Dáil Éireann díospóireacht -
Tuesday, 3 Feb 2009

Vol. 673 No. 2

Energy Prices: Motion.

Deputy Simon Coveney

I move:

That Dáil Éireann:

acknowledges that Irish households and businesses are burdened with some of the highest prices in the EU for electricity and gas;

recognises that energy costs are a key component of Irish economic competitiveness and that Ireland's ability to develop and attract new business is suffering from high energy costs as reported by numerous business surveys by IDA Ireland, the Irish Management Institute and Forfás;

notes that a discussion on reforming energy price regulation is currently ongoing between the social partners;

notes the decision of the Commission for Energy Regulation (CER) during July 2008 to grant electricity and gas price increases of 17.5% and of 20% respectively, due to spiralling oil prices at $147 a barrel;

is disappointed at the failure to reduce energy prices in the most recent review of prices as oil has collapsed by over 80% to approximately $40 a barrel;

notes that approximately 10% of every electricity bill is directly attributable to energy companies being compelled by the regulator to factor in the cost of carbon (emitted during generation) into their electricity pricing, despite the fact that they themselves are not currently required to pay for carbon allowances for emissions (until 2013 when a carbon trading market will function across the EU);

emphasises the fact that the regulator is required to set prices at a level that will not only take account of the cost of generation, transmission and supply but also at a level that will encourage new entrants into the market in an effort to promote competition and in doing so is keeping energy prices artificially high;

is concerned that the current regulatory regime is now damaging Irish cost competitiveness and adding to the challenges of recession;

is encouraged by the potential of reforming the energy regulatory environment to deliver price reductions and improve economic competitiveness, while incurring no additional cost on the Exchequer;

recognises that the energy sector must be central to any economic recovery plan, in terms of more competitive pricing and the creation of significant numbers of sustainable job opportunities in an exciting and rapidly developing renewable energy industry; and

recognises the importance of prioritising the case to maximise funding available to Ireland from the EU Commission Economic Stimulus Package, to subsidise the cost of upgrading Ireland's electricity grid and interconnection between Ireland, the UK and mainland Europe in the future;

calls on the Government to:

instruct the energy regulator to conduct, without delay, an extraordinary energy price review, as allowed by section 10 of the Electricity Regulation Act 1999 and section 7 of the Energy (Miscellaneous Provisions) Act 2006;

change the regulatory framework for at least a two year period, to prioritise achieving the lowest possible energy prices for households and businesses;

either introduce a windfall profits tax to recoup unearned profits from energy companies, who earn up to €300 million a year from charging consumers for carbon emissions, or alternatively instruct the CER to remove the charge for carbon altogether from bills for the next two years;

instruct the regulator to set a price ceiling for ESB and Bord Gáis prices and replace the current practice of setting a fixed actual price, in order to allow the ESB and Bord Gáis to supply cheaper energy;

require the energy regulator to hold more comprehensive public hearings with oral submissions from interested parties, including consumer groups, in advance of any new proposed price review; and

immediately introduce the promised legislation to transfer electricity transmission assets from ESB to EirGrid.

I wish to share time with Deputies Durkan, Breen, Connaughton, Deenihan and O'Dowd.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Deputy Simon Coveney

The scale of the challenges Ireland must face collectively has been brought into sharper focus today. After months of indecision, prevarication and failed attempts at consensus building with the social partners, this afternoon's announcements by the Government will further concentrate the public mind on the enormous difficulties we face in steering a course through recession and fiscal collapse.

Reductions in public spending are necessary, but they are only one element in a much broader series of challenges that require new thinking and brave choices. Cutting expenditure is painful but it is primarily a budgeting correction exercise due to blatant mistakes by the Government in the recent past. Cost cutting, however, will not create a single new job, improve competitiveness, boost consumer confidence or encourage much needed new economic activity.

If we are to prevent unemployment levels climbing to 20%, not 10% as some are predicting, if we are to avoid serious political and social upheaval and an uncontrollable downward spiral in taxation revenue that leads to State bankruptcy, then we need to launch an anti-recession fight back, effective on many fronts.

Even today, with all the build-up and grandstanding in the Dáil, we have heard little from the Government on the urgent need for public sector reform, economic stimulus proposals tackling cost competitiveness and practical job protection measures to reassure those losing jobs, never mind job creation initiatives. All the energy and focus to date has been on saving €2 billion this year and little else.

That is not enough. Fine Gael's Private Members' motion is targeting a key policy change in the energy sector, that is to reduce energy prices for businesses and the consumer. Politically, this should be a much-needed good news story if the Government had the political will to support us. That, however, seems too much to hope for.

This motion is a clear statement by Fine Gael that not every policy response to counteract recession needs to involve pain for people. This is actually a pain-relieving measure and, after today's announcements, should be welcome. This is not a general motion on energy and should not be treated as such. We will have that debate another day. It is not about interconnection, grid development or long-term renewable targets or grant aid for energy conservation projects. This focused motion is about one matter — price. It is about the cost to home owners and businesses of electricity and gas and how it is regulated, as a response to recession hardship and job losses.

