Dáil Éireann díospóireacht -
Thursday, 5 Apr 2001

Vol. 534 No. 2

Order of Business (Resumed). - Electricity (Supply) (Amendment) Bill, 2001: Second Stage.

Minister for Public Enterprise (Mrs. O'Rourke)

I move: "That the Bill be now read a Second Time."

The purpose of the Bill is to give effect to a 5% employee shareholding scheme in the ESB without waiting for the passage of legislation to change the status of the company from a statutory corporation to a plc under the Companies Acts. The 5% shareholding for staff of the ESB was provided for in the cost and competitiveness review – CCR – agreement between my Department, ESB management and unions. The current Bill will provide the necessary legal basis to allow that commitment to be honoured. The tripartite CCR agreement was designed to prepare the ESB for competition. The agreement was submitted to and approved by the previous Government on 3 April 1996. Over the following three years, the 2000 voluntary staff exits provided for in the agreement were achieved as well as the targeted cost savings.

The ESB has been setting aside 5% of the company's annual profits for 1997, 1998, 1999 and 2000 for the purpose of the employee sharehold ing scheme. A total of £46.8 million currently stands in a special reserve in the company's balance sheet, to be passed to the trustees of the employee shareholding scheme when it is established shortly.

At present, ESB management and unions are finalising negotiations on a further major change programme for the company before the electricity market opens fully to competition in 2005. The new round of change derives from the February 2000 tripartite agreement between my Department and ESB management and unions. This sets out a framework for the new electricity industry in a competitive environment. The establishment of the employee shareholding scheme and allocation of shares to staff will be an important element in promoting this new round of change.

For some time now, the ESB and my Department have been working on a proposal to create "virtual" shares under existing ESB legislation. The Attorney General recently deemed that proposal to be ultra vires the provisions of section 4 of the Electricity Supply (Amendment) Act, 1954, as that Act empowers the ESB to issue debentures or stock to the public but only for the purpose of raising borrowings. The Attorney General has advised therefore that the ESB proposal requires amending legislation to render it intra vires existing ESB legislation. The Bill now before the House will authorise the board to create and issue capital stock representing its net assets and permit the allocation of not more than 5% to the staff, the balance going to the Minister for Finance. The allocation to staff would thus fulfil the commitment made in the original 1996 CCR agreement.

The holders of such stock will enjoy dividend, voting rights and board representation. These rights and obligations will be set out in regulations to be made by the board with prior ministerial consent, such regulations to be laid before each House of the Oireachtas for the customary 21 days. The Bill provides that the capital stock created shall carry the right of conversion into ordinary share capital once the ESB is established as a plc. under the Companies Acts.

The ESB has operated under a break-even mandate since its establishment in 1927. This is enshrined in section 21 of the Electricity Supply Act, 1927. Surpluses recorded by the ESB over the years have been ploughed back into the business. I would like to draw the attention of the House to section 8 of the Bill which provides for the repeal of section 21 of the 1927 Act and the effective termination of the board's break-even mandate. This is an important and historic change.

The repeal of the break-even mandate is now a logical and necessary requirement as the board prepares to transfer 5% of its worth to its workforce. The "virtual" shares provided for in this Bill will carry the normal entitlement to dividends for both staff and the State. This in turn requires that legal provision be made for profits, out of which dividends would flow, and legal recognition of profit-making by the ESB inevitably requires repeal of the break-even mandate. The continuation of the break-even mandate is, in any event, no longer tenable in a liberalised market where the ESB becomes a player like other players in the market and must be allowed the same level playing field as other commercial players, including the legal right to make a profit. The repeal of the break-even mandate will effectively bring the ESB into the 21st century from a commercial operating perspective.

Section 21 of the 1927 Act specifies that electricity prices are to be set at a level consistent with the achievement of a break-even mandate taking one year with another. The repeal of this provision will not give carte blanche to the ESB in relation to electricity prices. Regulation 31 of the European Communities (Internal Market in Electricity) Regulations, 2000 (S.I. No. 445 of 2000) gives the independent Commission for Electricity Regulation the power to examine electricity charges to franchise customers, in effect, domestic consumers, and the costs underlying such charges and the right to issue directions to the ESB regarding either the nature or amount of any charge or proposed charge.

The foregoing provision achieves two effects. First, it affords protection to electricity customers against the possibility of excessively high electricity charges. At the same time, it allows the ESB to argue its case before an independent regulator for a reasonable level of charges, including, in particular, a rate of return sufficient to service its borrowings and remunerate its investment programme. The section aims to achieve, through the vehicle of an independent regulator, a proper balance between electricity consumers on the one hand and the rights of the ESB as a commercial player on the other hand.

The House had a very useful and wide-ranging debate in Private Members' time last week about electricity and energy matters generally. I do not propose to go over again all the ground covered in that debate. However, it might be useful for me to present a short overview of the electricity sector in Ireland at present and ESB's role in it.

As the House will be aware, 30% of the electricity market has been opened to competition since 19 February 2000. The milestone tripartite agreement, signed between my Department and ESB management and unions in February of last year, provides for further liberalisation of the market to 40% in 2002 and full market opening in 2005.

The electricity sector in Ireland continues to experience high growth in demand. The ESB has signed up over 200,000 additional customers over the past five years, while the number of units purchased has gone up by over 30% in the same period. These are the highest rates of growth in the western OECD. I gave the House details last week of the massive investment, totalling over 2 billion, which the ESB and EirGrid will be undertaking over the next five years, to provide the country with an ongoing electricity infrastructure to international standard.

The tripartite agreement of last year committed the State, among other things, to ongoing shareholder support for the ESB, general shareholder support for the company's international growth strategy, a robust but reasonable transition arrangement for the ESB prior to full opening of the electricity market in 2005, the ESB to retain ownership of the transmission and distribution system, and a public service levy to compensate the ESB for uncompetitive obligations, including the operation of peat stations.

