Dáil Éireann díospóireacht -
Wednesday, 2 Jun 1982

Vol. 335 No. 4

Private Members' Business. - Electricity Charges: Motion (Resumed)

Debate resumed on the following motion:

That the fuel variation levy in electricity accounts be discontinued in view of (1) the glut in oil supplies and the consequent lowering of heavy fuel oil prices, and (2) the adequate supply of natural gas to the Electricity Supply Board.

—(Deputy E. Collins)

Mr. Kitt

Last night I welcomed the Minister's statement that it is now opportune to discontinue the fuel variation cost charge. That levy or charge has been causing great concern to consumers in industry and agriculture and to householders. The Minister has said it will be got rid of and I am glad he has promised an announcement to this effect in the next two weeks. One of the reasons for this, the Minister told us last night, is that no longer will we be so dependent on heavy fuel oil for electricity production. At the moment heavy fuel oil accounts for 40 per cent of the cost of electricity generation by the ESB. In 1978 it accounted for 66 per cent of the cost and the Minister has said that it could be reduced to about 30 per cent by the end of the decade. That is most encouraging.

One of the reasons for that projected reduction in the use of fuel oil is that the ESB have been diversifying from heavy fuel oil to indigenous resources. For instance, we have developed more bogs, we have the contribution of hydro power and now we have natural gas. In my constituency Bord na Móna have acquired 13,000 acres of bog and they hope to acquire a further 2,500 acres. They propose to set up a briquette factory in the area. This development will go a long way towards reducing ESB dependence on heavy fuel oil and it will provide as many as 600 jobs in the area.

Natural gas has made a significant contribution towards reducing dependence on oil. It now represents more than one-third of the material used in electricity production.

I should like to say a few words on ESB price reviews. In the past year we have had a price increase of 25 per cent in electricity charges and there were similar increases in previous years. I am glad the Department of Energy and the ESB have a projected figure for this year which will stabilise the increase in single percentage figures. This is good news for all consumers but particularly for small industries, firms who have been trying to achieve stability of costs so that they can plan for the future. Of course they were hindered by the high cost of electricity. Numerous representations were made to the Department of Industry in efforts to get some relief, and I am glad that the Minister has said he will have consultations with the ESB to determine the extent of relief for industry. The ESB are to review the situation to see what they can do. I am knocking on an open door in this respect because the Minister has given a commitment to small industries, many of which were set up by the IDA and county development teams and have been doing tremendous work, although they were hindered in the past few years by high electricity costs.

We all know that farmers' incomes have fallen badly in the past few years and dairy farmers have been particularly hit by high ESB bills. A few years ago when the FEOGA grant scheme was introduced there was delight among communities in the west. However, there was disappointment that the scheme was so restrictive and many farmers did not benefit from it as they had expected. The FEOGA scheme was restrictive in many ways and I hope we can get some changes in the regulations which will enable us to extend it not only to farmers but to people in rural areas who either had houses built for them by councils or who have provided their own houses.

Last Novermber I put down a question asking for the number of people who had applied for help under FEOGA in respect of their capital contributions, and I was told that in Galway and in the west generally only half of the applications had been approved. An effort should be made to speed up the processing of applications so that more people will be approved for grants. I hope that the removal of the ESB fuel variation charge will help those who had been hoping for assistance.

People in rural areas have been complaining about poor electricity supply. I hope the Minister will inquire into this matter. Only for the co-operation which exists between farmers who rotate heavy work which involves the use of electricity, such as milking, there would be more difficulties than there are at present. Action should be taken to deal with this. Transformers should be erected or three phase current should be brought to towns and villages which do not have that kind of supply. That should be done immediately to help those who are handicapped by poor supply. Trustees of group water schemes have done tremendous work in bringing water supplies to rural homes. One of their bones of contention is the high cost of electricity involved in this.

When the Minister makes his promised announcement people will not be charged the fuel variation cost. I was critical yesterday when speaking about the public relations side of the ESB. Like other Deputies I would regret if people were not given adequate time to pay high bills and would be concerned if they were cut off. Deputy Taylor gave examples of people who were disconnected. Like other businesses, the ESB are affected by inflation as regards their wage costs, materials, transport, postal charges and fuel. Their costs are also affected by interest rates because they buy oil and gas abroad with a declining currency. Inflation has increased the price of electricity. Up to 1972, oil was relatively cheap and so was electricity. Before the oil crises it cost £7 a ton but immediately the war broke out in the Middle East between the Arabs and Jews there was an increase in the price of heavy oil of the order of £65 a ton. That was the reason why the fuel variation charge was introduced. The ESB abolished that charge in 1977 because it looked as if there would be stability in the oil crisis. However, despite their best efforts it had to be reintroduced.