The motion recognises energy costs as a key component of economic competitiveness. Ireland's ability to develop and attract new business is suffering directly due to consistently high energy costs. It is not just Fine Gael that is saying this. Business leaders are saying it, along with the IDA, the Irish Management Institute, unions in the social partnership process and the latest Forfás report on competitiveness. That shows Ireland with the second-highest industrial electricity prices in the EU, with only Italy ahead of it. We are out of line in terms of energy costs and while people accepted that when times were good, it is no longer excusable in the times we now live.

Even before last summer's price hikes, energy prices here were not competitive compared to our neighbouring EU countries. We saw ESB and gas prices rocket by 17.5% and 20%, respectively, last September due to a price review in July when oil prices had spiked to $147 a barrel. The collapse in international oil and gas prices since then, we are told, prevented a further price increase this month, which we are supposed to welcome. However, with oil prices today hovering at around $40 a barrel, I do not accept that immediate energy price reductions are not justified, despite the fact that our latest energy price review was only two months ago.

Our motion is not simply a call for energy price reductions due to the international oil and gas prices, although that is contained in it. We are seeking a much more comprehensive restructuring of our energy price regulation model through the Commission for Energy Regulation to reflect new realities in Ireland.

I will address some of the specific proposals. The Minister regularly asks the Opposition for constructive suggestions. We are attempting this and the Minister will note there is no political reference to Government incompetence or an attempt to have a go at the Government in the motion. It contains suggestions that we want the Minister to take on board — I welcome his decision to take one on board already.

We call on the Minister to instruct the CER to conduct, without delay, an extraordinary energy price review as allowed by law. I understand the Minister has done that this evening, which I welcome. The reason for such a review would be clear to everybody. For many years electricity prices in Ireland have been set taking a number of considerations into account. One of the main factors has been to encourage new entrants and competition into the Irish energy market. The sole focus of the regulator for at least the next two years — which will be recessionary — should be to reduce the price as much as possible to boost Irish competitiveness with regard to costs in business and to try to bring some relief to hard-pressed consumers and home owners.

We want to change the regulatory process that switches the focus away, temporarily, from trying to facilitate and encourage competition by encouraging new entrants into Ireland by keeping prices artificially high to prioritising consumers and what they pay for energy. That may be a subtle shift in wording but it would be a major shift in the priorities considered by the CER when it calculates prices in its reviews.

Rather than setting an actual price for energy producers to charge its business and domestic customers, we want the Minister to instruct the regulator to set a price ceiling for ESB and Bord Gáis prices. Speaking to Bord Gáis and the ESB, as the Minister does, he would get the message that they could be supplying power more competitively and cheaply to business customers but they are not allowed to do so because their price is kept artificially high in order to protect competitors. That was an understandable policy when the ESB was in such a dominant position that we needed to keep prices high to attract competition to Ireland. The ESB now only produces 50% of all energy in Ireland and is in a far less dominant position, so we should encourage it to compete on price for the sake of businesses and consumers so we can bring prices down.

It is about time Ireland started to get the benefits of competition in the energy market as to date, consumers and businesses have been paying the cost of trying to introduce competition to the market, particularly the energy generation sector but also in the supply area. We have seen none of the benefits of that competition with regard to price. There has been an increase in choice and service and we have seen new entrants come to the market, which is welcome, but in the current economic climate we particularly need to see direct price benefits from competition.

The only way to do this is to allow Bord Gáis and the ESB to compete on a price basis. The competitors will not like that but it is about time we prioritise consumers and general business people across the country over competitors in the energy market. The Minister should seriously consider the matter.

The Minister must set some rules for the regulator in terms of how price reviews are assessed. There has been a sea change in the area over the last six months and the last price review had a public hearing. It did not go far enough in giving the consumer and consumer representatives a sufficient voice at the table for making the case for price reductions, particularly from the perspective of those least well off and suffering as a result of energy price inflation.

Speaking to people off the record, whether in the ESB or Bord Gáis, they are likely to tell us that they expect a double-digit percentage reduction in price at some stage later this year when there is a price review. That indicates both ESB and Bord Gáis could undertake an immediate price review without any difficulty or pressure on the bottom line. That is why we want such a review rather than having the usual line that we cannot have regular reviews as it will lead to the inability of businesses to plan ahead financially with their energy bills. There is not a business in the country that does not want a price review. It is nonsense that we should be waiting six or 12 months to have another review. I welcome the Minister's initiative in that area.

I wish to discuss a slightly more controversial matter for this Minister. I have repeatedly raised the matter of unearned profits made by energy generators on the back of businesses and consumers with this Minister. This comes from the fact that they are required through regulation to factor the price of carbon into electricity pricing. I do not mind how the Minister deals with this issue but it is unacceptable for him to continually not deal with it, which is what is happening.

On a voluntary basis, the ESB has voluntarily returned a €300 million rebate to try to keep energy prices down. It has not made much difference to its bottom line, which demonstrates how comfortable the company is. The other 50% of generators in the country have not given anything back. Let me be clear that everybody in the country is paying an extra 10% for their electricity bills currently because — although it is not shown on the bill — they are paying for the cost of the carbon produced when the energy is generated.

