, when this House comes to ask itself whether the provision of electricity to the rural areas of Ireland is the source of the net deficiency in the E.S.B. accounts to which the Minister referred, we ought to bear in mind that the charge for burning turf as a fuel in our stations involves a burden on E.S.B. resources of something over £1,000,000 per year, and that actually, omitting the item of £500,000 depreciation and interest and repayment for the excess generating capacity which we have to maintain, the increase in costs for fuel alone comes to something between £600,000 and £650,000 per annum. That may be good policy or it may be bad policy, but one thing is certain; it is the main source of the deficiency in the accounts of the E.S.B. and it is a charge which, so far as I know, this House entered into with its eyes wide open. Having done that, it would be a deplorable thing if we forgot our own decision in that regard and proceeded to attribute the deficiency to the provision of amenities to the rural community in Ireland.

The conditions of the rural community in Ireland at present are such that a large part of the population are evacuating the country. The investment we have made in bringing the amenity of electric light and power to the houses of people on the land, I believe, is a very valuable investment for the nation as a whole. I believe it is a charge the E.S.B. could have borne upon their revenues with no difficulty whatever, if they had not been asked to undertake the additional charge of supporting the finances of Bord na Móna.

It should be borne in mind now that the vast bulk of the output of Bord na Móna is consumed by the E.S.B., and it is consumed on the basis of Bord na Móna informing the E.S.B. what the turf cost and the price Bord na Móna expected to get for it. That charge is then incorporated into the costs of electricity and communicated in due course to the consumer in town and country, through the medium of their bi-monthly bill.

The Minister might well examine this whole question of how far this business of building to excess capacity should be pushed or how far the interests of the nation would best be served by using our existing capacity to something nearer its maximum than we are at present doing. It is a very complex and highly technical question as to how far this can be done, but when we are borrowing money at six per cent. and charging £99 for 100 per cent. of our loan, the time has come to consider carefully how we are spending it. We ought to spend it productively and to the best advantage.

I believe we have enough equipment to generate all the electricity we shall want for the next ten years, and I believe the additional expenditure now envisaged for increasing that capacity is largely unnecessary. At one time, we were told to go on building, on the assumption that the demand would increase by 13 per cent. That was quickly found to be a mistake. I should be interested to hear from the Minister what are our present estimates of the annual increase in the demand for electric power, and how are they related to the programme which we have in mind for building and construction for the next five or ten years.

Sir Anthony Esmonde

The question of rural electrification being uneconomic has been mentioned here. I agree, of course, with what Deputy Dillon has just said, that it is most essential that we should give to the rural community all the amenities possible in order that we may hold them on the land.

The system adopted in rural electrification appears to have been to divide country districts into certain areas. One finds constantly that when an area has been electrified and power has been extended to it, there are half a dozen people in that area who were entitled to the power but were left out and told it would be uneconomic to give them a supply. That has not happened in one area only. In my constituency, whenever the E.S.B. have been working in an area and have gone, we always find a few people who have been told that although they are in the area they cannot have the power. That appears to me to be definite discrimination between one section of the community and another. One often finds that people in a particular area are really much closer to another area, but for some reason or another, whoever drafted the maps or plans originally, decided these were the frontiers that were to exist.

I suggest that is a matter which requires investigation. In that way, quite a number of people have been excluded from those benefits. I think it is true to say that the more people there are enjoying the benefits of electric power, the more likelihood there is of their settling down on the land and remaining happy and content there.

There is another matter which appears to me to militate greatly against people taking electric power. The amount they will be charged is calculated on the square foot capacity of the buildings on a holding. I know quite a number of people scattered throughout rural Ireland who would have taken the power and, therefore, made the area more economic, because they would have raised the percentage considerably, if they had been permitted to put in the lights they wanted, perhaps one in the kitchen and one in the dairy outside, but the charge they would have to pay is rated on the entire building. There are quite a lot of farms on which there are buildings which are very little used but, in spite of that fact, if they want the power, they have to pay for it in proportion to the room space. That is a matter the Minister might investigate.

We are now expending more capital on the development of the E.S.B. Deputy Dillon has queried whether we have possibly enough power at our disposal for the next 10 years. I do not know whether or not that is the case. I presume the Minister will tell us what the position is when he comes to reply. I believe that when rural electrification is finally completed there is bound to be redundancy of personnel. Naturally, a certain number will be necessary to cope with wear and tear, and the repairs that will need to be done. In any money we guarantee, we should ensure that the expenditure of such money will maintain the fullest possible employment. I should hate to think that we might come to the end of rural electrification and that considerable numbers employed now would find themselves facing the emigrant ship.

