By agreement, and notwithstanding anything in Standing Orders, speakers shall be called in Private Members' Time this evening as follows: 7 p.m. to 7.20 p.m. a Fianna Fáil speaker, 7.20 p.m. to 7.40 p.m. a Fianna Fáil speaker, 7.40 p.m. to 8.10 p.m. a Government speaker and 8.10 p.m. to 8.30 p.m. a Government speaker.
Private Members' Business. - Electricity Prices: Motion.
Is that Schedule agreed? Agreed.
I move:
That Dáil Éireann calls on the Minister for Energy to make the necessary arrangements with the ESB to pass on, forthwith, to all their domestic consumers the full benefit of the recent reductions in the price of oil.
Let me say how disappointed everybody in the House and in the country——
Will Deputies who are not interested in the debate please leave the House if they want to talk?
I want to express the disappointment of the 1,086,000 domestic consumers of the ESB at the fact that——
How many letters did the Deputy get?
——the Minister was not in a position to announce on 11 March the news that domestic consumers would benefit from the reduced cost of oil. We take exception to the fact that on that occasion the Minister promised many things, but he was remiss in not giving the advantage of the reduction in the price of oil to the consumers of the ESB. The Minister said he was pleased to announce the reductions and foresaw a significant reduction in energy costs, higher employment levels and bigger take home packages this year.
It is interesting to note that it was the Minister who made the announcement which was carried in the media, and that he made it in advance of its being made known through ESB sources. One would have expected, as in the past, that announcements of this nature would have been made by the board of the ESB.
Mea culpa, mea culpa.
It would appear that the Minister has extra control and a veto so far as reductions in electricity costs are concerned, but it is a pity he did not find it possible to grant the decrease in electricity costs to all consumers — commercial, industrial and domestic. We take exception to the fact that he omitted granting the reduction for the domestic consumer until September.
He should be aware of the impact electricity prices have on consumers. One would have expected a member of the Labour Party, a socialist party, to grant any reduction possible to domestic consumers at least at the same time as he was giving an impetus to the commercial sector. The fact that he has not given the reduction to the domestic consumers has created considerable hardship for the weaker sections of the community, particularly old aged pensioners, widows and people who over the years have found great difficulty in meeting increased electricity costs. When one remembers that in the same month the Government announced that they were reducing food subsidies further and removing the children's tax allowance from the taxation code, this shows that this socialist Minister did not recognise the hardship which would be inflicted on domestic consumers. We take exception to that and that is why we moved this motion.
Old aged pensioners and householders generally are dependent on electricity supply and any reduction which could have been offered between March and September would have been a great help when families were working out their budgets. It must be borne in mind that, over the past winter, many of our underprivileged and those in the social welfare classes experienced great difficulty in getting full free fuel allowances from the health boards. This has contributed significantly to the hardship consumers had to bear. The Minister could have done something particularly useful by announcing a reduction in electricity costs for ordinary domestic consumers when he announced the small reduction for the industrial and commercial sectors.
Everybody has been talking about the possible benefits that should accrue because of the reduction in the inflation rate and in the cost of oil. The delay in giving the small benefit of a 5 per cent reduction in electricity prices until next September is unacceptable to us. We must pose the question: would the Minister have been the one to make the announcement if there was to be an increase in the unit cost of electricity to the commercial, industrial and domestic sectors? I doubt it very much. Now that we have reduced costs, resulting in reduced electricity charges, if the reverse situation were to arise between now and next September would the Minister reverse the decision that has already been taken and would we see the prices increased again? If oil costs continue to plummet will the Minister come in to give us an increase on the promised 5 per cent reduction next September? Put a marker down in March that you are going to get a reduction in September, when everybody knows full well that production costs of oil are still falling, really means putting the consumer on the long finger. We would have thought that the socialist Minister would have taken a different attitude.
We want the Minister to tell us that he will top up that 5 per cent reduction if oil prices continue to plummet. The only reason we have this advantage at this time is the falling oil prices and the more favourable púnt-dollar ratio. Those falling oil prices have eased the problem of global inflation, but we are not getting the advantage from it. That is our biggest criticism this evening. Despite the fact that the Taoiseach on a few occasions recently was very vocal about the fact that there will be bigger disposable income in the family budget and that prices in all sectors will be reduced, this has not happened.
We hear talk about inquiries and the Taoiseach setting up special subcommittees of his Cabinet to look into the reason why we are not benefiting. Every other economy in the world has been benefiting from these cost reductions and from reduced inflation, but we are not benefiting from them and we resent that greatly. They should have had a profound effect on consumer costs as they have had on consumer and business costs in the US and Europe. Why is the result not similar reductions here? We should expect a much larger reduction in the cost of heating oil, diesel and petrol. We would have expected a major windfall for motorists and electricity users and our principal objection this evening is that that has not been happening, despite the recent protestations of the Taoiseach and the promises made by Government Ministers. The reductions should have had a major impact on industrial costs, because the cost of oil impinges primarily on transportation, airline costs, bus services, diesel costs, rail costs, and freight costs.
The farming community should be benefiting magnificently from all these wonderful reductions that were announced by the Minister, but they are not. Diesel, fertiliser and pesticide costs should have been down, but they are not. We resent the fact that the Minister has not taken the initiative to guarantee that those costs be allowed to be passed on to the consumer.