Deputy Eamon Ryan

On a point of clarification, the €300 million is a rebate, so bill payers are not paying it.

An Leas-Cheann Comhairle

The Minister will have an opportunity to respond.

Deputy Simon Coveney

For all of 2008, consumers and businesses in Ireland paid an extra 10% on top of their electricity bills, which amounts to between €200 million and €300 million. They did not even know they were paying it because they assumed that the price hike came from an increase in oil prices.

This is unacceptable because energy-generating companies do not have to pay anything for the purchase of carbon credits for the emissions they produce. After 2012, that will change, as they will have to pay for the cost of producing every tonne of carbon. They will have to charge the consumer for that cost at that stage. These companies are obtaining free allocations of carbon but consumers are obliged to pay the full cost in that regard. This adds a significant amount — approximately 10% — to people's electricity bills.

The Minister must either remove the cost of carbon from electricity, thereby immediately reducing people's bills by 10% — that is to say nothing of the price reduction that should be forthcoming in the aftermath of the fall in the price of oil — or recoup that money directly from energy generators and decide how best to spend it in the context of improving competitiveness, supporting people who are suffering as a result of the increase in the cost of energy or whatever. It is not acceptable, however, to leave that money in the pockets of those who run energy generating companies. Those companies are quietly creaming funds off the top while businesses are paying far too much in energy costs.

The Government amendment is not that dissimilar to Fine Gael's motion. We are somewhat more specific and ambitious in the context of what we want. It is a pity the Government did not at least attempt to try to achieve agreement in respect of the motion.

I understand the concern which gave rise to the Labour Party's amendment to the motion. There is a genuine policy difference between that party and mine in respect of the matter in question, but this does not really have anything to do with electricity prices. We will consider amending our motion in that regard and perhaps we could then have a debate on who should own the transmission assets at a later date. This would allow both parties to concentrate on the original motion, which relates to energy prices.

Deputy Bernard J. Durkan

I support the motion and I thank Deputy Coveney for bringing it forward at this time. It has become patently obvious to every consumer during the past three months that there is a need to reduce the price of energy, particularly as it relates to oil and gas, and also that charged at the pumps for petrol.

Just prior to the referendum on the Lisbon treaty, I drove into a filling station on the Ennis road and, for the first time ever, I was charged €1.40 per litre for petrol. At that stage, the prediction was that the cost of oil on the international market would rise to $200 a barrel. Now, however, the price has fallen to $35 or $37 dollars a barrel. An amazing thing has happened recently. For a period of four weeks or so before Christmas, one could buy diesel and petrol for between 80 cent to 85 cent per litre. The price has risen again in the interim to almost €1 per litre. The reason put forward in respect of the recent increase relates to difficulties involving Russia and Ukraine and concerns with regard to energy prices internationally. That is a whole lot of rubbish. Any excuse is being offered in order to jack up the prices. During the past ten years, market speculators have used a variety of such excuses to increase the price.

International market speculators have created a situation where energy prices are controlled by a chosen few. The truth regarding this matter was brought home to me two months ago at a meeting I attended in Brussels. It was suggested that the Organisation of Petroleum Exporting Countries, OPEC, was creating problems and would not produce adequate supplies of oil, and that this would have a knock-on effect on the market. One of the people at the meeting to which I refer stated that this was rubbish. He stated that OPEC could produce as much oil as people required. However, he also indicated that the market is being cornered because supplies of oil are being bought while being transported by sea and that these supplies are brought into particular ports and then hoarded.

Transport costs in Ireland are quite high and the sooner the Minister realises he has a responsibility in this regard the better. Apart from examining the position in respect of carbon emissions, he must also consider the position of the economy, which is currently in dire straits. He may say that we cannot abandon our carbon emissions targets, but our first responsibility is to ensure that people in this country remain in employment and can afford to meet the cost of living imposed upon them.

The Minister and his predecessors have all stated that the energy regulator is independent. That is not the case. The regulator is subject to Government policy and ministerial directive at all times. The Minister should use his influence — it is not so long ago that he was on this side of the House and would have said the same — to ensure that the benefit of falling energy prices in respect of oil and gas on the international markets are reflected in the costs imposed on Irish consumers and those operating in the areas of industry and transport.

Deputy Pat Breen

I commend Deputy Coveney on tabling this genuine, timely and positive motion. Small businesses are sinking on a daily basis, while others are barely remaining afloat. Many business interests are being crippled as a result of high costs. The high price of energy is a major factor in this regard. As Deputy Coveney stated, Ireland dropped from fourth to 22nd on the global competitiveness league table in recent years. However, businesses are not the only ones affected by what is happening. Ordinary people have also been affected.