Power should be utilised to the fullest possible extent. As against most other countries, we have practically no central heating at all here. We live in one of the dampest climates in the world. Nobody can gainsay that after 1958 and this year so far. The Minister should consider a nationwide scheme of central heating. There are many public offices which burn imported fuel. They could be turned over to local power. Will the Minister tell us if there is sufficient power available now, or if there will be sufficient power after the expenditure of these moneys, to make it possible to introduce electrical central heating in all Government offices, in hotels, and other buildings? Such a central heating scheme would provide employment and would absorb any potentially redundant power. I should be grateful if the Minister would deal with my fear of redundancy in employment. I should also like him to deal with the possibility of there being unutilised power available for consumption.

Mr. Childers

I should like, first of all, to thank Deputy Cosgrave, Deputy Dillon, and others, for the helpful and constructive way in which they made their observations on the Second Reading of this measure.

Deputy Cosgrave asked what had been ascertained in the last few years with regard to the cost of atomic energy. The answer is very simple. All countries have slowed down in their nuclear power programmes because of the very, very high cost per unit. There will have to be a considerable reduction in cost, and many more things will have to be done, before a country in our position, with the raw material now available for producing power in quantity, could undertake any nuclear power scheme. A nuclear power station at the moment would be very much more expensive than the small power stations we have for our electric generating system. Some explorations and investigations have been carried out recently, which may bring down the cost of small power stations. Until progress is made in that regard there is no intention on the part of the E.S.B. or the Government to instal a nuclear power station here. There is, however, a section of engineers in the E.S.B. who are engaged in constant study of this matter. I have asked them to report to me the moment they see any change in the general situation which would necessitate Government consideration.

Deputy Ryan raised the question of comparative cost and referred to the fact that urban consumers subsidise rural consumers. Of course, that raises the whole question of rural versus urban in our economic picture. In practically every country, because of the cost of providing electrical current over a widely scattered area, there is an element of subsidisation inasmuch as rural consumers could not possibly afford to pay the economic cost of the current provided for them.

We have, too, a peculiar problem here. It is one with which I am sure urban consumers have sympathy. Perhaps, it is some characteristic of the race, but we have a more widely disseminated rural population than any country in Europe, with the exception of Sweden. The number who live in clusters of fewer than 200 persons is far greater as compared with the total population here than in any other country in Europe with, as I have said, the exception of Sweden. As everybody knows, we are not, to use a trite phrase, villaged in the same manner as other communities are villaged. Because of that the cost of rural electrification casts a heavy burden upon the E.S.B.

As Deputy Ryan should know, the Government have provided a subsidy to help to meet that situation. I am not sure what the present figure is but, at a recent date, it was calculated that, if rural electrification were to be economic, the rural subscriber would have to pay a permanent annual charge equivalent to some 12 per cent. of the total cost of installation. That does not include generation. It is simply the installation and distribution factor only. The Government provides a subsidy which enables the E.S.B. to instal electricity in rural areas so that the annual charge represents a little over four per cent. of the total capital cost of installation. The E.S.B. selects areas where the global return on cost of installation will not represent less than a charge of four per cent., and the Government subsidy helps to make up the difference of eight per cent. That is a general principle and to depart from it would create a state of chaos.

It is obviously much more economic to have engineers and workers moving from area to area carrying out collectively a campaign of rural electrification; the E.S.B. and the Government will then be in a position later to decide as to what is to be done about those who are not joined up because, even with the aid of a Government subsidy, they would be an uneconomic proposition in so far as installation is concerned if additional charges were not paid. In spite of all that, as has been indicated, the E.S.B. is losing on rural electrification. There is, undoubtedly, an element of subsidisation to the consumer, but that is rather in tune with what goes on in other countries having regard to the general relation of the rural to the urban community, where there are apt to be transfers of payments of one kind or another.

Deputy Dillon raised the question of excess capacity in the E.S.B. as a result of having a high proportion of turf stations. At the moment, because of the increase in consumption, there is no absolute excess capacity in the E.S.B., none whatever. I particularly asked the Chairman of the Board that question in order that I could come before the House at the time of the Estimate this year. There had been various suggestions and there was a debate in the House on a former occasion during which accusations were made from one side to the other with regard to this matter. All this is history. At the moment there is no excess capacity.