The recent epic oil plunge was an unbelievable windfall and cheap oil should bring about a giant tax cut, but that has not happened here. It should result in increased jobs, and the Minister for Energy suggested that that would be the case. It should result in lower prices for petroleum and petroleum-based products from polyester to gramophone records, but none of these things has happened. Why has the Minister not insisted on suppliers reducing their costs and in particular why has he not taken the initiative in dealing with electricity prices? A look at price increases over the last few years gives an indication of what exactly the Minister proposes to do. In the August-September 1983 billing period the unit cost to the domestic consumer was 7.35p. At that time the ESB were granted an increase of 9.69 per cent. For the billing period December 1984-January 1985 the domestic unit cost was 7.85p. Standing charges also had increased, although not substantially; and for the most recent billing period, February-March 1986, the domestic rate stands at 8.20p. Even if the Minister gives the 5 per cent reduction that he promised from 1 September it will mean only 0.40p anyway which will bring the unit cost back to somewhere around 7.8p on the domestic rate. Therefore, he is not really giving anything like the amount that should be possible because of the reduction in the production cost of oil.
We all know that crude oil and oil products are internationally traded commodities and that we must meet the price on the international market. I put it to the Minister this evening that a substantial number of suppliers, manufacturers in the UK or their agents here in Ireland, have not been passing on the reductions of products that have been manufactured in the UK. It is now suggested to me by those who know that many of our petrol reductions have not yet been passed on to motorists despite the fact that the Minister talked so loudly about it recently. The Taoiseach referred to whole lists of products that should have had a cost reduction because of the reduced cost of oil but such cost reduction has not been passed on here.
Our industrial base needs electricity at internationally competitive rates and our large industries are paying up to 40 per cent more for it here in Ireland than their EC competitors. It is a very great cost penalty. When we consider that discounts are not available here to large energy users as they are in other countries we get an idea of the disadvantage being endured by the Irish industrialist. Electricity costs are greater here than in any other EC country and add up to almost half the total wages of some of our manufacturing industries here. We do not see that as a means of attracting industry to this country or of allowing electricity to be used properly in the interests of the Irish people. It is time that the tariff structure that is now biased against the industrial user was changed and a new system of pricing put in place. We know that the ESB have had considerable difficulties, but that was all gone into as far as the price of electricity was concerned in the Government inquiry announced in June 1982. What aspects or recommendations of that inquiry have since then been put in place? The Government have a powerful influence on Irish energy costs. They control the levy, the price of natural gas, all the taxation on fuel oil. When one considers how much involved the Government are in setting up the price structure for ESB charges we realise that they should take the initiative to see to it that the reduction in the cost of the production of crude oil is passed on directly to the consumer.
We all know that the price of crude oil is some where between $11 and $12 per barrel. It has reduced in the past 12 months from almost $30 per barrel. Bearing that in mind, a bigger reduction could have been granted by the Minister in so far as electricity prices are concerned. We do not regard it as acceptable that the ESB are allowed to charge the current prices until September as certain sections of the community find it very difficult to meet their bills. Almost 200,000 families are on the breadline and reducing their electricity costs would have resulted in a major saving in family budgets. We greatly resent the fact that the Minister is penny-pinching in allowing the existing cost structure to continue until September without giving full advantage of the reductions in inflation and in the price of crude oil to be passed on to the ESB. We request the Minister to change his mind immediately in this regard.
I support the motion so ably proposed by Deputy Flynn. The Government's amendment is disappointing. They are merely congratulating themselves on what they have done to help industry but the reduction they are praising is only 6.2 per cent on average for industrial consumers from 1 April which falls far short of what industry needs when one considers that our energy costs are 20 per cent higher for the industrial sector than those of our competitors. Deputy Flynn also pointed out that the cost for energy intensive users can be as much as 40 per cent more than our competitors which makes it very uncompetitive for the industrial sector. Last year, firms which used large amounts of electricity said that their energy costs were as high as those for wages and salaries. The reduction of 6.2 per cent will be of some help but their costs are very high and they need more relief.
Because of the increases in 1984 and earlier this year there has been a loss of jobs in the industrial sector which has been commented on by the CII. It is essential to get a further reduction for industry and domestic consumers should get the full benefit of the recent reductions in the price of oil. We must also be concerned about smaller industries which have been helped by county development teams and the small industries section of the IDA. These industries will not even get the reduction of 6.2 per cent — I am talking about light industry — because they would not use electricity to the same extent as larger firms.
The domestic consumers are certainly feeling the pinch after the harsh economy and weather of last year and the early part of this year. Families have lost the food subsidies and the tax free allowance for children has been scrapped in the budget. They are very disappointed that the 5 per cent reduction in prices will not come into effect until September. The Taoiseach and various Ministers tell us every day that inflation and prices are falling. Why are ESB charges not falling? The consumer should get every benefit from the price decrease in oil. If the Minister of State contacted the health boards and spoke to community welfare officers who have people coming to them daily seeking help in the payment of electricity bills, the Government would immediately pass on the reduction in the price of oil. There was an increase in electricity charges for the period March-April and then the Minister for Energy has the gall to say that the domestic rate will go down by 5 per cent from 1 September which will cancel the recent increase. We are merely getting compensation for the price increase earlier in the year, which is very disappointing for the weak and elderly section of the community.
A report published by the Council for the Aged —The Incomes of the Elderly in Ireland— made strong recommendations in regard to helping the elderly, especially in relation to the free electricity allowance. Recommendation No. 15 stated that the present scheme should be changed to permit the carry-over of unutilised units from one billing period to another. In other words, if a person in receipt of a free electricity allowance does not use his or her 300 units in a particular billing period, they should be carried over to allow that person up to 1,500 units in a full year. It is a matter of debate as to why the full units are not used but old people are afraid that, if they use more than 300 units in the winter or 200 in the summer, they will not be able to afford the cost for the extra units used. I strongly urge the Minister to look at that proposal and to allow the elderly to use the 1,500 units each year.