In return for this, the management and union sides committed themselves to a further major round of change and transformation, the ongoing provision of a modern electricity infrastructure in Ireland and, for that latter purpose, agreement to the use of outside contractors. The rejection earlier this year by ESB network technicians of new work practices and outsourcing was a severe setback. As I said in the House last week, the management and unions in the ESB are working intensively to achieve a turnaround in that situation and their efforts deserve support.

In the establishment of EirGrid last year, the ESB asked for, and was allowed to retain ownership of the transmission assets. The company is also the owner of the country's distribution network. Under the tripartite agreement, responsibility for the physical upgrading, maintenance and extension of these networks falls squarely on the ESB and the onus for delivery of the new investment programme also rests with the company. I should make clear to the House that the outsourcing arrangement poses no threat to ESB workers. The investment programme is of a scale sufficient to keep all ESB network staff, as well as outside contractors, fully employed for many years to come.

I have provided Deputies with a list of the key milestones since 1996 in legislation concerning the ESB. I commend the Bill to the House and I am happy to participate in the debate on it.

Mr. Higgins

(Mayo): While I welcome the Bill I am at a total loss as to the reason a simple Bill, which commands support from all sides of the House, has taken so long to prepare and publish. The delay in bringing forward the legislation giving the 5% shareholding to ESB employees has been one of the main bones of contention in blocking plans for redundancies at the midland power stations. The concept of giving a share in the ownership of companies, whether public or private, is supported by Fine Gael.

During the course of the Fine Gael Private Members' motion last week, speakers were rightly loud in their praise of the contribution of ESB workers to the welfare of the company from its inception to the present day. However, calling workers stakeholders does not make them stakeholders. The most effective and tangible way to encourage active participation by employees, the way to get the best from them, is to make them shareholders in the company. Partnership has been one of the success stories of the ESB over the years. Giving an ownership stake to employees helps to develop the partnership approach even further. It also helps to create a collective determination to improve the company's customer service, its quality and its commercial success. I hope the ESB will build further on this partnership approach based on trust, mutual respect and common interest.

Never did such a company need such a spirit to imbue it as the ESB does. The present time is one of enormous change and challenge for the company. Its monopolistic position in the electricity market is being dismantled. This has been eroded by the opening up of 28% of the market since February 2000. It will be dismantled further with the arrival of full liberalisation by 2005. At a time when the ESB needs to be at its most organised, alert, competitive and confident, it is far from fighting fit.

There is huge uncertainty. The issue of privatisation was badly handled by company management. The push by management for the ESB to be floated despite the unions calling for that to be delayed was ill-judged. The unions argued convincingly that the ESB is a long way from ready for the markets, and they questioned the quality of the management The board also took the view that the company is not ready for the markets.

Apart from the readiness of the company for privatisation, privatising such a key component of the country's national infrastructure is a serious issue. This must be resolved by the Government and, as owner of the company, it should set out its stall. Is the Government considering privatisation of the ESB? Is that issue off the agenda or only off it in the short-term? Are we talking about full privatisation or part-privatisation?

There is a feeling that much of the enthusiasm for privatisation and deregulation of key utilities has waned. One notes the comments which emanated from Stockholm last week on the privatisation disaster in California which has resulted in the residents of Silicon Valley having to resort to candles, torches and diesel generators. This has increased anxiety and scepticism. It is asked whether there is a danger that companies which have embraced the liberalised market could well decide to pull out for a variety of reasons such as insolvency, market changes, change of ownership or richer pickings elsewhere. This would leave consumers literally in the dark.

What protection will there be if such a situation arises? The Government needs to carry out a major re-evaluation of the electricity situation. There are lingering memories of the disaster for shareholders of the Eircom flotation where shares were over-priced, over-pushed and over-sold. What was learned from the Eircom saga?

Another area of uncertainty is the decision by the company to reduce numbers by 2,000 before June 2001. The impact on the company will be huge in that almost 25% of the total workforce of 8,500 are to be let go in a £300 million deal. In the light of the possible power crisis, caused by question marks over power generation and definite deficiencies in the grid, surely these employees should be retained as part of an emergency programme to upgrade the transmission system within a two year timeframe. The Minister has spoken about the £2 billion plan for the upgrading of the national grid. How can that investment be delivered if the company lets 2,000, or 25%, of its core staff go? That issue is relevant in view of the fact that the ESB insisted on retaining ownership of the grid while at the same time management of the system comes under the remit of the CER.

A further cloud of uncertainty hangs over the company. The dual threat of industrial action from SIPTU and the ESB Officers Association is very serious. Both unions are seeking a 28% pay increase on top of the terms of the PPF. All indications are that unless the issue is resolved major power cuts may occur in Easter week. All tried and trusted industrial relations procedures have failed to reach agreement. Unless a compromise is found, blackouts seem inevitable.

This is extremely serious. Widespread power cuts on top of the foot and mouth crisis, the major fall-off in jobs in the computer and technology area and the layoffs in tourism would have a crippling effect on an economy which is quickly degenerating from a gallop to a crawl. Strikes involving power cuts will send a shiver down the spine of IDA Ireland as it attempts to attract foreign investors.

The past two years have seen a worrying trend develop. One of the foundations of the Celtic tiger success was the stable industrial relations climate that this country offered and could almost guarantee. That stability is no longer there. We are witnessing the dismemberment of the partnership process. Ironically, the major problem is not in the private sector but in the public service and semi-State sector. In Aer Lingus, every group within the company has engaged in industrial action in the past six months. While it was assumed that overall settlements were in place, phase two action has begun, with clerical staff closing the company last Friday and they intend to do so again tomorrow.

At Iarnród Éireann, a locomotive drivers' strike last summer paralysed mainline services and brought havoc to the economy of the regions. It now looks as if there may be a replay of that dispute with ILDA set to withdraw labour if new rosters are introduced. The Garda, nurses and teachers have been on strike and it is clear that the national implementation body put together over four months ago to defend the PPF is ineffectual. From an ESB perspective we need a re-organisation and a re-energising. Unless the company gets its act together quickly it will not meet the necessary challenges, let alone avail of the opportunities.