Mr. Dillon

Several of the stations are not working.

Mr. Childers

The Deputy will understand that if consumption increases at the rate of seven per cent. per annum the E.S.B., cannot always put a station completely into operation in order to achieve a given supply of current. It must move by stages.

Mr. Dillon

I am bound to say I do not understand it.

Mr. Childers

I tried to explain that with a seven per cent. increase it may not be possible to put an entire station into operation within any given period of the year.

Mr. Dillon

Is that not excess capacity?

Mr. Childers

It is excess capacity for a short time. I am speaking of full-time excess capacity. Another problem is the peak load that takes place at various times of the year. There can be a tremendous peak load on a winter's evening when it is very cold and the heat is turned on and people start to cook the evening meal. Take, for example, the proportion of very large-scale industries which work in shift and help to level out to some extent these peaks. The hitherto low level of industrialisation does not help the E.S.B. in the matter of sudden peak loads that occurs at certain times of the day and involves a certain amount of excess capacity which is quite inevitable in the situation. I want people to understand the position.

In so far as the policy of the Government is concerned, this House in general is in favour of making use of our turf deposits for the generation of electricity. Employment is at present given to about 6,500 persons and that will rise to 7,000 persons within the next few years. Because we have these raw materials at our disposal, because of the employment given and because of the favourable balance of trade which results from our using our own raw materials for producing power we believe that is good policy.

I should say that Deputy Dillon and Deputy Cosgrave have been slightly confused in regard to the cost of the most modern type of processed turf in relation to the total cost of electricity. If the Table in the Annual Report of the E.S.B. for the year ending 31st March, 1960, is examined, it will be seen on page 24 that the total cost per unit of electricity, which includes interest and depreciation on capital, in respect of milled peat, is 1.056 pence per unit and in the case of Ringsend Station it is 1.043 pence per unit. In the case of the Marino Station—the last two using coal or oil—the cost per unit is 1.168 pence. In the case of the North Wall station, using oil, the figure is 1.516 pence.

Mr. Dillon

The North Wall station works at about 30 per cent. capacity. It is a stand-by station.

Mr. Childers

Not at all times of the year. In 1959, to which this Report refers, in spite of the dry season, there were periods of the year when the power stations were working at full blast. It has been shown that milled peat is an extremely economic fuel. We are passing from the time when we could provide only sod-peat. In five to eight years from now there will be an additional number of milled peat stations in operation. At the same time, we shall be introducing another cheap fuel, Irish made oil, into the system. The two together, with the water power we are still able to provide, will, I think, produce current at a reasonably economic price.

When people look back on the history of the E.S.B. generation programme, I do not think it will be said that in the long run we have, in any way, been impeded either in regard to agriculture or industrial production through the use of our native resources for electric current. Stand-by stations are necessary, irrespective of what fuel is used, so as to meet peak demands. We have to face that situation in the future.

I hope a greater volume of power will be used for industrial purposes. That has the effect of reducing the unit price and in certain circumstances, if the industries operate by shifts and avoid very high peaks, the use of the station is more economic.

Deputy Esmonde spoke about the disemployment that may be caused as a result of the ending of the intensified rural electrification programme. The Deputy may be assured that a very large number of the people employed on rural electrification are organised by areas. When an area is completed they lose their employment. There are other people for whom employment will, we hope, be found in what I believe will happen, namely, the development of a second scheme of rural electrification on a different basis. There are still others that can be drawn into the service of the E.S.B. through its general expansion.

Gangs of workers are employed by the E.S.B. in an area on a purely temporary basis. When the rural electrification scheme has been completed there, they naturally go out of employment. The engineers go into an adjacent area and recruit a new group of workers. The situation is not as serious as it might seem on paper.

Subsidies for central heating are a novel idea. I do not know if there is any case to justify the development of a form of grant for central heating, as such. It is impossible for me to say anything at this stage.

Mr. Dillon

If the original rate for storage heaters were restored I am sure that would be a very substantial contribution.

Question put and agreed to.

Committee Stage ordered for Wednesday, 9th November, 1960.

The Dáil adjourned at 4.30 p.m. until 3 p.m. on Wednesday, 2nd November, 1960.