The ESB are to be complimented on the various measures they have introduced to make payments easier for the consumer. They have a number of schemes such as savings stamps, a budget payment system, credit card and an easy pay system which allows the customer to pay weekly or monthly to suit the household budget. We hear many complaints about large two-monthly ESB bills. There are 300,000 customers availing of these different schemes and that figure reflects their success. However, they are not as great a help to the consumer as the Minister's decision to discontinue the fuel variation charge. I am glad he has made this decision and I am sure all sides of the House agree that it is an opportune time to do so. I say that particularly because of the diversification which has taken place. This diversification has helped other sectors of the community, for example, in bogland areas we have electricity generating stations. Natural gas has made a significant contribution and the ESB have stated that savings to them were of the order of £45 million in 1981 and are expected to be £55 million in 1982. The overall effect is that ESB prices to the consumer are 10 per cent lower than they would otherwise have been.

The Minister is to be congratulated on the step he has taken. I am glad that there is agreement on the motion. It has not been mentioned in the debate that our native energy resources are saving us large sums of money because we do not have to import so much oil. The figure quoted by the ESB is a saving of £136 million a year. We are helping our own economy by the diversification process and because we are less dependent on oil now the Minister has been able to discontinue the fuel cost variation charge.

Mr. Keating

I should like to make a number of observations on the motion before the House and the debate thereon. When one casts aside all of the debate and discussion one central issue comes through, which is this, that the public have a right to expect now a drop in the price of electricity. Naturally I am grateful the Minister has seen fit to accept the motion from this side of the House, so ably and comprehensively put by our spokesman, Deputy E. Collins. However, I should like to take it a step further and pose one or two questions arising from the debate and particularly the implications of acceptance of the motion by the Government.

The motion relates to the discontinuance of the fuel variation levy in electricity accounts. As I understand it, the Minister has indicated that he is willing to accept that that should be the case. I should like to know very clearly whether or not that is merely some form of accountancy exercise to be compensated for by some other means. I think one speaker last evening referred unkindly to the fact that what might be given with one hand might be taken away with another. Perhaps that is a commentary in itself that one is always somewhat dubious about such easy undertakings given in this House that we must probe a little further. But, in truth, there are very solid, economic reasons that the hopefully temporary problem relating to extraordinarily high prices for oil over the last number of years and the recent glut in the market which has led to a downfall in prices should result now in a real and appreciable drop in the price of electricity for the ordinary consumer, the ordinary housewife. This is compounded by the fact that at the time of sanctioning by the previous Government of a 25 per cent increase in electricity charges — which increase, incidentally, was agreed merely because it had been postponed during the reign of our predecessors — there was inbuilt into that 25 per cent an 8 per cent tier which was to be for one year only. This case has been made already by Deputy E. Collins. I shall not over-emphasise it except to say that regardless of what should happen arising from the natural fluctuations downwards in the market price of oil, the public have a realistic right to expect a visible and appreciable drop of approximately 8 per cent in their next accounts.

The dropping of the fuel variation levy should mean that ESB charges should drop considerably. I should like the Minister to confirm that that is the case. Over the last number of years the public have experienced increases in electricity and indeed in other commodities, due to international trends, particularly in relation to the price of oil. In all cases all that ever happens — as far as they can see — when international prices rise is that they pay more but these prices never come down again. The same operates now despite the fact that there has been a dramatic change in the international oil situation, despite the fact that OPEC have had to rethink their strategy and attitude, despite the fact that people in the oil-purchasing business, large companies, now pay a great deal less than they did, the housewives of this country pay more than they ever did before. That is not something we should tolerate. I ask the Minister to spell out clearly that whatever benefits can be derived from the erratic price of oil on the open market should be passed on to the housewife, not after long and protracted delays, not after they have been wrung from possibly reluctant oil companies by a Minister but automatically, as their right, the same way as they, the voters and others must pay increased prices when those oil prices rise.

I would ask the Minister to make very clear indeed that when he agrees to discontinue the fuel variation levy there will be no other form of imposition of an energy-related nature to compensate for such an innovation and that the public who consume energy will see a realistic improvement in their situation. Of course, the general dependence of this country on oil, which is one of the highest in Europe and which successive Governments have endeavoured to depress to some extent, should not be encouraged further. In line with the hoped-for decrease in prices, I hope the Minister will continue to emphasise and do whatever possible to ensure that other aspects of energy consumption in this country likewise improve qualitatively. Here I am talking particularly about our waste of energy which is extraordinary by any standard. I hope the Minister will be able to instil into the public a real appreciation that energy, particularly that based on oil, is a finite commodity and should not be wasted. Indeed, I might give him an example on which to start in this very House — and I am not talking merely about our hot air, if the expression will be pardoned in this Chamber — but the actual temperature of the rooms here is an appalling and abysmal commentary on the way we carry out our business. Perhaps in this case we should start at home. Certainly it would appear that throughout society the public is being given very bad example. Therefore I do not blame people who are cynical about energy and energy prices, if they do not expect that what the Minister is saying now will redound now to their advantage because, if it does, it will have been for the first time. I shall wait and see.