Mr. Stagg

I thank the Minister for bringing the Bill before the House. In general terms I welcome it. The Bill arises from a decision made in 1994 in the cost and competitive review process in the ESB, whereby employees of the ESB were entitled to a 5% shareholding in their own company. That was part of the deal. It is important that this part of the deal be enforced because the long delay in doing so has had an adverse effect on industrial relations within the ESB. The Government was required to deliver this part of the deal. It was seen by the trade unions as a measure of bad faith that it was not delivered in good time. A delay from 1994 to 2001 could not be seen as good time.

A number of things is attendant on a Government decision to legislate for the 5% shareholding. One, which was referred to by the Minister, is an agreement on outsourcing. Of the follow-on agreements which were required, one was partly achieved and others were left in abeyance because of lack of action on the shareholding agreement. This has created a feeling in the ESB that the Government will not deliver its side of the bargain. The employees have delivered their side of the agreement in large measure and management has done its share. The agreement by the Opposition to deal with this legislation with minimal debate and probably without a division is a measure of our concern that this matter should be dealt with now.

I presume the Minister was waiting in hope – or perhaps hopelessly – for agreement on some form of privatisation. There is no chance of that occurring. The only people remaining who are now in favour of privatisation are senior management in the ESB. The Minister is not in favour of it, despite her protestations to the contrary. Senior managers are in favour of privatisation because they suffer from the Alfie Kane syndrome, a disease senior managers get when they see millions of pounds of public money being transferred into their wallets. This is a cute disease with all sorts of side effects. People who suffer from it speak of their concern for the greater common good rather than the size of their own wallets. Senior ESB managers are still doing this, despite the fact that the Minister appears to have made a decision to park this issue. I have asked her, rather than merely park it to examine the issue to see if it is the best thing for Ireland Incorporated and the citizens of Ireland to lose control of the company. I do not want the Alfie Kane syndrome to win out. I know of no other pressure being applied to the Minister to proceed with privatisation and I urge her to reject the pressure of senior management.

I disagree with Deputy Higgins when he says the ESB is not ready for the market. The company is not ready for privatisation but it is ready to compete. In fact, the ESB is competing so well that the super-generators which were expected to ruin the ESB have been seen off. This may not be entirely a good thing for the consumer, if competition is a good thing. This is a question which might also be re-examined because we have seen the effect of competition in California. The ESB is ready for the market.

The issue of combined heat and power has been introduced into the Bill. When the Opposition agrees to deal with a Bill quickly it is bad practice for the Government to introduce a new issue at the last minute. We debated CHP at great length and made a decision which may not have been the best one. We may have over-reacted to outside influences and collectively failed to make the best decision. That decision should be reviewed. I am anxious that this important subject is being introduced into the Bill at the last minute. I appreciate the briefing I received on this subject from Mr. John Brown in the Department of Public Enterprise and from the trade unions. I have agreed in principle to what has been suggested in discussions outside the Chamber but I am nervous about rushing this measure. The first time we came to this matter we made a rushed decision which we subsequently changed. It is a pity things were done in such a hurry and I regret that we will not have an opportunity to discuss the matter at leisure on Committee Stage.

A strike is threatened in the ESB in a fortnight's time. No one seems to appreciate that unless there is a major intervention and a change of position, the lights will go out, factories will close and Moneypoint power station will close down. The ESB Officers' Association and SIPTU will serve strike notice in about an hour's time to come into effect in two weeks. Only two parties of the three involved are at the negotiating table. The CCR and subsequent agreements were all tripartite agreements between the Minister's Department, ESB management and the unions. However, only two parties are taking part in negotiations and one of those, management, cannot make a decision without reference to the Minister. The Minister is sometimes accused of meddling but in this case she has a duty to be present at these negotiations. She is the shareholder. Major policy issues are involved and more than a wage agreement is at stake. Without her presence management cannot act effectively to negotiate and resolve the matter. I ask the Minister and her departmental staff to act quickly to prevent a close down of industry. Given the foot and mouth disease crisis, the last thing the economy needs is a power strike. I ask unions and management to co-operate with any move the Minister might make to have talks resumed on a tripartite basis. This question should be examined seriously and quickly.

Newspaper reports about the CCR generally include a comment from the new regulator, Mr. Reeves, that he opposed the CCR. Mr. Reeves handled negotiations for two Minister during the entire process and it ill-behoves him to give briefings to journalists indicating the he was opposed to the process, despite the fact that he was negotiating for the Government.

I wish to put it on the record that it ill behoves Mr. Reeves to take this position. I will be supporting the Bill. I am sorry we do not have more time on the CHP but maybe we can look at that again because it may be necessary to do more than is being provided for today.

Mr. Collins

I wish to share time with Deputy Moloney.

An Leas-Cheann Comhairle

Is the Deputy aware he has five minutes?

Mr. Collins

Yes, five minutes each.

An Leas-Cheann Comhairle

The Deputy has five minutes. The Standing Order provides for five minutes. I shall then call Deputy Stanton to be followed by Deputy Moloney. Deputies have five minutes each.

Mr. Collins

The purpose of this Bill is to give effect to a 5% employee shareholding scheme in the ESB and to put in place a cost and competitiveness review commitment without waiting for the passage of legislation to change the status of the company from a statutory corporation to a plc under the Companies Acts.

Section 2 proposes to authorise the board of the ESB to create capital stock representing its net assets and permit the allocation of not more than 5% to the staff, the balance going to the Government. Section 4 provides that such stock shall be converted to shares if the ESB is, in the future, given a share capital structure by further legislation. Section 8 proposes to repeal the ESB's break-even mandate enshrined in section 21 of the Electricity supply Act, 1927. The repeal of the break-even mandate is now a necessary requirement as the board prepares to transfer 5% of its worth to its workforce. The "virtual" shares provided for in this Bill will carry the normal entitlement to dividends for both staff and the State. This in turn requires that legal provision be made for profits, out of which dividends would flow, and legal recognition of profit making by the ESB inevitably requires the repeal of the break-even mandate.