Recommendation No. 16 of the report said that there should be an involvement of the meter reader in assisting the elderly to understand how many units they have and how many free units remain in any period. This service could be improved and expanded to include subcontractors employed by the ESB for meter reading, to help the elderly wherever possible.
Recommendation No. 17 said that any schemes operated by the Department of Social Welfare concerning the free electricity allowance should be widely publicised and that voluntary organisations, friends and relatives of elderly people should be involved in explaining the details of the scheme. If the Minister was in contact with voluntary organisations, particularly the St. Vincent de Paul Society, in rural areas he would realise the problems of the elderly, not only in regard to the workings of the scheme but in regard to health boards who are asked to contribute towards the cost of the bill.
We must be concerned at the way the western package is being implemented. On a number of occasions I expressed concern to the Minister about this. I understand that more than 1,500 people have been approved and I hope the Minister will be able to announce soon that the EC have approved a similar scheme. I hope the next scheme will be more flexible and extended so that people in rural areas who have electricity installed will not find that the balance of the deposit mounts every billing period.
Many constituents have written to me about the charge imposed on them by the ESB. One constituent told me that a capital contribution of £968 was being demanded by the ESB. The final paragraph in the letter from the ESB to that constituent referred to the marvellous offers from the company if a consumer purchased a full electric cooker and a dual immersion group electric water heater.
That constituent was informed that he would get free electricity up to £90. Obviously, a person asked to pay almost £1,000 for the installation of electricity will not be in a position to qualify for such marvellous benefits.
It concerns me that social welfare is being considered as income under the scheme since it was altered. I hope the Minister removes that anomaly and that the children of any farmer who is building a house can qualify for the electricity subsidy, as they did up to 1983. On a number of occasions the Minister gave me an assurance that he would make an effort to have the scheme made more flexible so that people in rural Ireland would qualify. The scheme should be made more flexible and extended.
The Government have been making the point in recent days that the economy is picking up. According to today's issue of the Irish Independent, under the headline, “Boost to the Economy as Trade Rockets,” a colleague and good friend of the Minister for Energy, the Minister for Finance——
The Minister for Energy would not be carried away like that.
——predicted that with the price of oil standing at about half of what it was at the end of last year a dramatic cut in our national oil bill was "on". In today's issue of The Irish Times the Minister for Finance is quoted as saying that the massive fall in oil prices will reinforce the improving trend in the economy which the Government's policies have created.
Will the Minister agree that it was a magnificent weekend?
Colourful.
It will be a lot easier to live with than the one the Minister is going to have in October.
Real politics.
Such comments by the Minister for Finance give the impression that the Government should not have any difficulty in arranging with the ESB for the benefit in the fall in oil prices to be passed on to consumers. The many problems we have discussed in the House in recent times should not exist if one is to go by the ebullient form of the Minister for Finance yesterday. However, when it comes to helping the less well-off sections in our community—the elderly, widows and the disabled, whose plight has been highlighted so well by the Council for the Aged—the Government do not appear to have any money.
The Minister and other members of the Government told us that the price of electricity would fall when Moneypoint is in operation and I hope he will tell us what benefit consumers will receive from that project. He must remember that the price of electricity will not fall until September. Where is the benefit for industry? I understand that the price of our electricity is about 20 per cent higher than the average EC price. I should like to know if the money the Government are saving as a result of the fall in the price of oil is going to fund Moneypoint. Will the Minister tell us the capital contribution being made by the Government to Moneypoint? Consumers are disappointed that they are not getting an immediate benefit from the fall in the price of oil.
On a number of occasions I expressed concern to the Minister at the way our milled peat is being utilised here. It may represent a small amount of the fuel used in the generation of electricity but it is a very important one. The Minister will be aware that from the Derryfadda group of bogs in Roscommon and Galway 140,000 tonnes of milled peat will be transferred to the power stations in the midlands. I am sure the Minister will tell me that that is being done because of the poor peat production in 1985 in the midlands, but I wonder why Bord na Móna are engaging in this expensive exercise. It will cost a lot of money to transport that milled peat over very bad roads. That natural resource should be used in the local areas. I hope the long term proposal for Derryfadda is the erection of a briquette factory there. It is ridiculous to transport so much milled peat on bad roads from the west to the midlands. Perhaps the Minister would comment on that aspect of energy policy. We should revert to developing all our bogs, using the resources available where such development is taking place.
Another matter I have raised with the Minister in this House is that of alternative energy sources. I have had a number of questions to the Minister on what is Government policy.
The Deputy is broadening the debate very much.
I am merely inquiring from the Minister about alternative types of energy in order that we might have cheaper electricity. I might refer in particular to a reply the Minister gave me with regard to experiments carried out on hydroelectricity——
The motion calls on the Government to make the necessary arrangements with the ESB to pass on, forthwith, to all their domestic consumers the full benefit of the recent reductions in the price of oil.
The Minister did mention a number of sites throughout the country with regard to the development of hydroelectricity at a very cheap rate, perhaps the Minister would tell us whether there are any further proposals along those lines.
I fully support the motion proposed by Deputy Flynn. I have heard no reason yet — perhaps the Minister will give us one — why the benefits of the recent reduction in the price of oil have not been passed on to domestic consumers, something that every householder or housewife wants to know. I might say that the industrial sector also is far from happy with the small reduction of an average of 6.2 per cent——
Nobody is happy; it is the national preoccupation.
——in the price of electricity to them.
I move:
That all words after "Dáil Éireann" be deleted and the following be substituted:
"notes and endorses the reduction in electricity prices announced by the Tánaiste on 11 March 1986, the favourable impact of reductions in electricity prices to industry on job creation prospects and the fact that prices to consumers generally will fall later in the year, and notes his stated intention to review the situation in the light of circumstances to determine if further reductions can be achieved".