Therefore if the Minister accepts that the fuel variation levy will no longer be a feature of ESB accounts it is incumbent on him to say where the shortfall, if there is one, will be made up, or if there is to be any loss of revenue to the ESB. It is unrealistic to expect that body — which has rendered this State a great service over the years — simply to continue with their expansion programme, with the very high quality of their service while their income is reduced. Accordingly, I hope the real reduction will be made up of a composite element, based on the 8 per cent one-year-off levy or increase granted in the context of the February 25 per cent increase, plus the fuel variation element, that it will be significant and will be compensated for in the event of the ESB having to go without. It is not simply acceptable that a board would be told, Look, we are going to give you less income, you make it up from here." That temptation, if it exists, should be resisted because it could prove to be very unsettling to this board which I believe have done an exemplary job in almost all respects.

The cost of our national fuel bill should mean that if there is a significant decrease it will undoubtedly redound to the advantage not just of the housewife — who obviously is of primary concern — but will be of significant advantage also to industry, particularly to small industry, in some cases very heavily taxed now by a wide variety of methods of extracting money from them, not the least of which has been their fuel bill. If there is anything the Minister can do by way of giving special consideration to small industries and businesses — I am talking about people employing up to half a dozen people — I appeal to him to do so. If we can encourage their development and growth by positive discrimination in relation to fuel prices then we will be doing a good job and the present employment prospect, so daunting, might be brightened on that account.

The motion asks that the fuel variation level be discontinued in view of the glut in oil supplies, and consequent lowering of heavy fuel and the adequate supply of natural gas to the Electricity Supply Board. In regard to the glut in oil supplies, I would be of the view that it is imperative that a Government should have a national energy policy, that we should not be dependent on the whims of the market places or indeed on the ability of a Minister to garner for us the benefits which are available because of the international market price situation. We should develop our utilisation of energy, our approach to conservation, our approach to alternative energy forms and so on, in the context of a national energy policy.

As far as I can see there is not a national energy policy. Although we had a Green Paper last year on this, I am not aware of any serious clearly established policy within which the Government are acting at the moment. The result is that there is uncertainty with regard to pricing, which is the kernel of this motion, but also with regard to every other aspect of fuel and energy. That should not be because it is unsettling in terms of domestic budgeting and its impact on commercial and industrial development, and the whole life of the community is affected when there is uncertainty about the development of such a fundamental input to the future as energy.

I believe there is a great need for the Minister to say not just that the price will now come down, which is inevitable when one considers the international situation, but that there is now a readiness to decide principles on which action in future will be guided. If we get that kind of reduction in price we will create a climate in which the private and public sectors will be sympathetically disposed towards accepting the rigours of a policy in this area.

There would, therefore, be no need for a debate about the fuel variation levy or any other aspect of prices, which would be automatic and would follow clear guidelines set out in a policy rather than the irregular debates which occur on occasions such as this when there is a glut in oil supplies.

The second reason for the request of the Opposition in this respect is the supply of natural gas to the ESB. Natural resources, in whatever part of the State or whatever shorelines, should lead to the benefit of all our citizens and no such supply should be seen in merely local terms. It is accordingly perfectly realistic to expect that there would be very significant reductions in price to consumers when natural gas supplies are on stream as they now are. The sooner they are on stream to the whole community the better. In the interim, it is reasonable that savings made because of the supply to a locality should be reflected in a national price structure. That has not been clear to date. One would be forgiven for thinking that the natural gas availability at present is a matter reserved almost for local concern and local consideration. That is not the way it should be. It should be a question of advantage to the whole community in the same way that the whole community have to shoulder the burden if the barometer goes in the other direction.

We would like the Minister to spell out in as much detail as possible what exactly his acceptance of the motion means in terms of the fuel and energy pricing structure — if people will have to compensate in some other way. We would like to know where the money is to come from that will no longer be paid in the bills. We would like to know the exact size of that and if I am right in assuming that it will reflect the two composite elements referred to previously by me, the 8 per cent one-year levy plus the natural fluctuation downwards in the market price of oil. We would like to know if the Government accept the need for an energy policy within which that price structure will be a feature rather than being the subject of a separate debate and perhaps in some cases taken out of context.