Last July, the price of oil reached an all-time high of $150 a barrel. In the interim, it has decreased to somewhere in the region of $40 a barrel. Unfortunately, this decrease has not been reflected in householders' ESB or gas bills. Motorists are complaining that the reduction in fuel prices has not been passed on at the pumps. When the price of crude oil decreased in the autumn of last year, there was a gradual drop in the price of petrol and diesel. However, the price soon rose again. There was a high of €1.43 per litre of petrol in July of last year. The price now is just under €1. In light of widespread dissatisfaction with what has happened and claims that motorists are not receiving the benefit of reductions in the price of crude oil, the National Consumer Agency undertook an investigation into petrol and diesel prices which indicated that there is little evidence to suggest unwarranted delays in the passing on of wholesale price reductions to consumers.

Tight profit margins in this country have already forced many petrol retailers in rural areas out of business. A large number of petrol stations throughout the country have closed. Many of these were small businesses which had shops on the forecourt at which bottled gas and other things were sold. The majority of those who operated these concerns will inform one that there was very little margin to be gained in respect of selling diesel and that they could no longer remain in business.

There is a concern that the bigger players entering the market will close further stations in rural areas. The retention of competition in respect of prices is vital. The national consumer survey found that Ireland compares quite favourably in the context of the density of petrol stations. Ireland has one outlet per 2,020 people, whereas in Northern Ireland it is one per 3,100. In Britain, the figure is one station per 10,000 people. Competition is the key towards ensuring that there is some level of variation in prices.

Petrol and diesel prices in this country are high. I trawled the Internet earlier this evening to try to discover the price of diesel in Poland. Many manufacturing jobs are moving from this country to Poland at present. Last month, some 1,900 jobs at the Dell plant in Limerick were lost to Lodz. The price of diesel in Poland is 82 cent per litre. This compares to a price of approximately €1 in Ireland. That speaks volumes about the price of diesel and petrol here and the fact that it is affecting many of our manufacturing businesses.

There is enormous potential in the mid-west region in terms of renewable energy resources, particularly in the area of wave and wind energy. If the wave and wind energy in the Shannon Estuary was captured it could make a major contribution to regional and national electricity demand. We are fortunate that the University of Limerick is located in the area and we should examine the importance of the University of Limerick, which could become a centre of excellence in this area. A programme of investment is already under way in Moneypoint, which I hope continues.

I commend Deputy Coveney. He pointed out what must be done to address these issues and I appeal to the Minister to take on board his proposals.

Deputy Paul Connaughton

I congratulate my colleague, Deputy Coveney, who has a great personal interest in this topic.

I consider this country's lack of competitiveness in the economy to be the ruination of the State. I recall the 1990s when our competitiveness in terms of industrial development and output was as good as that in the best of countries. The products we exported abroad were at a premium but then what can only be termed the curse of the building boom camouflaged the system of Government and the entire economy. The Government took its eye off the ball because it did not have to look for money. If anything was wrong with the economy the money was available to spend on it. I do not have time to outline all the daft things the Government paid for on which we did not get any return. If the money was not available, no sane Government would get involved with PPARS, electronic voting machines and so on. If a government was short of money, those are the areas in which it would not get involved but this Government did because it knew the money would be coming into the coffers the next month.

The Government's big sin, and what a sin it was in terms of what we heard earlier in this House, is that it never thought the day would come when somebody would have to pay for that foolishness. As Members are aware, on the floor of this House a few hours ago the Taoiseach let it be known that the hardest working couples in the country, two people working and bringing in approximately €45,000 each, are now €10,000 worse off. That is the penalty they will pay for what the Government did wrong in the past ten years. We must now get back to competition. That is the reason this motion is so important. There is no other way for this country to proceed other than to trade and market our way out of the problem we now face.

I will make two points to the Minister, Deputy Ryan, who, in fairness, handles some aspects of his Ministry very well. There are aspects I cannot grasp, however, and if I cannot grasp them 3.5 million other people in the country cannot grasp them either. Several of my colleagues referred to this issue. I will refer briefly to petrol and diesel prices before I deal with the price of gas and electricity.

I recall when crude oil was $147 a barrel. Everyone remembers that, as we all remember where we were when President John F. Kennedy was shot. We will always remember the price of a barrel of crude oil on that day because we had never seen anything like it. The price displayed at my filling station on that day was €1.35, and I took that to mean that €1.35 equated to a crude oil barrel price of $147. When the price of a barrel of crude oil reduced to $40 I assumed the basic price of petrol and diesel would have reduced below 80 cent.

Increasingly, I have very little time for regulators. There was a time I thought they were a good idea but for whatever reason bank regulators and energy regulators do not appear to be keeping pace with what we want in the economy. That is an area the Minister must deal with quickly. Regardless of what the Russians or anybody else does, when the price of crude oil is $40 or $50 a barrel, nobody should be paying more than 80 or 85 cent at the pumps.

The ESB needs a major dose of reality. It is a great company but at this stage it is just too costly. We cannot afford it and whatever has to be done must be done.

Deputy Jimmy Deenihan

I join with previous speakers in acknowledging this motion in the name of Deputy Coveney and compliment him on bringing it forward. It has achieved results already because I am sure it is not a coincidence that because of this motion the Minister has ordered this evening a review of electricity and gas prices. That is good politics and it is good for the Dáil in that we are seen to be gaining something by putting down a motion. I acknowledge that contribution by Deputy Coveney.