Before speaking directly to the amendment, I would like to offer a few comments on the motion in the name of Deputy V. Brady. The way the motion is framed lends itself to the interpretation that the benefits of the improved circumstances of the ESB should be passed exclusively to domestic consumers and not to industrial and commercial consumers.
That is not fair. The Minister is putting a very narrow interpretation on it.
We cannot have interruptions in a confined debate.
Knowing Deputy Flynn to be an honest man, I will take the broader interpretation then. I am sure that is not what was intended by his party's Chief Whip. However, I feel I should draw attention to that interpretation just to keep the House clear on technicalities and also to bear that relatively important point in mind in the course of the debate.
It is the reverse which is true in so far as the Government amendment is concerned in that they are concerned only with industry and not with the domestic consumer.
The circus is over; that was last weekend. We are back to reality now, as the Deputy will see from the large attendance.
The Minister will be facing into his agony before too long——
Deputy, please.
The Minister is inviting interruptions. He cannot justify the fact that he did not look after domestic consumers.
Would the Deputy please cease interrupting?
The numbers are getting tight around here; we will have to have him thrown out. One does not have to be sad to be serious.
A famous man said that before the Minister.
From the west, yes. For several years past the ESB and the Government have been conscious of the need to alleviate the problem of high electricity costs in industry. In September 1983, the Government established an inquiry into the price of electricity — Jakobsen inquiry. The inquiry report, which was published in January 1985 was wide-ranging and detailed. It examined in considerable depth the cost and price structure of the ESB for purposes of comparison. It also looked at the electricity prices obtaining in various other countries.
The inquiry found that, while the price of electricity to domestic consumers in Ireland was in the middle range of prices in European countries, industrial electricity prices were higher than average. Obviously this finding of the inquiry was a matter of serious concern to the Government. It was of particular concern that our exporting industries should be at such a disadvantage vis-à-vis their competitors abroad. The inquiry report conceded that the ESB labour under certain disadvantages by comparison with many of their European counterparts who produce lower cost electricity. Their system is smaller than most of them and, therefore, cannot avail of economies of scale. It is an isolated system and, in consequence, is deprived of the benefits which inter-connected systems enjoy. By virtue of its small size and isolation it is constrained, for reasons of security, to avoid concentrating on the use of any one primary fuel even though that might present the cheapest option at a particular time. In other words, it has to maintain the capacity to use a mix of fuels and that implies a cost penalty.
Against the background I have been describing it should not be surprising, therefore, that we have been moving gradually to improve the price to industry by a judicious tilting of the balance at each review. This has obvious importance for job creation and the competitiveness of the economy.
That was evident in January 1985 when I was able to announce an average reduction of from 2 per cent to 6 per cent in the industrial tariff. This reduction was facilitated by a special allocation of natural gas in recognition of the urgency of the problem as highlighted by the Jakobsen report.
It will be recalled that subsequent to this, around the middle of 1985, the ESB applied to the National Prices Commission for a phased increase to cover normal increases in their costs. This was, of course, long before the dramatic turn-around in oil prices which is a very recent phenomenon, and even before the dollar started to weaken in the international currency markets. The application was carefully examined and considered by the Government and an average increase of 2.7 per cent was approved and announced in December 1985. This level of increase was fully justified at that time. It was decided that this increase be applied as 4.5 per cent for domestic consumers, 3.5 per cent for commercial and a zero increase for industry.
Bearing in mind that inflation since the previous increase of November 1984 was 6.7 per cent, I am satisfied that the weighting of the increase in the manner which I have just outlined was fully justified. The increase, incidentally — and this is relevant to what I will be saying later — was based on costs as they were at the time and made no allowance for costs which would be increasing in the normal course in 1986. This is particularly pertinent to the 25th round pay arrangements. I should say, too, that the calculations in December were based on information current at that time and not on the application which had been made by the ESB several months earlier when, among other things, the price of fuel oil was still distorted by the UK miners strike.
Having placed that brief background on the record, I will now turn to more recent events. It was into 1986 when the spot market prices for crude oil and oil products started to soften rapidly. Records show that the average spot price for 3.5 per cent sulphur fuel oil was $139 in December last. The January average was $120, February, $90 and March, $86. I am giving the high of Platts in each case. I and my Department, and indeed the Government separately, were alive to these developments and we opened consultations with the ESB at the appropriate time. In fairness to the ESB, I have to say that they too were conscious of these developments and of their responsibility. In the circumstances I found them to be willing partners in the consultation.
At this point, I want to remind the House of one or two salient points. The ESB reported a loss of £27 million in their accounts for the year ended 31 March 1985. This brought their accumulated deficit to £64 million. That figure cannot be ignored either by me or by the ESB in considering appropriate pricing policy. The Government have a responsibility to ensure that the ESB maintain their financial viability. Failure to do so would inevitably result in the Exchequer and, in the final analysis, the taxpayer, being called on to carry the burden. The ESB, during their long history, have never had to make demands on the Exchequer. It is my Government's intention that they will not need to do so now or in the future.
When the ESB were set up in 1927 and given their mandate to generate, transmit and sell electricity it would have taken no less than a prophet to foresee the enormous developments that have taken place since then in every area of the electricity business in this country. The fact that the ESB are now in a position to sell their expertise abroad in a highly competitive market is a measure of the degree of maturity at which they have arrived.
In 1927, the ESB were mandated not to discriminate.