I would like to tell the Minister, if he is in need of any food for thought in that area, that our party have an excellent document which he should certainly acquaint himself with. It is one of our finest productions. Deputy Eddie Collins and all the other spokespersons in our Department will be happy to facilitate the Minister in regard to this. The consumer at long last appears to be in sight of getting some relief. I do not know if we should give the international market place the credit, the oil companies, or the Minister. Perhaps a little bit of credit is due to each of those segments. I would like to see this being implemented as soon as possible. I would be grateful if the Minister would give us a little more clarity on that. Apart from that I want to reiterate the general thrust and content of Deputy Collins' contribution last night which eloquently made our case for us.

An Leas-Cheann Comhairle

Deputy Tom Bellew. I would remind the Deputy that there remains 40 minutes between now and 8.15 p.m. before I call on Deputy Eddie Collins to conclude the debate. Deputy Bellew is entitled to 30 minutes, although I gather he will not avail of this time.

Mr. Bellew

I will allow other speakers to get in. I was surprised at Deputy Keating directing questions to the Minister about where the money is to come from to pay for the acceptance of the motion. Deputy E. Collins should have been less farcical, a little less like a pharisee and come before the House and stated where he and his colleagues would find the money. After all, it is the Fine Gael motion which we are debating which is being accepted with the same degree of integrity by the Minister as the Deputy when he put down the motion. We should not test the credence of the House too far by putting forward the type of arguments Deputy Keating has just put forward.

In common with the Minister and the majority of Deputies in the House, I welcome this motion. I am delighted to see that the Minister indicated last night that he intends to seek discussions with the ESB in order to eliminate this very contentious item from the ESB bills of all electricity consumers, domestic and industrial users. All of us have practical experience of receiving ESB bills and noting this charge, which has generated quite an amount of resentment and even at times, perhaps, misunderstanding about the ESB by their customers over the years.

The fuel variation element of all ESB accounts has been with us for eight years, since January 1974, although it applied in a limited way before that in regard to industrial. All of us have practical the mechanism was necessary in times when there were steep increases in oil prices. We all understood that oil was the main energy source for the ESB, during the seventies particularly, but the crisis which was caused during that decade by the rapidly increasing prices brought about by the oil producing countries, forced the ESB to consider diversifying their sources of energy supply. That diversification has been effected. We must all acknowledge that the consequence of that rapid increase in oil prices had a dramatic effect on the standard of living not only of all of our people but of most other people in the developed countries. It was a shock that took some time to absorb but we had to contend with it. In that sense it was understood and accepted that the ESB, in order to fulfil their statutory obligation, had to impose this type of surcharge. They had responsibility for keeping some semblance of order in their own finances and for producing the necessary result at the end of each year of neither making profit nor finding themselves in a loss situation to any extent. However, the need for the surcharge at present is questionable. As has been said here it is very difficult for the ordinary consumer to understand why he should have to pay this surcharge in circumstances, it would appear, of falling world oil prices and of a glut of oil products. As Deputy Keating has said, the prices of heavy fuel oil have fallen dramatically but perhaps all of us in discussing this matter can ignore the fact that while oil prices are expressed in punts we pay in dollars and that the ratio between the two has not moved as dramatically as has been the case in respect of other world trends both in terms of supply and price. Therefore, we may be under some misapprehension in talking of oil prices in isolation and not talking into account all of the other factors that are influencing the situation in which it would appear that the ESB should not be in a position to reduce charges to their customers, both domestic and industrial.

It is understandable that all of us would be of the opinion that the consumer is entitled to expect to be the beneficiary of these trends. Until 1978 the generating output of the ESB was derived perhaps to the extent of two-thirds from oil but then the situation in relation to the supply and price of oil forced the ESB to diversify and reduce their dependency on this one source of energy to the present figure of about 40 per cent. This was achieved to some extent by the increased output from the hydro-electric and peat stations plus a development that we all welcome though which perhaps might not be the best in terms of the utilisation of energy sources, that is, the natural gas burning station at Cork which is capable of producing one-third of the total amount of electricity generated.

Therefore, against a background of falling oil prices, of a dramatic reduction in dependency on oil and of the enormous contribution of natural gas, it is inconceivable that the imposition of the electricity surcharge would not be examined urgently with a view to its removal.

I have here an example of a domestic account of 800 units per month. That Bill as presented to the board by the consumer shows a standing charge of £2.65. There is usually no comment so far as that is concerned. The number of units consumed represent a charge of £33.8 while the fuel variation charge amounts to £15.65 or approximately 50 per cent of the cost of the electricity consumed. This is an area in which the ESB have not conducted a proper public relations exercise in explaining to the public why this charge is so high in relation to the basic charge for the electricity consumed. The title of the charge implies that it is a variation charge in respect of fuel oil but we all know that the price of fuel oil has not increased to this extent or that if it has, the board have been remiss in not restructuring their charges to show this situation in a more realistic fashion than in the example I have given. This is what leads to misunderstandings and to a lot of resentment against this surcharge. To that extent much of that resentment is justified.