The Taoiseach outlined earlier the areas in which he would like to see Ireland gaining competitiveness, and singled out our energy costs. Obviously, that aspect has struck home with the Government.

Ireland has dropped from 4th to 22nd in the global competitiveness league. In 1991, I was in America on an industrial promotion visit. At that time Ireland, along with Portugal, had the lowest energy prices in all of Europe but at the same time our hourly rate was a little over $6 an hour, which was approximately £5. We were very competitive, and there was a price freeze on electricity charges for a number of years. As a result we went from being one of the most expensive countries to the least expensive at that time in terms of energy costs, and it made Ireland very competitive.

All the surveys being done, including the recent survey by Forfás with business people, are identifying energy prices as one of the main disincentives for companies in terms of staying in Ireland and setting up in Ireland.

As regards wages, and I have mentioned these figures on previous occasions, I was in Silicon Valley last March. The dollar was fairly weak against the euro at that time but a senior IDA official told the members of the delegation who were with me that it cost $26 to employ somebody in Silicon Valley, $6 in Poland and $28 in Ireland. He said it was very difficult to explain that cost differential to people when they have much lower energy and wage costs in those countries, and we expect companies to set up in Ireland. As regards competitiveness, apart from the social cost the other increased costs are an additional burden on all domestic users throughout the country.

I understand approximately 95% of our gas is imported; only 5% now comes from Kinsale. It is hoped that a project in the Shannon Estuary will provide a liquid natural gas terminal. Around the Shannon Estuary, in Tarbert we generate electricity from oil. In Moneypoint, we generate approximately 20% of the nation's electricity from coal and we will now have gas on the same site in the general area. There are more wind turbines on the Stacks Mountains and in west Limerick than in any other part of the country. There is an ideal energy mix in that area. The Minister should consider a proposal I have made in the House on several occasions to designate the area a national energy park. This region has the potential to supply energy to most of the country. The IDA may communicate with the Minister on the matter, while Shannon Development will definitely be in touch with him. I ask him to support the concept when it comes before him shortly.

We are examining potential opportunities to create employment. While it may not be a panacea, the green technology revolution offers major employment opportunities. Green energy technology companies are being spawned throughout Silicon Valley, which now has around 400 such firms. There is no reason a number of similar companies cannot be created here. We should grasp the nettle and exploit our natural advantages.

Deputy Fergus O’Dowd

I congratulate my colleague, Deputy Coveney, on tabling the motion. I will touch on some of the issues Deputies have addressed and raise several others in the short time available to me.

Jobs, productivity and competition are the key points raised at national and international level in the context of energy. Energy prices are not as low as they should be. Forfás published a report around Christmas which examined the costs of goods and doing business. It found that energy costs are cheaper in the North and the United Kingdom than in the South. As a Deputy from a Border county, it is clear to me that we must do more to drive down prices and become competitive. Those of us who live in Border counties, including County Louth and towns such as Drogheda and Dundalk, are fearful owing to the number of shops that are closing. One sees "For Sale", "For Lease" and "For Rent" signs all along the Border. One of the reasons for this trend, albeit not the only one, is that businesses cannot compete and we are not doing enough to make them more competitive.

We cannot continue to live as we have done. We must change our ways and address the issue of energy conservation, in other words, using less energy and using it more wisely. This should be done on a local and regional basis. A climate change committee established in counties Limerick and Clare has brought together representatives of local authorities and other groups to plan energy use for the region. Co-operation among counties is constructive development and we must do more to develop plans to reduce energy consumption in an efficient and effective manner.

The energy officers appointed in a number of county councils should be given a more useful role. While the Power of One campaign gives advice to members of the public, we are not focusing sufficiently on households, schools, hospitals and industry. We must examine how energy is and can be used more wisely and effectively to reduce costs and to achieve a better return. The Minister should address this issue. Many people would be pleased to assist and advise him but he must adopt a constructive and focused approach to addressing this issue. The message must be driven home in local authorities through one-stop-shops and the provision of a 1890 number to inform people how they can reduce their costs. Advice on reducing energy consumption must be available to industry on site.

We must also insist that all new appliances feature the latest technology. Washing machines, for example, should not have a stand-by function and should be activated only by users. We must think and act smartly.

It is astonishing that the Government, which allegedly has a green component, is cutting back on public transport by reducing funding to Dublin Bus. At a time when we want to increase the number of people using buses in the capital the Government is cutting 270 jobs and reducing the number of bus routes. It has failed to open up competition in the bus market with a view to increasing rather then decreasing the number of buses on the roads. It must open up the market to private bus operators to allow them to price route and supply more public transport cheaply and effectively. The Government is asleep in that regard. I understand Bus Éireann drivers are protesting outside the Minister's office this week.

