I move:
"That the Bill be now read a Second Time."
The Gas (Interim) (Regulation) Bill 2001 completed all stages in the Seanad on 10 October last and I am now pleased to introduce the Bill to the Dáil. The Bill provides for independent regulation of the natural gas sector in Ireland through the transfer of certain powers and functions of the Minister for Public Enterprise to the Commission for Electricity Regulation. It contains no provisions dealing with the future shape or direction of Bord Gais Éireann. The Bill seeks to regularise and improve the existing regulatory regime through the removal of the current anomaly whereby the Minister is both shareholder of Bord Gais Éireann and regulator of the gas sector and through the establishment of a framework within which the Commission can undertake its regulatory duties effectively. The Bill is an interim measure and uses the regulatory framework already established under the Gas Act, 1976, the Gas (Amendment) Act, 1987, and the Electricity Regulation Act, 1999 to achieve its purposes. Further refinement of the regulatory regimes for both gas and electricity will be required when the draft EU directives, currently under discussion in Brussels, are adopted.
The need to establish independent regulation of the Irish gas sector at this time is clear. The level of competition has increased over the past number of years and the number of players, other than BGE, becoming involved in the gas sector in Ireland is growing. Increasingly, decisions need to be taken on a range of issues where there is the potential for a conflict of interest – particularly in relation to pipeline consents and charges for access by third parties to the BGE network. While I have total confidence in the performance of my Department as regulatory authority, I believe that independent regulation needs to be established if confidence in the transparency and the fairness of the regulatory process is to be ensured.
Competition was first introduced into the Irish gas market in 1995 through the Energy (Miscellaneous Provisions) Act. This Act obliged BGE to offer access to its network to customers consuming 25 million standard cubic metres of gas per annum. The term normally used for this arrangement is "third party access" which allows consumers to source their own gas from any supplier, including BGE, and have it delivered through the BGE network on non-discriminatory terms and at a fair price. The existing threshold of 25 million standard cubic metres per annum gives a level of market opening in Ireland which is the fifth highest in the EU. The Bill provides for a reduction in this threshold to two million standard cubic metres per annum, resulting in the level of market opening rising from 75% to over 80%. The Bill also allows for the introduction of further market opening by order and it is my intention to have full market opening by 2005 at the latest.
At present, the main consumers benefiting from third party access are operators of gas-fired electricity generating stations and a number of large industrial users. The reduction in the threshold will increase the number of companies that can benefit from these arrangements from under ten, at present, to nearly 100. The introduction of full market opening by 2005 will mean consumer choice, not just for industry but also for ordinary householders consuming gas. This proposal fully complements the latest liberalisation proposals from the European Commission. I intend adopting an orderly phased approach to full market opening by introducing at least one intermediate step between the enactment of the Bill and 2005 and I will be discussing the timing of this with the CER once the Bill is enacted. Such an approach is essential if we are to succeed in the effective development of the gas sector.
The development of the gas sector is intrinsic to maintaining and developing growth in the economy. Gas is now the fuel of choice for electricity generation and its share of the domestic and industrial energy markets is continuing to increase. This reflects a number of factors, including competitive gas prices, the relatively high conversion efficiency of gas and the fact that it is cleaner than other fossil fuels such as coal and oil. This growth in demand has, of necessity, led to a renewed focus over the past year on the issue of security of supply.
As Deputies are no doubt aware, in February of last year the Government gave approval for BGE to proceed with its proposal to construct a second gas interconnector between Scotland and Ireland. This followed an independent assessment of possible new supply options to meet projected capacity constraints in the existing gas network. Following the events of September 11, my Department reassessed the supply and demand scenarios and I am satisfied that the need for the second interconnector to be in place for next winter remains critical. BGE is proceeding as planned and the project is on schedule for delivery in October of this year.
The proposed second interconnector is only one of a number of large-scale gas infrastructure projects being undertaken or being planned at present. BGE is proceeding with its proposal to construct a new transmission pipeline between Dublin, Galway and Limerick. This will link in with the existing Limerick-Cork-Dublin pipeline to create a national transmission ring, thereby enhancing the security of the national system and bringing gas to thousands of new customers. This pipeline is on schedule for completion by the end of this year.
Members will also be aware of the Corrib partners' plans to land gas from the Corrib field located off the Mayo coast.