The situation in industry is at least as serious but perhaps even more so in that there is inherent in that situation more hindrances to our potential competitiveness as against that of our trading partners in terms of our very high energy costs. This is a factor that is recognised by the IDA. In the context of attempting to attract industry we would appear to have excessively high energy costs vis-à-vis our trading partners. Any step that may be taken to alleviate this burden on industry must be welcomed and I trust that the Minister's consultation with the board in this connection will be successful.

I would direct the Minister's attention to a situation that exists in a part of my constituency though it is a situation that may be common to many other areas also. I refer to circumstances whereby, despite the fact that the ESB have surplus generating capacity due to a situation which will probably rectify itself now with the ending of the recession and the beginning of the upturn in the economy, industries who are large consumers must at a certain time of the day, especially from 5 p.m. to 7 or 8 p.m., switch to their own generating capacity because otherwise there would be a breakdown in the system. It is difficult to understand why this should be the case. It is something that militates against the smaller units who are not capable of providing their own generating capacity and who are consequently paying an inordinately high price for their electricity, they being pegged to a maximum kilowatt demand which comes into effect for possibly five, ten of 15 minutes in the day but once they have crossed that demand for even a small period of time, they must pay an excessively high cost for the energy they use. This is an area also that should be considered and I cannot conceive of there being any objection from any side to any rearrangement by the board in terms of their price structure in order to discriminate positively in favour of these smaller industries.

I would question also the activities of the ESB as a body in the field of the sales of domestic appliances. While this seems to be compatible with their general thrust in the commercial field, I wonder whether it is right that they should be tying up scarce financial resources in this area, an area that could be left more properly to the ordinary commercial sector. There must be substantial amounts of money involved in this area both in terms of financial arrangements made between the board and their customers and in the provision of the large stocks that are carried. While this may be a small element, it must be a contributory factor in the pricing structure of the board's supply of electricity to customers.

It has been said that competition is the spice of life and in this connection the figures for the projected output from the Kinsale gasfield are heartening. I congratulate the Minister on completing the deal with the Northern Ireland authorities in regard to the supply of natural gas to that part of the country. I am sure that some rural development will spin off from that move northwards. Competition is good for any organisation and it is time the the ESB looked to its laurels in this respect. The availability of natural gas, a clean and cheap form of energy, will force from the ESB a form of pricing structure that will make them more competitive.

I welcome the proposal to extend the supply of natural gas northwards, supplying the major towns en route. I welcome the fact that agreement has been reached with the gas company in Dublin in relation to the supply of natural gas. It is good to know that towns like Waterford, Limerick and Dundalk and other large centres of population will get a supply of natural gas. This will assist those towns in their drive to attract energy-using industries. We must also remember the advantage that the use of natural gas will be to the National Exchequer. We are all aware of the substantial amount of money that is paid annually by us for oil. Natural gas is a welcome addition to the generating capacity of the ESB but it is an inefficient form of energy production. The board should accept that it will not always be available to them.

The Minister was asked to outline where the finance necessary to implement the terms of the motion will come from but that is a problem to which the ESB must direct their attention. There is little use in the board burying their heads in the sand and saying that a situation will not arise, but a cheaper source of energy will become available and the board must work to prune their overheads where possible. They must prune their financial commitments to ensure they can within their statutory obligations reduce the price of electricity to a level that will be competitive and acceptable. I accept that the ESB are committed to a further reduction of their dependence on oil through the construction of coal burning stations. Those stations are bound to be a big contribution to the areas they serve and I am sure will prove efficient and more competitive.

The fuel variation charge, as it appears on consumers' bills, amounts to an additional charge of about 50 per cent on the cost of electricity used. The ESB within their own organisation have the scope to make the necessary saving to implement the terms of the motion before the House. I hope the Minister's discussions will bear fruit and will result in consumers being granted a reduction in the charge. I welcome the terms of the motion and the fact that as a nation we have reached the stage whereby we will be able to generate a greater proportion of our electricity from native resources.

Mr. Gallagher

(Waterford): On the surface the motion tabled by Deputy Collins appears to be a straightforward one which would find favour with all Members and the public who must bear the fuel variation charge in addition to the price they pay for the electricity they consume. However, the manner in which Deputy Collins proposed the motion was less than candid about a very complex matter. The fuel variation levy was first introduced ten years ago but applied only to industrial consumers. In 1973-74 when we had to face our first oil crisis the ESB extended the fuel variation charge to all consumers. The board responded with flexibility and speed by extending that charge to all consumers so as to ensure that industry survived and that household consumers had an adequate supply of power. In 1978-79 the fuel variation levy was used by the ESB again in response to a situation which was outside their control.