According to a Time magazine analysis published a couple of years ago, Nantes in France is one of the best places to live in Europe. The reason is that the city has an integrated public transport system featuring buses, trams and even boats on the river. I visited the city and saw its fantastic public transport network. A target of halving the number of cars entering the city was achieved by closing down road space while at the same providing adequate, efficient and effective public transport alternatives. This is the way of the future. We must reduce energy consumption, secure greater efficiency, improve our cost basis and enhance public transport.

Minister for Communications, Energy and Natural Resources (Deputy Eamon Ryan)

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

recognises:

the global energy challenges faced by all countries in providing a competitive, secure and sustainable energy supply;

that Ireland faces particular acute challenges as an island nation on the periphery of the EU, which has a 90% energy import dependency and limited indigenous fossil fuel resources;

that global fossil fuel prices, especially for natural gas, are the single largest cost component in determining electricity prices in Ireland;

that the analysis published in January 2009, by the Commission for Energy Regulation (CER) shows how meeting the Government's long-term renewable electricity targets will put downward pressure on energy prices;

that Ireland has developed a robust energy regulatory framework, which is bringing new entrants into a competitive electricity market and will also serve to help lower energy prices;

the actions taken by the CER and the ESB to cushion the impact on consumers of continuing volatility in international fuel prices; these actions included the adoption of a two-phase approach to tariffs in 2008 and the unprecedented rebate of almost €400 million from the ESB for the benefit of all electricity customers;

that the recently falling market price of gas and coal was integrated into the CER tariff decision effective from 1st January 2009, resulting in a small average reduction in electricity prices; and

that most large energy users are already offered fuel variation tariffs which track either natural gas prices or single electricity market prices and have therefore experienced significant recent reductions in electricity prices;

commends the Government for:

its commitment to accelerated delivery on its energy policy priorities, including ongoing investment in energy infrastructure, ambitious targets for renewable energy to ensure diversity, a radical improvement in energy efficiency, and the continued focus on ensuring a competitive, transparent energy market which works for consumers;

tasking the CER to immediately review options for a possible early reduction in electricity and gas prices for businesses and domestic customers;

its prioritisation of electricity interconnection and grid development including the East-West Interconnector and the inclusion of the Interconnector in the list of projects under the proposed EU Economic recovery package;

its committed work in Europe in support of an open EU energy market ensuring that Ireland's energy policy interests are protected and reflected in EU energy policy developments;

its work in partnership with the NI authorities on the development of an all-island single electricity market and common arrangements for gas;

its commitment to begin an equitable and transparent process involving all stakeholders to transfer the electricity transmission assets from ESB to EirGrid, the independent State owned Transmission System Operator;

its provision in the Finance Act 2008 of energy efficiency tax incentives which were significantly expanded this year, its provision of significant budgets for the Home Energy Savings Scheme and Warmer Homes programmes, and a range of energy efficiency programmes for large industry users, SMEs and the public sector; and

continuing its range of policy measures that will provide job creation, investment opportunities and more competitive energy supplies for the wider economy."

I propose to share time with the Minister of State at the Department of Communications, Energy and Natural Resources, Deputy Seán Power. I welcome the opportunity to have this debate on a crucial issue for the economic development of our country. I was taken with Deputy Connaughton's point that we must get ourselves out of the current economic crisis through enterprise and exports. We have a young population with skills which can be used to trade, produce, grow and export. This is fundamentally the only route out of our current economic difficulty.

My Department and the Government will do all in our power to ensure Ireland is competitive. In energy and communications, the areas for which my Department has responsibility, infrastructure and competitiveness are crucial. We must approach energy policy cleverly and in the proper manner. When one considers who are the leading thinkers in this area and what are the best plans and strategies, the central point to emerge is that one must try to balance three competing but mutually reinforcing objectives, namely, to have a competitive, secure and clean energy supply. One must balance policy decisions to ensure one meets all three objectives. I want to show that in doing so, we will bring down prices and make Ireland one of the most competitive, effective, secure and clean energy countries in the world.

According to the latest figures available to us, which are for the first half of 2008, energy prices here are roughly 8% above the European average. There are a number of different reasons for this. Key among them is our reliance on imported fossil fuels. The percentage of imported fossil fuels, particularly gas, on which we rely for electricity generation is much higher than in other countries. This reliance left us exposed when fossil fuel prices were rocketing, although they have declined recently. Oil prices are not the issue at stake in the context of the motion because oil accounts for only 1% of power generation here. As such the decline in the price of oil to approximately $40 per barrel is not relevant.

Deputy Simon Coveney

The oil price sets the gas price.

Deputy Eamon Ryan

In the past year, gas prices have not followed oil prices, which have fallen from $147 per barrel to $40 per barrel. While gas prices have also declined, the fall has not been on the same scale as the fall in the oil price. I will address the reasons electricity prices will decline this year in a moment.

The first reason for higher energy prices in Ireland is, therefore, the lack of diversity of supply and our reliance on fossil fuels. The second reason is the poor availability of certain plant at one time and the tight situation between supply and demand. In 2003 and 2004, during a period of rapid economic growth when new data centres were coming on stream, we did not have sufficient power to meet demand. This helped drive up prices and the problem was exacerbated by the fact that a small number of older and difficult to run plants were not available. It had a significant effect in driving prices higher because we were forced to turn on emergency generators to cover those plants which were not available. That is the background to understanding an analysis as to what was happening and why our prices were higher.