I would not be as old as the Deputy. Much of the change and development has taken place in comparatively recent times. This is not in any way to denigrate the achievements of the early years without which later advances could not have been made. But it is salutary to recall that up to as recently as twenty five years ago the ESB's electricity was generated predominantly by hydrobased plant. Since then customer numbers have doubled and unit sales have increased seven fold. The ESB have had to undergo major changes during that quarter century, not merely in order to keep pace with the growing demands for electricity, but to plan for future demand and to ensure the best of advantage for their customers. The ESB are now on the threshold of a new era in their history. The recent movement into coal by the ESB will add a greater degree of security to the nation's electricity supply. The ESB of course have taken the precaution of diversifying their sources of coal supply and this will add a further measure of security.
Ireland is a comparatively under-industrialised country. In that respect it is still a considerable way behind most of its partners in the EC. By comparison with many European countries it was later for historical and other reasons, in developing an industrial base and the infrastructure required to service it. Security of supply and cost of energy are vitally important considerations in such a climate. The ESB's movement to coal-based electricity generation will contribute significantly to the nation both from the economic and strategic points of view.
In common with every other business, the ESB have been affected by the worldwide recession. During a period of several years of falling demand they had to contend with rising imported fuel costs. They have coped well with the consequences of the recession but they are not emerging totally unscathed. In my view and that of the Government it would be short-sighted and foolhardy in the extreme to embark on a programme of swingeing electricity price reductions at the first signs of recovery. The viability of the ESB and the continued development of our electricity system are too important to the nation as a whole to be put at risk for the sake of short term popularity gains.
Secondly, their 1985 annual report showed that native sources, natural gas, peat and hydro, accounted for 80 per cent of units generated compared with 20 per cent from imported oil. This was as a result of policies pursued for a number of years. It is also known, that the first unit of the Moneypoint coal-fired station commenced producing electricity in September of last year although the build-up of generation is a gradual process. The point of this is to say that oil consumption by the ESB is nowadays on a very limited scale and the scope for increasing it on a sustained long term basis is somewhat constrained.
This is not to deny that trends now emerging bode well for the future of electricity in this country. Following a period of stagnation, demand increased by 4.2 per cent and 4.5 per cent in each of the years 1983-84 and 1984-85. The steady recovery of demand is encouraging. The commissioning of a further two 300 megawatt units of coal-fired plant at Moneypoint will increase the security of the electricity system and help to reduce costs. If oil prices continue to remain low this will help too. All of these trends are good grounds for being optimistic.
The decision which we arrived at in relation to price decreases took into account factors other than the drop in oil prices. It also included savings due to coal generation, exchange rate and interest rate benefits and an increased demand for electricity. In announcing the decreases I said that they would cost the ESB £30 million in 1986-87. Clearly, they would cost more in a full year; the figure is an extra £6 million to £8 million depending on demand.
Bearing in mind, as I said earlier, that the increase approved in December made no provision for the 25th round pay increase or other internal cost inflation and the accumulated deficit, this £30 million represented the limit that could be afforded at the time. I said then that I would keep the situation under review, and that I am continuing to do. If and when the time is right for further announcements I intend to make them.
Is there any possibility that the Minister would have a spare copy of his script?
I will see if a copy can be found and if not I will give the Deputy one immediately afterwards. The press were so anxious to get one that all the copies had been grabbed up.
I know they have always been favourably disposed to giving the Minister a good press.
It is the springtime after all.
And a happy springtime to the Minister.
The decreases which I announced were 6.2 per cent on average for industrial consumers, 3.9 per cent for commercial consumers and an adjustment in the night rate domestic tariff which was worth 13 per cent to those who avail of that rate, all with effect from 1 April. I also announced that the general domestic tariff would be reduced by 5 per cent with effect from 1 September. I am conscious that the decision to defer the reduction in the domestic rate by five months attracted some unfavourable comment. As I said earlier, we have been pursuing a gradual adjustment in favour of the industrial tariff in response to the Jakobsen conclusion. We have been trying to achieve this while continuing to be fair to other consumers bearing in mind the rate of inflation. Within the arithmetic available at the time it was possible to give meaningful reductions to industry and commerce while reserving some money to reduce the domestic tariff.
I had two choices in the case of domestic consumers, either to give a small reduction from a current date or to give a larger reduction from a slightly deferred date. I opted for the latter. To have brought forward the domestic reduction to a current date would have cost a further £8 million. This money simply did not exist in the arithmetic facing me. Naturally, I would have wished things to be different. Was I to have had a smaller reduction for industry? Indeed, if industry generally was to approach reducing costs in the energy area, including electricity reductions, along with oil, in the same spirit as I and the ESB have done, the domestic consumer should benefit in the medium term from both the domestic and industrial tariff reductions. I expect this is happening in some instances either in direct reductions or by foregoing increases which might otherwise have been necessary. The underlying downward trend in inflation confirms this.
As I said already, I chose a deferral of the domestic tariff reduction as being of greatest long term benefit to domestic consumers. Consumption is on average lower in the summer and individual bills tend to increase with increased winter consumption. A full 5 per cent reduction per unit would obviously be attractive to consumers at that time and I would have thought more welcome than a 2 per cent or 2.5 per cent from an earlier date. The new rate in September will become the basic rate for the future and this is a very important point which should not be overlooked. The average domestic consumer will have paid only an extra 2.5 per cent or 3 per cent for five months in return for a benefit which will last for some time. For example, an individual consumer paying about £75 every two months would have paid an extra £5.60 in those five months whereas the same consumer would save £3.75 every two months from a 5 per cent reduction. These calculations are made before any adjustment for summer/winter consumption variations. Again I have to say that I am satisfied that my announcement of 11 March did well by the domestic consumer.