Deputy Collins was being simplistic when he stated that because there was a glut of oil on the market there should automatically be a drop in the price of oil to consumers. I listened to the contributions and I noted that the Minister pointed out to Deputy Collins that the drop in the price of oil was more than offset by currency fluctuation, the value of the punt as against the dollar. Having listened to the contributions so far in the debate I must remark that some salient points have been overlooked, deliberately in my view. The reason electricity costs are high is because 64 per cent of our electricity is generated by burning high-priced residual fuel oil, a most expensive way of generating electricity. Another factor that must be taken into consideration is that the price of residual fuel oil is further increased because the ESB are obliged to purchase supplies through the private enterprise firm of Tedcastle Limited. It seems odd that a State company in doing business should have recourse to a middle-man in the private sector in order to obtain supplies. If the ESB dealt directly on a state-to-state basis there could be a reduction in the cost of electricity, especially to industry.

We must bear in mind that hand-won turf is burned at an electricity generating station in the west of Ireland. Obviously, this amounts to a hidden subsidy being paid by the ESB to the area. If the Government wish to pay a subsidy to an area — I am not saying they should not — it should come from the area of direct taxation rather than expecting ESB consumers to pay it in the form of an increased charge for their electricity. A similar situation exists in relation to a private enterprise coalmine at Arigna. That is a costly way of generating electricity. The ESB have produced an effective low grade coal burning furnace capable of utilising the plentiful supplies of low grade coal here, particularly in the south and west.

Another matter which contributes to the high cost of energy — this was ignored by other speakers — is the high interest charges the ESB., like other State companies, must pay to the banks. I should like to know what bank interest charges cost consumers. It is obvious that more coal-burning electricity generating stations should be erected so as to reduce the overall cost of generating electricity. However, the ESB cannot do this if banks are allowed to levy the same heavy interest charges they are permitted to charge other State companies. For example, the sugar company, which had a trading profit of £378,000 last year, had that profit more than wiped out by interest charges which were in excess of £10 million. Irish Steel have to find £3.8 million each year to meet interest charges while NET must find almost £40 million.

We all accept that it is necessary to keep down the cost of electricity not only to prevent increases in the cost of living but also to ensure that our industry is not placed at a disadvantage in their efforts to win or hold markets. I welcome the Minister's statement that he intends having discussions with the ESB and I hope they prove fruitful. I expect that the Minister will be in a position to make a favourable announcement on the matter shortly. Another aspect of the discussion on the motion which I felt was unwarranted was the attack on the ESB staff, the manner in which it is portrayed that ESB staff deal with the ordinary consumer. I cannot speak for other areas of the country but in my own area of Waterford, particularly Waterford city where I live, I know the policy of the ESB in relation to the general public who have difficulty in paying their bills is an open-door policy and I am sure that that policy is consistent throughout the country. It is disheartening to hear this constant sniping which surely must lead to a lowering of morale among workers of the ESB. I recall the snowstorm last winter and the response of the ESB staff who worked 18 hours a day to ensure that supplies were kept going. At that time it was politic for politicians to praise ESB staffs. That is over now and the snow is gone. It is open season in regard to State employees, and a very unfair advantage is being taken, particularly in the case of the ESB who are giving first-class service to the consumers and the public at large. These allegations are reprehensible and harmful to the staff of the ESB and will lead to resentment among them. There have been problems in the ESB from time to time, but we must accept that relations within the ESB structure have been developed to a highly sophisticated level.

An Leas-Cheann Comhairle

I remind the House that when I call Deputy Collins he will be concluding. If any other Deputy has any comment to make he should do so before I call Deputy Collins.

Mr. Fitzsimons

I welcome the Minister's speech in relation to the ESB fuel variation charge and its abolition. This charge has given rise to considerable adverse comment up and down the country for a long time. It was introduced some years ago when oil prices were increasing and it may have been necessary to some extent, but a levelling-out has occurred since then and there is no doubt in my mind that this charge should have been dropped by the ESB even before now.

It is good to see that the House is not divided on this issue tonight. Undoubtedly the benefits of the abolition will be seen right across the board by the normal householder, the farmers, the agricultural industry and industry as a whole, particularly small industries. One can imagine that the cost of electricity to industry is a burden, particularly on small industries. I live in Navan which is a hive of small industries based mainly on house furnishings and carpets and all the machinery in those small industries depends totally on electricity for its functioning.