I believe we will be able to lower prices. It is happening and will continue to happen in a steady, progressive manner. We will see lower prices this year because of forward projections. In this market one has to look forward because companies, contractors and power generators buy forward and contract forward for their customers, so one has a fairly clear idea when looking forward at to what the future price of gas will be. Looking at prices at the moment, unless they shift radically within a short period of time, we can expect to see a double digit reduction this year, which would be very welcome.

We will see the problem of supply and demand being addressed. We will see additional plants come on board, such as large gas fired plants in Cork developed by the ESB and Bord Gáis. There will be a welcome number of new competitors coming into the country, which will make significant investment and are taking some of the older plants and investing in them to upgrade them and have them available for use. This is significant.

People will have read in the newspapers about the introduction of new competitors, such as Endesa, which is a large, international, experienced, well-capitalised utility, to Ireland. There was a fundamental shift in the Irish electricity market when it signed a contract two or three weeks ago, and signed up its willingness to invest more than €800 million in this economy and invest further as we progress as a fair, well-regulated market. It was a significant development.

We have seen the arrival of Viridian, Bord Gáis, Bord na Móna, Airtricity, Mainstream Renewable Power and a number of other electricity providers. We have achieved the objective, set for many years, of delivering a competitive market. We are at the point of achieving a competitive market in the mainstream public supply market, where the average householder has seen high electricity prices.

The introduction of competition and the successful development of a policy which has come to fruition in recent weeks with the introduction of major new international competitors into the Irish market gives great hope and succour to Irish industry that it is now dealing with an industry where there are a number of major player who are well capitalised and will compete for business. That will bring prices down, not just this year but next year and the year after. We must make sure we stick to the correct policy approach and the regulated system we have, which is the best way to manage a competitive market.

There was an interesting report presented by the regulator last week which backed up the analysis done by Government. It indicated that the higher renewables target set, which is 40% of renewable power generation, will have a significant further dampening effect in bringing down prices. Every wind turbine we can put up will have an immediate effect on diversifying our supply and helping bring down prices. In 2020 with the higher level of 40%, we could see a reduction of approximately 15% in prices compared to what a low wind scenario would be.

The fundamental analysis and policy approach is working and will bring an immediate reduction in gas prices. In energy policy one must always have a long term direction because it brings immediate returns. The long term success we are now having in bringing in competition and diversifying supply will continue to bring prices down and make our country competitive. There is an equation between getting a clean supply and a secure supply because competitive forces and environmental aspects of developing renewables will complement our competitive approach.

I will address a number of the points made by Deputy Coveney. The review mentioned was signalled in a Government economic policy paper before Christmas. It complements the ongoing review work the regulator must do on tariffs. I have asked the regulator, in conjunction with the energy companies, to see if there are ways we can fast track some of the changes coming and bring forward some of the price reductions expected through proper regulatory systems. We do not want to undo that good policy and create false and unfair market which, more than anything else, keeps electricity prices here high.

There are a number of options we can look at to bring prices down more quickly. We know prices will fall but perhaps we can bring that forward more quickly. One option we should be careful of and avoid is a unilateral reduction, which Deputy Coveney might argue for, that the ESB could favour or introduce. The reason it should be avoided is that it could easily be used as a competitor tool to ensure nobody enters the public supply business, which is not easily profitable or easy to get into. If a company comes into this country, spends significant amounts of money and has a sense that it was effectively locked out because there would always be a pricing mechanism to keep it out, it is a real risk.

Deputy Simon Coveney

How would it be locked out?

Deputy Eamon Ryan

I would prefer a proper regulated approach to that market until we have such competition in public supply. It can then be opened up in the same way as the business market.

The ESB can operate in the business market on a free and flexible pricing basis. It has no pricing restriction in the crucial economic market——

Deputy Simon Coveney

Bord Gáis cannot.

Deputy Eamon Ryan

We are talking about electricity. There is no restriction on the entry of the ESB to a market because it is competitive and open. In that market, because it is competitive and we have followed the correct policy approach, we have seen that the large energy use companies which have more detailed and complex contracts have already seen, because of the prices in the gas markets coming down, their prices coming down by some 25% this year. It is different to the public contract and is more complex. It is working in that area. The price drop of a quarter that has occurred on the back of the drop in gas prices is happening. When we are looking at how we make these changes, we recognise where it has already happened and do not introduce flawed changes to the regulatory system that would fundamentally undermine our ability to bring down prices further, particularly in the consumer market.

The ESB could say we should be careful if we are looking for it to subsidise a price reduction across the board. I interrupted Deputy Coveney earlier because I think the ESB and the regulator have gotten a raw deal. They did the work collectively to come up with a mechanism whereby a €300 million rebate from the ESB could reduce electricity prices across the State, for other suppliers and its own customers.

It was an incredibly generous act——

Deputy Simon Coveney

The regulator is very unhappy with that model and said so before an Oireachtas committee.

