Vol. 407 No. 6
23 Miss Flaherty asked the Minister for Energy if his attention has been drawn to the fact that Bord Gáis Éireann are proposing steep increases in gas prices to industrial gas users; and if he is concerned at the possible environmental and employment effects of any such increase.
The Deputy will be aware that Bord Gáis Éireann as a commercial body are statutorily bound to earn a satisfactory return on their investments.
The board are harmonising pricing policy throughout the group to ensure consistency in their dealings with all customers. They have assured me that their pricing policy is designed to ensure that gas remains competitive with alternative fuels.
I understand that the gas supply contracts for a number of industrial customers came up for renewal this year and that agreement has been reached in the majority of cases. In fact, within the last few days I was able to announce price reductions ranging from 7 per cent to 28 per cent for industrial customers with effect from 1 April last.
The indications reaching me would appear to indicate that there has been enormous resistance to the steep increases in prices to industry. Is the Minister satisfied that industry can cope with such increases without their having substantial negative environmental and employment effects? Would he say whether there is any justification for the view that Bord Gáis Éireann are being used as a source of Government revenue with prices being pitched at a level just about as high as they can be, that there is no transparency in those prices?
The Deputy can be assured that the pricing policy is to maintain gas prices to industrial consumers at a level competitive with alternative fuels; that is the policy. I understand that Bord Gáis Éireann, as far as possible, are endeavouring to move all of their heavy fuel oil price-related customers to a common fuel oil base in the interests of consistency and fairness. This development reflects a similar practice in the European market and the more widespread use of low sulphur fuels for environmental considerations. In addition, the cost of imported gas, when it comes onstream, will reflect low sulphur oil prices. Many of the contracts now being negotiated will remain effective when imported gas comes onstream. Therefore, we must take account of the fuel cost to the board. Indeed, I might add that the present low level of oil prices means that in many instances customers will now be paying about the same for gas, on a 1 per cent heavy fuel oil market price, as they had been paying at a 3.5 per cent heavy fuel oil related price previously. Therefore, the Deputy will see that the environmental considerations are primary in the policy of Bord Gáis Éireann. That is why the oil-gas relationship is being transferred from heavy fuel oil, 3.5 per cent sulphur to 1 per cent, for environmental considerations.
Is the Minister denying that that change in the linkage of the particular oil product has resulted in 10 per cent to 25 per cent increases for some companies? Is it not a fact that the Government have put a budgetary figure on Bord Gáis Éireann that they are to contribute to the Exchequer and that they are extracting from industry every bit they think industry can possibly contribute and a bit more besides?
I am assured by Bord Gáis Éireann that the difference — of course this difference applies only to certain large industrial concerns honouring contracts which will terminate during that period; it does not apply to all industrial users — would range between the levels of 12 per cent and 14 per cent.
That disposes of questions for today.