The Minister has not alone given a commitment to abolish the fuel variation charge but also has given an undertaking to ensure that ESB increases will be confined in future to single percentage figures. In doing that he has given small industry an enormous boost and it would seem that he has also given them the opportunity to plan ahead. They will know this year how to plan for next year. They will know what their energy costs will be. Energy costs have been an exasperating and killing factor for small industries trying to develop, endeavouring to give employment, and then knowing that, having set their targets for the coming year, some time during that year through an ESB increase or whatever, their overhead costs in relation to energy have risen beyond their calculations and this has caused unpleasant ramifications for whatever industry it might be. I have no doubt that the small industrialists I am speaking of will welcome this decision of the Minister and will be with him in doing what he has said here tonight.

The fuel variation charge has always puzzled householders who could never understand it fully. Every Member of this House and of a local authority must have had at some time a visit from a constituent asking about this fuel variation charge, the reason for its initiation, whence it came and why it should be imposed. The abolition of this charge will be an enormous benefit to every house-holder. As recently as last week I had a visit from a constituent, a young widow, whose ESB bill had caught up with her and because of a little bit of arrears and one thing and another she was unable to pay that bill. The fuel variation charge in both her previous bill and her present bill was part of the reason. I had to contact our local ESB office where I must say I am usually met with compassion, consideration and kindness when I make representations on behalf of a constituent. The ESB were considerate in not cutting off the young widow's supply of electricity and through my representation they facilitated her by allowing her to pay her bill over a phased period. It struck me then in looking at her bill how unfair, unkind and unjust this fuel variation charge was.

Agriculture today is as dependent on electricity as industry. There is not a dairy farmer in the country who does not depend on his electricity supply to milk his cows twice a day. Farmers pay substantial electricity bills but now, because of the Minister's wisdom, they will not have to bear the brunt of this imposition. I know that farmers will greatly appreciate this move by the Minister.

There is no doubt that we are living in difficult times, both politically and economically. It behoves us all to assist as much as possible the ordinary house-holder, the farmer and the industrialist. Any gesture which can alleviate their problems will be much appreciated. By eliminating one problem we are indirectly assisting industrialists to give further employment. Their overheads will be reduced and this may give them the incentive to take on more staff. Unemployment is our biggest scourge and this gesture by the Minister will be worthwhile if it creates even one extra job per small industry. I compliment the Minister on his fine and noble gesture.

Mr. E. Collins

I am very pleased that the Fine Gael motion which seeks to abolish the fuel variation charge has been accepted in principle by the Government. This is a clear recognition that circumstances are now such as to allow of stability in the price of electricity and for a lowering of the price to the consumer.

I thank Deputies who took part in the debate. It is always helpful to get the views of all sides of the House. I was somewhat surprised at the ungenerous contribution of Deputy Gallagher of the Workers' Party. I suppose it is symptomatic of the schizophrenic position which that party hold in the House. His speech was certainly sympathetic to the Government position with regard to this motion and it only confirms my view that this party are in rampant support of Fianna Fáil. Once that is understood by the public, I am satisfied. I do not think they should be flying the flag of socialism in those circumstances.

In the course of his remarks Deputy Gallagher made certain allegations about the ESB which cast doubts on the integrity of certain personnel there, particularly those who have responsibility for the purchasing of primary sources of energy. In view of his remarks regarding the other personnel employed by the board, I would expect that senior personnel in the ESB would take a very dim view of his remarks regarding purchasing policy. I hope that his remarks regarding purchases of residual fuel oil or heavy fuel oil will be rebutted by the Minister in due course or, if not, by the ESB. To my knowledge the board's policy is one of extreme competitiveness. Indeed, when I had responsibility for the board I had difficulty in getting them to take any quantities of residual fuel oil from the Irish National Petroleum Corporation. To my certain knowledge their attitude to the purchase of both oil and Bord na Móna products is one of high efficiency which will tolerate only the highest degree of competitiveness on the part of suppliers. I hope that this aspect of Deputy Gallagher's speech will be rebutted.

There are some aspects of the Minister's speech to which I wish to refer. He expressed surprise that the previous Government did not make it a condition when granting the ESB an increase of 25 per cent that there would not be a further increase for 12 months. In order to put the record straight I will reiterate what I said in my speech. I said that at the time of sanctioning the 25 per cent increase my clear directive to the ESB was that there should be no further price increase for a period of one year. I accept that the Government did not insist on a one-year moratorium on prices. As the Minister responsible for the ESB I called in the chairman and the managing director and I told them quite bluntly ——

Mr. Reynolds

Did the Deputy issue a directive in writing?

Mr. E. Collins

The Minister can check this in the minutes of the meeting——

Mr. Reynolds

The Deputy knows whether he issued a directive in writing to the ESB. That is the way one deals with semi-State companies.