This is a small but an important Bill for the future of the ESB. Like Deputy Stagg I compliment the Minister on bringing it forward. On a broader level, many changes have been introduced with regard to the administration of the electricity industry in Ireland. This is primarily as a result of broader deregulation proposals which have been brought forward within the context of the European Union. Only last year a new transitional regime, designed to give the ESB time to prepare for the onset of full competition was put in place. This transitional regime was comprised of a five year internal contract between the ESB's generation arm and its public electricity supplier functions. Any future changes to the ESB will have to be agreed by means of negotiation between the ESB and the unions. It is important for the functioning of greater competition in the marketplace that any changes are brought about in as speedy a timeframe as possible and that a voluntary severance scheme will be a key requirement in delivering such a new programme. Any changes must be brought about with the support and goodwill of the workforce in the ESB.

Other new changes which are being introduced entail separating the operation of the transmission business from the rest of the ESB into a newly formed independent State owned company. Recognising the advent of competition and progress towards a fully open market entails the need for the ESB to position itself as a significant player in this emerging market. It is recognised that the issue of the ESB's dominance must be addressed by willingly facilitating real and substantive competition while at the same time ensuring that ESB continues to be a viable commercial entity with a significant market share. There are many challenges for the ESB in achieving this and without doubt significant changes will be required. However, all parties recognise this must be done to ensure a vibrant ESB which is the only way of ensuring attractive and secure employment for its staff.

We now have an electricity competition regulator up and running. The Commission for Electricity Regulation oversees the introduction of competition into the electricity sector and it has taken over from the ESB the function of licensing the generation and supply of electricity. The Commission for Electricity Regulation will achieve part implementation of the EU electricity directive which introduces competition into the electricity market. Recently there has been much discussion on the operation of Ireland's electricity grid. It is now clearer than ever that new power plants will have to enter the Irish electricity market because the Irish electricity grid is working to near full capacity. The ESB, new competitors in the marketplace, the Department of Public Enterprise and the Commission for Electricity Regulation must ensure that viable procedures are put in place to guarantee that the electricity supply in Ireland increases in the coming years.

The Government signed the European Communities internal market electricity regulations in December 2000 which has implemented the remainder of the electricity directive in its entirely. This provides for the establishment of an independent transmission system operator to be known as Eirgrid. The Government has decided to accelerate the liberalisation of the electricity market moving to 40% in 2002 with full market opening in February 2005.

Mr. Stanton

I am pleased to contribute to this debate. I believe the Government is proposing a substantial amendment to the Bill. I am concerned that it may be a case of making it up as one goes along. Why was this amendment not included in the initial Bill which was published only last week? It would have been much better had that amendment been included as part of the Bill. This is not good practice as it does not allow us time to consult or be briefed on it. I ask the Minister to desist from that type of practice in future if possible especially given that we agreed to take the Bill at short notice and to be as helpful as possible in putting it through the House.

It is probable that the Bill was published as a result of the Fine Gael Private Members' business last week which highlighted the deficiencies in the service. It is amazing that there are threatened strikes in the ESB and in Aer Lingus and there were major strikes in Iarnród Éireann. The one common denominator is the Minister for Public Enterprise. Perhaps we need to look at all these areas to ascertain why these strikes are taking place.

I am concerned as to the reason the ESB was insistent on retaining Eirgrid and I wonder whether that is the best way to proceed. One of the problems in the ESB is the whole area of transmission. The Minister is aware of my concerns for the Cork region where the ESB has said jobs have been lost and companies have backed off the Cork region because of the transmission difficulties. This problem has been on going for four years and there have been many attempts to resolve it. Yet there is no obvious resolution to the problem. Everywhere the ESB proposes to erect plyons there is vehement opposition so that one wonders whether it is feasible to push ahead with them. I ask the Minister to examine this issue. We all want electricity in the regions but we do not want plyons. That is a major difficulty. The Minister needs to grasp the nettle and solve the problem. I am happy to see CHP coming to the fore because my understanding is that it is more economic and that the gas can be transferred to the site and power can be generated there. The Minister, the Department and the ESB need to examine this method of transmitting power instead of pylons.

In reply to a parliamentary question, the Minister for Health and Children, Deputy Martin, outlined that there were fears regarding a link between power lines and childhood leukaemia. The Minister knows that people become emotional once fears are raised regarding health, particularly children's health. In such circumstances people will block the erection of pylons. It is time the Minister considered the issue of transmission. She should speak to her Cabinet colleagues and recognise that a major policy change in required. Communities will not agree to the erection of pylons. Such pylons are also an environmental blight as they look awful.

This is a major issue and, according to the ESB, it has resulted in the loss of many jobs in Cork. This is not the first occasion on which I have raised this matter and I appeal to the Minister to place it at the top of her agenda. The required infrastructure cannot be rolled out unless we can transmit power. However, we cannot transmit power if people will not allow it. People become very emotional about this issue and stand in the way. The Minister has seen what has happened in Cork over the past four years and this issue has to be grasped. However, this has not been done.

I am also concerned about the lack of the ESB's generating capacity. We were lucky in that the winter was relatively mild. Much money was spent bringing generators from America. Can the Minister outline how much use was made of the generators? They cost £10 million to hire but what use was made of them? Some have suggested that the generators were hardly used. There are major issues to be addressed in this regard and the Minister needs to take matters in hand for the good of the economy.

Mr. Moloney

I compliment the Minister on her pro active attitude to this issue. I wish to refer to the 5% shareholding for workers and the share options. We should recognise the great contribution ESB workers have made to the economy over the years and the fact that they have brought value and wealth to the company. ESB workers are available around the clock to ensure that supplies are maintained, particularly to industry, health services and other vital facilities. The lack of sufficient electricity supply would be catastrophic.

Share options give employees a link with the fortunes of a company. However, they are not a panacea for promoting the betterment of a company or for curing its ills. We need to look no further than Eircom in this regard. It is important to recognise that the fundamentals within a company must be right if share option schemes are to be successful. Eircom employees are not thriving and face a falling share price and an uncertain future. This is taking place at a time when directors' salaries and remunerations are causing controversy.