Over the weekend I read a comment from Deputy Reynolds at the great circus I referred to in which he said that the ESB had insulted the housewives of the country in offering a derisory 5 per cent cut in prices from September. I have explained the reasoning for postponing the reduction until September. It is difficult to see how a 5 per cent cut could be described as an insult. In fact it gives domestic consumers a higher cut than that given to commercial consumers and is only marginally below that for industry. I cannot help wondering, however, whether the role stereotyping implied in the quotation from Deputy Reynolds is not itself insulting to the modern woman.
I want to draw attention to another important feature of this matter. I said already that only 20 per cent of electricity was generated from oil in the last ESB financial year. It is also relevant to say that only 42 per cent or a total of £303 million of the ESB's current expenditure in that year was on fuel. Therefore it takes about a 2.4 per cent decrease in the total fuel bill to create a 1 per cent average decrease in electricity prices if other costs stood still. In practice, however currency and interest rates have been moving in the ESB's favour in terms both of their loan commitments and repayments and their foreign purchases. Payroll costs will increase as a result of the 25th round and of course the starting point was a current account loss and an accumulated deficit. All of these factors had to be and were taken into account in arriving at the decreases which I announced. The ESB said publicly at the time of my announcement that they expect to hold prices stable now for two or three years. That is a very happy outlook for consumers but it does not take from my assurance that if favourable movements indicate further decreases, these will be implemented.
There is another factor to be borne in mind in considering the oil price decrease and its impact on the ESB. To the extent that the ESB have limited scope to increase their oil consumption, and they have been availing of this, one cannot simply take the spot market price of oil into one's calculations. Oil must be brought to Ireland incurring freight charges, port dues and tax. It also carries an inventory cost which does not apply at all for some fuels, or to the same extent for others. Any extra oil which the ESB consume incurs a 90 day stock obligation under EC regulation applicable directly to power stations and which continues until the end of the following calendar year. All of these are real costs. If Deputies opposite are doing calculations which do not include these cost factors, then it would not be surprising that they would expect price reductions to be somewhat greater than they have been.
I want to turn now to the real price of electricity, leaving aside the increase of January last which was effectively cancelled, the last increase in electricity prices was effective from November 1984. Cumulative inflation from then to 1 September next is estimated at 7 per cent. During that time the industrial tariff has been reduced by about 13 per cent cumulatively on average and these decreases were worth substantially more in percentage terms to the biggest consumers; in fact over 20 per cent in some cases. By 1 September the domestic tariff will be back below its 1984 level.
In December of 1984 a unit of electricity at the general domestic rate cost 7.85p. From September 1986 this will be reduced to 7.8p. The economy night rate, which was 3.80p per unit, is now 3.30p per unit. In a period of inflation, when the CPI will have increased by 7 per cent, I do not think Members opposite can justifiably decry that performance. There can be few, if any, performances to match it in any other economic sector.
It would be remiss of me not to record my appreciation of the contribution made by the ESB themselves in improving the outlook for electricity prices. The board set themselves quite high targets in their forward plans in terms of increasing the efficiency and effectiveness of their organisation. They have been quietly transforming many aspects of their organisation in recent years in response to the energy crises of the seventies. The ESB went, in ten years, from being an organisation which could plan to double itself in every respect every eight or nine years or so, to one which had to deal with a down-turn in growth of demand and a severe economic recession. I am not going to catalogue their achievements but I want to commend them. I want, in particular, to commend the workforce for the demonstration of their adaptability and response to change. I hope, and the recent past gives me some confidence, that I, and we, can count on the continuation of these efforts.
Since 53 per cent of electricity in the year ending March 1985 was generated from gas, the price of this has an important influence on the price of electricity. On the one hand, the ESB are and have been a very important customer for natural gas. On the other hand, Members of the House will have heard the chief executive of the ESB on radio recently extolling the virtues of gas as a fuel for electricity generation. In present circumstances in this country, the two fit conveniently together. By their own public admission the ESB have benefited to the tune of very many millions from their use of gas in recent years. Now conditions have changed and I am examining this question in consultation with the ESB and Bord Gais Eireann. I am optimistic that this and other favourable factors can give rise to a further reduction in electricity prices. I am not in a position to talk about the extent and timing of such a decrease this evening. Equally, I do not wish to create false hopes. If we are in a position to announce further price decreases for electricity, these will be modest, based on any outlook that I can see now. But again, let me say that if there is scope for any decreases, however modest, they will be made.
It is my duty, of which I am constantly aware, to keep electricity prices at the lowest possible levels. This is underlined for me and for everybody else concerned when it can be readily seen that every 1 per cent of electricity prices is worth £7 million approximately. Even few multiples of that figure can be quite important from the point of view of the economy. Low domestic prices for electricity, as well as for many other items, play a part in keeping down inflation and the need for high pay demands. Low industrial electricity prices keep down consumer costs and reflect in the competitiveness of the economy. Low pay demands do likewise. It is relatively straightforward economics to draw a direct connection between these statements and the ability of the economy to generate sustainable employment. I recognise my responsibility in this matter. I know from experience that the ESB recognise theirs.
The House is aware that some commentators have in recent times, and with the benefit of their version of hindsight, started to question the current viability of the decision made in 1978 to construct Moneypoint as a major coal burning station. I want to say that Moneypoint is reasonable value for money, even compared with current low oil prices. Furthermore, the price of coal must gradually adjust itself to firm trends in oil prices and this process has started. More importantly, however, coal is in very long supply in the world — known resources extend to several hundred years at present consumption levels and coal is available in many widely dispersed locations around the world.
I am glad that the Minister will not be around for it.