Mr. E. Collins

What I have said is contained in the minutes and I am sure it is in the minutes kept by the ESB. I am sure the Minister will agree that when one says such things to the chairman of a State body it is quite clearly understood by the people concerned. The price application being examined will not become effective until the August-September accounts, which is one year later. It is obvious that the spirit of what I said to the chairman and managing director of the ESB has been adhered to and I am pleased about that.

Mr. Reynolds

If the Deputy really believes that ——

Mr. E. Collins

I have told the Minister it is in the minutes of the meeting.

Mr. Reynolds

They did not comply with what was said. The Minister did not issue a directive.

Mr. E. Collins

The Minister may indulge in semantics if he wishes. I would point out to him that the word "directive" is not in the ESB Acts.

Mr. Reynolds

The Deputy used the word first.

Mr. E. Collins

Yes, but I did not say it in a statutory sense.

An Ceann Comhairle

Deputy Collins to continue without interruption.

Mr. E. Collins

It is a relatively small point in the context of the debate. I am glad there was not an increase for one year and I am not too sure that there should be an increase now, for the reasons I stated last night. There was a serious loss of income to the board because of the electoral position of Fianna Fáil at the time and we had to rectify the matter by giving them an unduly large increase. However, 8 per cent of the 25 per cent granted was given for only one year and I expect that 8 per cent to be taken off the price of electricity as and from August-September. I do not understand why the application for a 6½ per cent increase is being considered when 8 per cent should be coming off the price of electricity in accordance with the decision of the former Government. I do not accept the argument of the Minister that oil prices did not fall in the context of currency fluctuations. I am quite sure that the board were capable of buying forward to ensure that falling oil prices were translated into real falling prices in Irish money terms. I am sure that was done by way of purchasing forward with dollars. I do not accept the argument put forward by the Minister.

In his contribution the Minister said I had reservations about gas to be given to Northern Ireland. I did not say in my speech that I had any such reservations about this matter. I said it was important to establish the true reserves in order to ensure that the allocation of those reserves could be handled and understood by all concerned. I welcome the supply of natural gas to Northern Ireland and I hope it will become a reality soon.

Mr. Reynolds

Why did the Deputy not do it when he was in office?

Mr. Harte

Certainly the Minister is one man who is not short of gas.

An Ceann Comhairle

Deputy Collins has only a few minutes left and he should be allowed to continue without interruption.

Mr. E. Collins

I wish to refer to the report of the National Prices Commission. Paragraph 55 states that the board are anticipating an increase in their total fuel bill in 1982-83. In the case of fuel oil, the board forecast an average price for 1982-83 slightly above the average 1981-82 price. I challenge that. I hope that in the next review of the fuel cost variation surcharge, which will take place this month, the position will be reversed. I made a slight error regarding the FVC when I spoke last night. It is reviewed on a four-monthly basis by the National Prices Commission. It was introduced to allow that four months flexibility while, at the same time, retaining the annual cost price increase.

There is no doubt that the price of electricity should fall. I have explained the reasons, such as natural gas coming on stream and the collapse in the price of oil. The fact that the Minister has accepted the motion is an emphatic endorsement of my view.

Mr. Reynolds

Why did the Deputy not do all of this when in office?

Mr. E. Collins

The Minister knows quite well that the drop in oil prices did not commence until January-February and it continued into March. It did not begin to occur until this year. The circumstances in which the ESB are operating are changing. Natural gas will come on stream in Dublin and perhaps in other areas in the next few years. I suggest that the growth in electricity sales will be static to say the least. In those circumstances the attitude of the board to efficiency is welcome and I hope it will be continued in the years to come. I am aware of the excellent work done by the staff in difficult times, especially during the winter. I am aware that the board is not over-staffed. I believe that the service given to the public is efficient. The point I made last night was that it is important that this concept of efficiency should continue to permeate the whole of the board's activities.

The ESB have to contend with foreign currency movements and this was referred to by the chairman in the annual report for 1981-82 when he stated:

A measure of this risk is the fact that adverse currency movements alone in the past year increased foreign borrowing liability by £35 million.

I suggest that the time is ripe for the Government to guarantee the ESB with regard to their foreign borrowings against devaluation of the Irish currency.

Mr. Reynolds

Why did the Deputy's Government not do that?

Mr. Harte

The Minister should keep quiet.

An Ceann Comhairle

Deputy Collins must be given the opportunity to conclude without interruption.

Mr. E. Collins

It is a very good argument for guaranteeing the ESB with respect to foreign borrowing because it would give them more confidence to borrow abroad and carry on with their development programme.

Question put and agreed to.