However, we must recognise that corporate greed applies to only a small number of companies. Glossy brochures often predict the most amazing developments for consumers which may not occur for five years and prices for existing services sometimes increase to pay for minimal decreases in other charges. We should be aware of examples of such developments. California, the most powerful state in the USA, woke up one morning to the news that electricity would be rationed. The Golden State is the home of movies, technology and innovation.

Mr. Stagg

The Minister did not realise that her party had a socialist in Laoighis-Offaly.

Mr. Moloney

Fianna Fáil has always been able to recognise issues throughout the State, and not just in Laoighis-Offaly. I wish to address the concerns regarding under-investment. Privatisation does not always work and, in the case of California, investment was sacrificed for shareholder dividends and management remuneration.

The rail system in the UK has also been privatised. Railtrack has, in effect, been rationalised because of gross under-investment in rail and rail safety. UK taxpayers are paying for the failure of privatisation.

Mr. Stagg

Hear, hear.

Mr. Moloney

The Minister has been pro active in ensuring that none of these factors impinge on the Irish economy. I began by recognising her pro active attitude to ensuring that the interests of consumers receive priority.

Mr. Stagg

It is good to see that the old Fianna Fáil is alive and well.

Mr. Moloney

It is alive and well and will thrive in the future. I am not against privatisation or private investment in public utilities. However, privatisation must deliver real value and services to consumers and continue to contribute to the wealth of the nation. That is what we are trying to achieve in this Bill.

The Minister has learned the lessons of electricity black-outs in California, high prices and low pressure in British water services and chaotic and dangerous signals in the UK's rail network. The privatisation of utilities must focus on delivering real value to consumers by giving incentives to the work force. The Minister has recognised this fact in the Bill. Privatisation must also ensure that companies continue to provide good services and value for money. The end users of electricity must be the primary focus, as is reflected in the Bill. Such end users drive the economy and must be protected from investment failures or we will all pay a high price.

Over the years the ESB provided electricity for homes and industries. Anyone involved in small schemes or who has seen the enormous advances will recognise the company's great commitment. Our commitment to the company is indicated by the proposal to invite workers to participate in share option schemes.

ESB workers often operated in appalling conditions to ensure that lights kept burning in homes. In so doing they often had to forsake their own firesides and families. Significant industrial developments were made possible by power supplied by the ESB. I commend the Bill and thank the Minister for her pro-active attitude in ensuring that services are delivered for all in the State.

Mr. Naughten

I welcome this Bill which all Members will accept is important legislation. However, it has taken too long to introduce the Bill. The Minister for Public Enterprise, Deputy O'Rourke, has the main responsibility for the semi-State sector and the mechanism proposed in the Bill should be used in all semi-State companies, whether or not they are due for privatisation.

Proposals for employee share option schemes should not only be proposed in the context of privatisation. The Government is promoting share options and profit sharing in private industry. I do not understand why these options should not also apply in the public sector to give employees a shareholding in their companies and a reason to ensure increases in productivity. Such a mechanism might help resolve many of the impending industrial disputes in the semi-State sector such as those in Aer Lingus, the ESB and the threatened dispute in Irish Rail.

Section 8 repeals section 21 of the 1927 Act and effectively terminates the ESB's break-even mandate. I question the wisdom of this proposal. Investment has to be the priority in the electricity sector. Our infrastructure is creaking and addressing this problem should be our main priority, rather than looking at privatisation. My fear regarding privatisation is that a private company will not invest money in infrastructure.

It is as simple as that. We see it at the moment with the first company that has been privatised, Eircom. ADSL has now been put on the back burner in Eircom. Eircom recently announced that its high speed ISDN lines will now be at a slower rate, even though they are supposed be high speed because the priority is not to put the infrastructure in place. The priority for Eircom is profit for its shareholders and, sadly, many of those shareholders are not getting too much out of Eircom at the moment. It would be wrong to go down that route in relation to the ESB or Bord Gáis at this point. The priority should be to put the infrastructure in place.

The Minister spoke about introducing combined heat and power, which is a very welcome proposal and one which I wholeheartedly accept. The problem is, however, that combined heat and power will not be feasible in many parts of the country, including the BMW region, because we do not have the gas supply in the first place to bring this about.

It has been suggested that we are to privatise gas. At the moment Bord Gáis is not putting the infrastructure in all parts of the country because it does not believe it is commercially viable to bring it to towns like Roscommon town and other towns in north Roscommon. We are talking about a semi-State company which should put the infrastructure in place now and not in ten years time.

On the issue of infrastructure, EirGrid will be controlled by one body and owned by another, namely the ESB. Is it the Minister's intention that EirGrid, along with the ESB, will be privatised in time? It is fundamentally important that the basic infrastructure remains in public ownership. I do not agree that it should remain in the control of the ESB. The Competition Authority has strongly criticised the fact that it is remaining within the ownership of the ESB. If we are talking about investing in infrastructure in the years to come, it should remain in public ownership. A prime example of that is Railtrack in the UK which was turned into a private company. Investment has not been put into the infrastructure. Every week there are minor accidents on the rail infrastructure throughout the UK and there have also been some major accidents because investment has not been put into the infrastructure and it has been privatised. We should tread very carefully and slowly in regard to this issue and should make sure we have the proper the infrastructure in place before we talk about privatisation.

I note the Minister made the point that over the past five years, the number of units purchased through the ESB has been 30%. We can see that demand has been increasing and yet we have not increased the capacity to meet that demand. I hope the Minister will address the issue of capacity in her response.

Mr. Kenny

I pay tribute to Mr. William McCann, the recently retired chairman of ESB. I had a number of dealings with Billy McCann when he was involved with the former Department of Tourism and Trade. I always found him to be a thorough gentleman and one who was absolutely committed to his duty. I wish him well in his change of career, as I am sure the Minister does.

As Minister for Public Enterprise, the Minister has the opportunity to make a real and lasting imprint on the future development of this country as we head into the new millennium. Electricity has become something we take for granted and it is only when the well runs dry that one realises the value and importance of the water. I hope that by involvement or instruction, the Minister will head off the forthcoming strike due to take place in the next fortnight.