In addition, many commentators still believe that oil will again have its day of high prices; there is a wealth of evidence to support this view. We may be witnessing a slower re-run of events in the mid-seventies where falling real oil prices stimulated demand which in turn created the climate for the second oil shock of 1978-79. It is not for me to put a date on when these events might culminate in another spurt for oil prices. What I would say is that it is a scenario with a high probability some time in the next decade. In case there are any lingering doubts, I want to say now that Moneypoint is the right long term decision, giving the ESB a good strategic balance of fuels and keeping down their dependence on imported oil for the future. Fortunately, the modern trend for many stations to be dual-firing allows a degree of flexibility to use the most advantageous fuels from time to time, but this does not take from the validity of having a long term posture in favour of balanced strategic fuel options.
Now, a Leas-Cheann-Comhairle, I want to take an unusual step in the context of a Private Members' motion. I want to thank Deputy Brady and the Members opposite for affording me this opportunity to explain in detail where we have arrived at in relation to electricity prices. It has given me time to give a fuller background briefing to the House than I could have had at any other time, with the possible exception of the introduction of the Estimate for my Department. I am happy to have put all this information on the record. The record speaks for itself in relation to electricity prices. We have had a significant reduction in the industrial electricity prices which will be good for the economy and for job creation. We will have a significant reduction for domestic consumers and I am keeping the possibility of a further reduction under review and I am cautiously optimistic that there can be further reductions. Finally, the outlook for electricity prices across the next few years is more stable than it has been for a very long time.
I would remind the House again of the technical drafting point which I made at the outset concerning Deputy Brady's motion and I commend the amendment to the support of the House.
I support the motion tabled by Deputy Vincent Brady, Chief Whip on behalf of the Fianna Fáil Party:
That Dáil Éireann calls on the Minister for Energy to make the necessary arrangements with the ESB to pass on, forthwith, to all their domestic consumers the full benefit of the recent reductions in the price of oil.
The Government have submitted an amendment to this motion. I should like at this stage to remind the Minister that last week, prior to a particular vote being taken, there was a turn about, a change of heart in policy. It is quite possible that perhaps before the vote will be taken tomorrow night there will be another change of heart and perhaps a change in direction by the Government which will benefit the many hard-pressed people here in Dublin.
As a Deputy for the Dublin area, with particular reference to the constituency of Dublin South-West which I am privileged to represent, on many previous occasions I have spoken on matters concerning problems in the Tallaght and Clondalkin areas. I am speaking in support of this motion and I hope many other elected representatives in the Dublin area and in the constituency of Dublin South-West will also support it.
From all parties?
Some of the Minister's colleagues might take the opportunity. I recall speaking on a motion about 12 or 18 months ago relating to Clondalkin Paper Mills and at that time the pressures were on the Deputies of the Minister's party. I was the last speaker on behalf of my party that night. Only three minutes before the end of a speech by the Minister of State at the Department of Energy a member of his staff passed a note to him saying that arrangements had been made for a particular company to take over the working of Clondalkin Paper Mills. I said that night that this was done to save embarrassment to Deputy Mervyn Taylor, a man whom I respect. He was in an embarrassing position that night and a deal was done, just as a deal was done last week with the Progressive Democrats.
A Labour dissident — never. There is never a Labour dissident in the House.
The Deputy should come back to the motion.
Would the Deputy agree that we got Clondalkin right?
There is some work there now.
We must stick to the motion.
I did not interrupt the Minister and there should be some manners shown. As one of the elected representatives for Dublin South-West I want to highlight the problems in the area. Special concessions should be afforded to many Dublin areas, particularly Tallaght and Clondalkin. I have said many times before that in view of the high level of unemployment they should be regarded as special areas. Very little has been done to help the cause of the worker, the poor and the people affected by the policies of this Government. That is why I am supporting this motion.
Speakers on behalf of the Government have taken every opportunity to highlight the reduction in the price of oil. If the Government were able to find a way out last week, surely they can find a way out on this occasion and pass on these benefits to the consumer now. Is it to be similar to the case of those who must wait until July for increases in social welfare payments granted in the budget? Some allowance has been passed on to the industrial section, small though it may be, and as an old industrial worker I welcome it, although it is only in the region of 5 per cent. The reduction in the price of oil is in the region of 25 per cent. Why must we wait until next September for a mere 5 per cent reduction to be passed on? At a time when things are so depressed and people are calling for some benefits, these reductions should be passed on.
Many Members will be aware that during the past few years many of the health boards have been called upon to help people to meet their ESB bills. The money must be found somewhere to help these unfortunate people. Why can we not now pass this allowance on to the people? Is this not what Government is about? The Government describe themselves as being a good and caring Government and now they have an opportunity to show this, particularly to the people of Dublin South-West, whom I have the privilege to represent.
Recently we had the withdrawal of many of the subsidies, thereby causing an increase in the cost of living. The price of milk, bread and many other items was increased. We have heard very little about this but an opportunity is now being given to the Government to show some concern for these hard-pressed people. Why can they not see their way to meeting the situation? Is it because they do not wish to or because they have not the heart to do so?
I recall that some time ago the Taoiseach came to Tallaght to present the People of the Year Awards. I was present on that occasion when the Taoiseach assured the people that the Government of which he was head always had at heart the interests of the poor and the working people. He said they cared for them. It appears now that they have changed their minds. Possibly the Minister present will explain this when he speaks.
I am calling for special concessions for many of the hard-pressed people in Dublin generally and especially in Tallaght and Clondalkin. We have mentioned the people who are unemployed and those receiving various kinds of assistance. These are the people who should be cared for and towards whom the Government have a duty and responsibility. I call on the Minister to consider this motion. We had a turnabout last week, so why cannot we have another one this week? This motion is in the interests of poor people and working people, those who are hard-pressed. The Minister for Energy is the Leader of the Labour Party who say they represent the working people. Now they have an opportunity to show their consideration and care for these people and I call upon the Minister to allow the decreases in the cost of energy to be passed on to the consumer. I am calling on all the other elected representatives for the constituency of Dublin South-West and other Dublin constituencies to support this motion.