I am a very strong supporter of the combined heat and power processes. I saw a number of these working when I was in the trade Department. There is a great deal of ongoing research there on which the Minister needs to follow up. It is something for the future. If the major plants throughout the country were to avail of the opportunity to put in combined heat and power processes by virtue of the gas not only would it give stability in terms of the area itself, but it would allow power to be provided to small towns and villages in the locality. That is very important.

I note the ESB intends to provide a broadband communications system by way of its overhead transmission network. This is obviously in conjunction with its partnership with Ocean. That is very worthy and will provide a new dimension to the communications competition network we have throughout the country. I noticed in the ESB publication, Electric Mail, of February of this year that the only place not mentioned in the 1,100 kilometre proposal was my own county of Mayo. The ESB intends to do this in two loops, a southern loop and a northern loop. Perhaps the Minister might clarify in her response that the county will be included as part of the proposal to provide broadband combination by way of fibre optic cables being provided on the transmission network.

In regard to the Corrib gas field, which is a major development with more to follow in the years to come, the Minister should take a lead and host, if you like, a public seminar where all of these bodies can come in, state their case and hear Government policy and direction in this area. There is a great deal of confusion about who is doing what and what the impact will be in terms of the environment and the development of the economy.

I support this Bill. It is worthy to give the workers a share in an enterprise such as this and 5% is 5%, I suppose, and it sets a headline for them. I am a bit concerned at the number of comments from people concerned about privatisation. We have always backed privatisation as being the be-all and end-all. Examples in other countries give us a cause for concern that were the ESB to be fully privatised, the more remote rural areas would be left out in terms of investment in quality of supply and so on. I support the Bill. Perhaps the Minister might deal with my comments in her response.

Mr. Perry

I am delighted to speak on this Bill. There is huge concern in Sligo and opposition to the ESB's plans to reinforce its high voltage electricity structure. A planning application has been lodged and permission is being sought to run a 40 mile 220kV line from the existing 220kV station at Flagford to a 220/110kV station at Sooey in east Sligo. I fully support the opposition groups from Riverstown, Ballymote and Sooey which want the ESB to put the cable underground instead of using the proposed 30 metre pylons. They have lodged objections.

I also contend that the EIS supplied by the ESB does not contain all the information needed by the planning authorities. This has since been confirmed because its application has been invalidated by the senior executive planner in Sligo County Council who said the ESB is required to comment on the observations that the environmental impact statement does not address the following issues: alternative substation sites located west of Belhavel Lough near the R289, coinciding with the preferred route in the previous Flagford proposal of 1993 and the alternative route options based on the 1993 proposal. With respect to underground options, it was asked to supply detailed relative cost estimates, if necessary, on a linear kilometre basis to do a cost an analysis between over ground and underground options. That must be done.

This application by the ESB has totally ignored the business case. This is not fully explained and relies heavily on information used previously in the planning application. As regards the health concerns, highly selective quotes to suit the case were used, which is wrong. No regard is had to more up-to-date research which could damage the case. The precautionary transfer is not mentioned.

Environmental and health concerns are totally ignored, as are many aspects of the county development plan. ESBI stresses that it is concerned about the environment, yet it persists with old, discredited solutions when it has demonstrated it can adopt more modern ones. ESBI has shown it has the experience, capability and expertise to put lines underground. The reasons for not doing so are highly selective and do not stand up to close scrutiny. It comes down to cost, yet ESBI has never been asked to produce a proper survey and detailed cost analysis of a project of this nature. There is little about cost in the report which has been thrown out by Sligo County Council planners. I appeal to the Minister to intervene and request the ESB to conduct a cost analysis of this project.

ESBI is entirely dismissive of alternatives, yet it could be part of the way forward. The line will not add one job to the area whereas alternatives would and there are many of them. ESBI has demonstrated it has the technology to implement them, but has chosen not to do so. Why is there no generating station west of the River Shannon? The time is right for us to take a long, hard look at our position in the west and north west and examine the integrated plan that will bring benefits to the area well into the future. ESBI can help in this respect and thus better serve the common good. It is possible to have sustained development and, at the same time, preserve what is good in the region. It is no longer the time for ESBI to be engaged in quick fix solutions that will need to be addressed again.

The new line will not add to the generation of power west of the Shannon, as it is purely a transmission line, not a generation line. A total of 4,000 people have signed a petition against it and their voices must be heard. An alternative gas supply is coming to the region. The Minister visited Sligo last week and has decided that there must be a gas supply link to the town. Alternatives must be examined. When the chief planning officer of the county council completely invalidates an application from the ESB, it begs questions given the expertise at its disposal.

The anti-pylon group in the Ballymote-Sooey-Riverstown area has a strong case. It will be successful because another line between Flagford and Sooey has been proposed. People do not want it as it will carry 220 kV with associated 110 kV developments. I have visited the station at Flagford, County Roscommon, and it is a sight to behold. The people of south Sligo do not want a second Flagford because it will have major consequences. It will have an impact on the cultural heritage of the area. Carrowkeel megalithic bombs, built in 2000 BC, are sited there and the pylons will be in close proximity.

I appeal to the Minister to contact the ESB and return to the drawing board. This application will not be successful because 4,000 people in south Sligo have said "No" and people power will prevail.

Mr. Finucane

I welcome the Bill, in particular the provision to grant shares to ESB workers. There has been a relaxation of many aspects of policy in regard to the foot and mouth disease outbreak and I ask the Minister to examine an issue which is causing concern among young farmers. The ESB cannot access their properties. A number of farmers in County Limerick have approached me. They have been seeking an electricity connection for the past nine months. Two of them have paid the ESB more than £750 for connection. They have other commitments, including mortgage repayments, but they still do not have an electricity supply. Will the Minister examine whether the restrictions can be relaxed in this regard? I understand discussions have taken place.

There are two large power stations in my constituency at Tarbert and Moneypoint. The Moneypoint station has been a burning issue for many years. I have no doubt that if Moneypoint made a planning application, even with the new technologies and products available, it would not be granted. A significant mistake was made in the past. A major generating station was constructed which spewed sulphur dioxide into the air. Approximately 50% of Ireland's sulphur dioxide emissions are generated at Moneypoint and as a result of a confluence of winds, they are confined to one area of the Shannon Estuary.