Recently documents were distributed in this area by members of the Fine Gael Party, the Labour Party and the recently formed Progressive Democrats expressing their interest in and care for the people. One wonders what the response of the Progressive Democrats will be on this occasion. I trust that the Member who was elected for the constituency of Dublin South-West will support the document she distributed recently and vote in support of this motion. I trust too, that the former Leader of the Labour Party, Deputy O'Leary, will support the motion. When he came to the constitutency of Dublin South-West he gave as his reason for doing so his belief that he had something to offer the people of the area. So far we have not had much evidence of his having anything to offer the people. However, perhaps he will have a change of heart when the division bells ring tomorrow evening. It is easy to talk and to make promises but matters may be very different when one is called on to stand by what one has said. I am calling on Deputy O'Leary who is now a member of Fine Gael to support us in this motion and in that way to show his support for the unemployed of Tallaght and Clondalkin with particular reference to the Killinarden, Jobstown and Brookfield areas of Tallaght and to the Bawnogue and Deansrath areas of Clondalkin where, as I have said many times here before, there are many families in which no one is employed. In many other areas one can find seven or eight families but not one person employed. This is why I am speaking in support of this motion, a motion that might urge the Government to have some consideration for these people.
So far the Government have failed to deliver on their many promises. They have done little or nothing in the matter of the creation of employment in the Dublin area. There is no evidence of their having done anything in this respect in the Tallaght area. Instead, factory after factory has closed. These are the facts.
Apart from the inner city area, the constitutency I represent is one of the worst hit in Dublin by reason of the policies pursued by this Government. I recall occasions when Fianna Fáil were in office and when we had to listen to speaker after speaker from the then Opposition criticising us at every opportunity. I recall some elected representatives at residents' meetings in my constitutency not being able to find words severe enough to criticise the then Government, but when the shoe is on the other foot matters are different. I recall some of those elected representatives disappearing suddenly when matters became too hot. They would leave with the excuse of having to attend other meetings. I expect the attitude of these people will be the same tomorrow evening when the division bells ring. I am calling on these Members to support this motion. If there was a change of heart on Wednesday evening last and if a deal was done then with certain people in order to avoid embarrassment and to avoid the possibility of the Government having to face the people in an election, what is to prevent a change of direction tomorrow evening?
In every newspaper we open these days we read references from various Ministers to the reduction in oil prices with the implication that in some way this is happening because of Government policies and that consequently there will be a general improvement in our economy. I should like these Ministers to tell us why we must wait until September next for a mere 5 per cent to be passed on to the consumer. Why can we not make this reduction now? After so many depressing years why can we not help the consumer at this point?
The social welfare benefits announced in the budget will not be implemented until July. In other words, social welfare recipients are another group that the Government are not thinking of so far as passing on the benefits of the oil price reductions is concerned. I am very happy to support the motion.
I listened carefully to the rather long speech from the Minister, though judging from the monotone in which the speech was delivered it seemed that the Minister did not comprehend fully the implications of what he was saying. The many points outlined in the script, which obviously had just been delivered from the Department, are non sequitur points. For instance, at the outset the Minister sought to interpret our motion but he interpreted it narrowly in the sense that Fianna Fáil seemed to be concerned only with domestic consumers. If the Minister had any doubts in that regard they should be dispelled by what he has heard from Deputies Flynn, Kitt and Seán Walsh, who have demonstrated that Fianna Fáil are concerned very much with all consumers both domestic and industrial.
The Minister referred in detail to various aspects of the 1982 report. It is with the implementation of the recommendations of that report that we in Fianna Fáil are concerned. A historical account of what the report contains is of little use at this stage.
The Minister reminded us that the ESB survived economically despite rising fuel costs during the years of the recession but can he tell us who paid for those rising fuel costs? They were borne by the consumer by way of increased charges. Why, then, should the consumer not be put in the position of reaping the benefit when prices are falling?
Our motion highlights a specific problem which is part of a larger question. It is hoped that as fuel prices decrease inflation will decrease also and that purchasing power will increase in industrial oil importing countries such as ours. The Government, not by means of any great national plan or of foresight, have taken two steps in the last six months which would seem to ensure that all else being equal domestic and industrial purchasing power will increase in this economy. First, they have fixed the pay contracts for 1987 at rates of between 6 and 7 per cent. After tax, income in the 12 months period will average about 6 per cent. Secondly, the Government have indexed tax allowances and bands for a projected inflation rate of 4½ per cent whereas inflation is expected to be of the order of 3 per cent or lower. That means that the total purchasing power of the economy should increase by 3 per cent during the 12 month period from 1 January 1987. In order to ensure that happens we must prevent the benefits of falling inflation from being confiscated by intermediaries and consequently not passed on to the consumer. We have highlighted one instance in which an intermediary, namely the ESB, have not passed on the full effect of falling fuel prices and of the fall in inflation. If this trend is allowed continue the impact of falling fuel prices, the potentially beneficial impact from the point of view of generating economic activity and employment, will not percolate through to the economy.
We are concerned, too, with the social aspect of this question. The cost of a unit of electricity bears proportionately higher on a person in the lower income group. In other words, those who are hit hardest proportionately by ESB prices are the poorest people in our community and many of those people are poor because of the economic recession that resulted from increasing oil prices. It follows that those people having had their circumstances reduced and poverty brought upon them in this way should benefit when oil prices fall.
Debate adjourned.