This is not good enough and, although we are excited by the gas find by Enterprise Oil and gas interconnectors abroad, I do not know to what extent the ESB has examined the conversion of the Moneypoint power station to gas supply. I do not know what the cost would be, but it would be minimal relative to the inconvenience caused and the concerns in the area. I am excited by Aughinish Alumina's proposal to build its own power plant in conjunction with outside interests, which will enable it to provide its own generating capacity. That will be an excellent development by the company in the long-term.

Does the ESB have plans to change Moneypoint power station? I recognise that there is a lack of electricity capacity in the State and concern that the growth of the Celtic tiger may be slowed as a result. We may head in the same direction as California, which, as a result of the large technology base in the state, was unable to attract more industries because it could not guarantee electricity supply.

I am concerned that there are objections to the promotion of wind energy throughout the State.

Mr. Sargent

Very few.

Mr. Finucane

There are quite a few. As one flies into airports around Europe, a succession of windmills can be seen, which are accepted as part of the landscape. If we are serious about alternative forms of energy rather than paying lip-service to them, we must ensure they are suitable and acceptable in the areas concerned.

Mr. Stagg

Hear, hear.

Mr. Sargent

Ba mhaith liom tacú leis an méid atá ráite ag an Teachta Finucane agus tá áthas orm seans a bheith agam labhairt ar an mBille. I wish to make three points. The Minister stated without qualification that the ESB has signed up 200,000 additional customers in the past five years and, while the number of units purchased has increased by more than 30% in the same period, this is the highest rate of growth in the OECD. There is no doubt that power demand is rocketing in Ireland and it is an issue that is not being focused on in legislation or Government policy generally. The Irish Energy Bill continues to sit on the back burner while we are in every way blazing a trail to try to catch up with the demand for supply. That is an unbalanced approach. We object to President Bush's rejection of the Kyoto Protocol but the USA was expected to reduce its greenhouse gas emissions. Ireland has been given permission to increase its emissions and it has not managed to adhere to the agreed increases. We will probably be three times above the permitted 13% increase over 1990 levels when it is measured. That will be costly for this country. Let us not simply talk about our moral obligation, we also must discuss the financial implications for the country of not balancing our approach to energy demand by trying to deal with the demand rather than simply serving it.

According to the Irish Energy Centre, we could save £75 million per year if even current housing stock were effectively insulated. That does not take account of the thousands of new buildings being constructed under basic and flawed building regulations. I accept that this is not the Minister's responsibility but at the Cabinet she must vociferously point out that she is being left to carry the burden of the energy crisis when the Department of the Environment and Local Government has a huge obligation in terms of building regulations and the Department of Finance has a huge obligation in terms of fiscal measures that will change behaviour regarding energy use and provide incentives to ensure that renewable energy continues to be the favoured option for people investing in energy supply.

That is not happening at present. There is an anxious wait for the pricing of the new AER contracts. We will see what that brings but we are lagging badly behind competitors such as Denmark in that area. That is a reason for collective shame.

The outsourcing of the upgrading network is mentioned in the Bill. This must take greater account of up-to-date international practice. In Australia there are service corridors for underground ducting. We are building roads as never before in this country and service corridors are definitely the preferred option to stringing pylons across farmland from one end of the country to the other. Such options have not been examined because we are locked into old practices. The Swedes have developed an amount of technology in underground ducting as well. That option allows smaller operators, community-based wind farms and smaller generating capacity to feed in. There could be net metering so people could get credit for the energy they produce. Rather than wait for the bill to arrive, they could wheel back the meter as they feed into the network and get credit for it. That type of thing is badly needed to encourage small scale renewable energy development.

The CHP is favoured in the Bill. I prefer CHP to many of the old polluting methods of generation, such as Moneypoint. However, it should not be allowed to gain equal favour with renewable wind energy. I thought we had established that CHP is favoured over the old polluting technologies but is not as good as renewable energy generation. That hierarchy of preference must be maintained so that renewable wind power, which is vastly underexploited in this country, continues to be favoured for investment in power generation.

Mr. Ring

I am delighted to see the new chairman of the Committee of Public Accounts in the Chamber. I congratulate Deputy Finucane, the most quiet-spoken and able man in the Dáil. I have no doubt he will be fit to fill the place vacated by the former chairman, Deputy Jim Mitchell. I wish Deputy Finucane well.

Mrs. O'Rourke

I join in the Deputy's congratulations.

Mr. Ring

He will do a good job on behalf of the State. It is a well considered appointment.

I am glad the ESB workers are getting a 5% shareholding in the company, and I compliment the Minister in that regard. The workers have kept the company going since the foundation of the State and I hope the past workers in the company will be rewarded as well for the wonderful work they have done over the years.

We tend to criticise the ESB in the Dáil and in county councils. However, every year when there are power shortages due to storms or bad weather, the workers are on the front line in that weather. I wish them well. They do a good job. I might not say that about the management of the company but I must acknowledge that the workers have always responded to whatever had to be done in difficult weather.

I hope a gas power station will be located in Mayo following the gas find off the Mayo coast. The workers of Bellacorick are due to lose their jobs in the next three or four years when the power station is closed. The power station has been there for a long time and it employed a large number of people. Its closure will be a great loss to north Mayo and the county in general with regard to employment. The workers worked hard and gave loyal service to the company. They did a good job.

I condemn all Governments for not putting the necessary funding and infrastructure in place for Bellacorick. The peat is there and the station should have been kept open. However, it was a political decision on the part of our political masters. It will have a bad effect on an area that needs employment. It is wrong that people will be taken out of employment in an area that is so dependent on the power station.

There is great difficulty at present in relation to gas. There is great concern in the county. The people who are living in the area are anxious to be informed by the Government and the company about what is happening. They also want to be given the information in layman's language. They do not want to be given technical explanations. Technical documentation frightens people. It is not unlike the Bills that are brought before the Dáil. Why they cannot be simplified, I do not know. We seem to talk in two tongues in legislation – one would need an interpreter to explain what is in a Bill. In some cases it is probably saying nothing but it is also probably a way of hiding what is actually said. It is time to simplify these things. Why must we have to try to figure out what is said in a Bill, as if we were trying to solve a crossword? Why can we not say: "This is what we propose to do and these are the changes we are making", and let people judge for themselves.

I hope the Minister will discuss the power shortages in north Mayo with the ESB. Whether there is a storm on a winter's day or an ambush of midges on a fine day, the power goes off. The power has been off in north Mayo every week since Christmas. That is wrong. The region affected is Erris, which is as big as County Louth. The ESB staff have been taken out of the area so if the power goes off and one telephones the company, one will get through to somebody in Letterkenny or Dublin who never heard of Pullathomas, Glenamoy or Carrowtigue. It probably takes them a few days to find out where north Mayo is and a few more days to find the staff. In the meantime, the people of north Mayo are suffering. I ask the Minister to take up this matter with the ESB and to urge the company to provide the necessary staff in the area and improve the power supply.

However, gas is the big issue. There must be a gas power station in the county. The people of Erris must gain from the gas find. It will be a criminal disgrace if that does not happen and if the people living nearest the gas find do not gain from it.

Mr. G. Reynolds

I am glad to have the opportunity to speak on the Bill and I compliment the Minister on bringing it before the House. I am a strong supporter of the employee share option scheme. It is a worthwhile way of giving employees of semi-State companies for a long period of time—

Mr. Stagg

On a point of order, when will we see the amendments for Committee Stage which is due to be taken in ten minutes?

Acting Chairman (Mr. McGrath)

They have been circulated.

Mr. Stagg

We have not received them.

Mrs. O'Rourke: The Bills Office has them.

Acting Chairman

As they are included in the brief given to me, they are around.

Mr. Stagg

We do not have them.

Mr. G. Reynolds

I welcome the employee share option scheme because it gives an incentive to employees who have worked for companies for a long time. For that reason I support the Bill. I have a difficulty, however, with one aspect of the ESB monopoly, the ESB shops. These have an unfair advantage over their competitors in the electrical and white goods sector, an area in which I have a personal interest and involvement. ESB shops can offer their customers interest free loans through the billing system when they purchase goods. That is an unfair advantage in a very competitive sector. I have no difficulty with the ESB being involved in the white goods or electrical sector, but I have a difficulty with its unfair advantage. When Deputy Molloy was Minister for Energy some years ago he initiated an investigation into this issue, but, although numerous changes were supposed to be made, no changes were made and the ESB's advantage remains. That should be changed.

Deputy Perry spoke about the difficulty with the application for an ESB line from Flagford, County Roscommon to County Sligo and said that there were 4,000 objections to bringing the line by pylon across most of County Sligo and parts of counties Leitrim and Roscommon. I raised this issue last week during Fine Gael Private Members' time when business related to the ESB and reiterate my call for an independent body to be established to determine the cost of putting the cable underground. The ESB has a monopoly and states that it would cost eight to ten times more to put the cable underground than it would to use pylons, depending on the topography of the area. Individuals state that it should cost only twice as much, but the ESB disagrees. That is the reason I want an independent company or body established to resolve this situation.

The Bill is welcome. There is much work to be done, particularly in the north and north west, to bring a proper electricity supply to all areas with which the Minister should deal urgently.

Mr. Daly

I welcome the legislation and compliment the Minister on bringing it forward. Legislation in this area was promised for some time and the Bill will consolidate the position of the employees of the ESB. As a word of caution, however, we are facing threats of industrial action from many sections of ESB staff and that is not the way in which they should do their business. We are introducing concessions which will make them part of the board and it is unwise of them to use a policy of industrial action. The legislation is welcome and very important for many ESB employees in my constituency, particularly Moneypoint, which employs up to 500 people. I compliment the Minister on the Bill.

Mrs. O'Rourke

I thank the 12 Members who contributed to the debate. There would have been 12 more if we had more time. I thank the Whips, Deputies Stagg, Jim Higgins, Sargent and O'Malley for their help. I went to Deputy Stagg first and asked his advice on getting the Bill through, though it is not a result of the motion tabled last week, but a week earlier. I then spoke to each Whip or main spokesperson and all were agreeable. It was a great act of co-operation, though I wish we had more time also. I met with generosity and wise advice.

I thank the House also for agreeing to these amendments at such short notice, though it is not the best way to do our business. In recent years we have worked out points in lengthy Committee Stage debates – none of which I regret – with better Bills ensuing. This was one occasion, however, on which it was important to get the amendments through. I have asked John Brown and it was 31 March 1996 when the earlier CCR was signed and agreed.

Members mentioned the 2,000 members of staff, a figure agreed in the pact. It was 2,000 on 31 March 1996 also. Deputy Higgins suggested that 2,000 should not go, but that was worked out and agreed by the various parties to the agreement. Deputy Perry mentioned Sligo County Council, but that is a matter for it. It is not for me to intervene or discuss. That is its business.

Deputy Stagg mentioned the need to put talk of privatisation to one side. When the board of the ESB wrote to me last autumn stating that it did not want to proceed I accepted what it said, even if my personal opinion is another matter, because obviously it had discussed it. I agree with Deputy Kenny who commended the chairman, who has retired, Mr. Billy McCann. I always found him to be punctilious and agreeable. He was, definitely, on top of his job.

Deputy Kenny also asked me about the broadband in his area and I will get back to him when I have discussed the matter with the relevant assistant secretary. Deputy Finucane said that foot and mouth disease is holding up connections for some young people who have paid the ESB for power. A protocol has been worked out between the ESB and the Department of Agriculture, Food and Rural Development's expert committee and work has commenced again. There was a delay for four to five weeks, but that was for the greater good.

Deputy Stanton raised the Cork issue. He spoke of the long delay – five years – since the Cork issue was first mooted.

Acting Chairman

As it is 1 p.m. I am required to conclude Second Stage.

Question put and agreed to.