Deputy Eamon Ryan

The regulator may be unhappy, but I want to recognise the contribution of the ESB in agreeing to do it in the national interest, wearing a green jersey and handing over money to the private sector. It was not compelled to act in this way as, fundamentally, it is not regulated or owned by the State.

Deputy Simon Coveney

How can the ESB afford it?

Deputy Eamon Ryan

I would love to have a mechanism where there is an easy way to compel companies to do it. However, European law must be followed and there is no country where this policy has been applied because it is not legally possible to do so, or there is a high risk, legally, in doing so.

That second option of bringing the price forward is passible but has certain risks and difficulties attached to it. We are asking the regulator to look at the options, but also to see what other ways in the review of tariffs does not distort a market and maintains the regulatory control and independence of a proper functioning market. That is the way for us to bring prices down consistently, year in and year out, and to bring forward the reduction we expect. It must be recognised that reduction will come primarily because of the market changes that are occurring and will be backed up with the benefits we will see as we switch to renewables and as competition kicks in across our market and country.

One issue in our amendment to the motion was to highlight some of the broader electricity changes we are making. Deputy Coveney raised the issue of a stimulus. He is correct. When I say one must look at a three-way equation we must also look at the competitive interests for the wider economy in having low electricity prices. At this time, when it is difficult to attract investment in any area because of the credit market freeze, we must examine what the electricity sector can do to lift the economy. In that regard, it is vital for us to support the various measures that have a big stimulus effect. The ESB and Bord Gáis, to name but two semi-State companies, have a €30 billion investment package to lead us in this more renewable, zero-carbon emissions future, which is a massive stimulus. EirGrid has a crucial €4 billion grid upgrade programme, which we must support if we are going to develop renewables and bring prices down.

Deputy Liz McManus

The consumers are paying for it.

Deputy Simon Coveney

Let us be clear, the consumers and business people pay for it. Let us not pretend that these companies are producing the money out of thin air because they are not.

Deputy Eamon Ryan

No, but the Government is using investment in this area to stimulate our economy and create jobs.

Deputy Liz McManus

They are not even paying for it.

Deputy Simon Coveney

By charging the consumers.

Deputy Eamon Ryan

The strategy will also bring down prices because that grid development will allow us to tap into the renewables that bring prices down. That is the right policy to follow for economic growth prospects and lower prices. Today we have seen a further allocation of funding towards energy insulation. It is an example of where we can leverage State aid and work with banks and householders to make the best possible investment to help people cut their fuel bills, save the money they spend on energy and at the same time create thousands of new jobs. When we look at this equation in energy policy in terms of competitiveness, sustainability and supply, we must also examine the prospects of directing funding and support to job protection and creation, which both the Government and energy companies can do. In the long run, it should also help us to protect our economy from future volatility in electricity prices by spending on energy efficiency, grid connection and experimental research and development in power generation supplies.

Deputy Simon Coveney

What about spending on salaries in the ESB? Is the Minister happy with that?

Deputy Eamon Ryan

That is what this Government is concentrating on. The policy approach has taken a long time to reach fruition. I can understand Deputy Connaughton when he says he is unhappy with the regulatory system and is worried that it is not working through to prices at the petrol pump. I must say that we have the right policy framework in the area of electricity generation and supply, which has evolved over a long period. It is not easy because people see immediate difficulties with prices and so on. However, if we maintain our course — and do not jump in with jackboots, trying to achieve an easy, short-term solution that will not deliver the policy terms we want — we will bring down prices and carbon emissions, as well as having a more secure electricity supply. I am determined to maintain this course and support the regulator to ensure that we have an absolutely fair and transparent market. It must be competitive and welcome outside companies with which we can collaborate.

I can say to the ESB or any other company operating in the electricity sector in this country that this market will grow exponentially in future. As we electrify our transport system and generate new renewable electricity supplies we can be world leaders. We should be welcoming international companies here to make seed investments on the basis that if only one of those projects takes off and we become, for example, a centre for wave development, there would be enough business in it for every company in order for this country to take off economically. We are at a similar point in the electricity industry, where it is testing new technologies in the grid and in renewables, to that which existed when Intel first came here to establish a small factory to test the market.

Deputy Simon Coveney

I agree with the Minister on that, but the motion is about prices.

Deputy Eamon Ryan

The way we protect that is by having a fair, regulated price market through which we are seen as an innovative, straight and cutting-edge country for electricity policy. We are there and shall stay there if we bring prices down, more than anything else.

Deputy Simon Coveney

The prices are not there.

Minister of State at the Department of Communications, Energy and Natural Resources (Deputy Seán Power)

My ministerial colleague, Deputy Eamon Ryan, has highlighted some of the measures the Government is taking to improve the competitiveness of the energy sector that will ultimately deliver lower electricity prices to consumers. I am sure that is something we will all work towards and can all agree with. It is important to examine some of the measures we are participating in at European level, which will also contribute to the competitiveness of our electricity supply. Deputy Deenihan and other Members referred to the importance of energy costs. We are very much aware of that and for that reason we have set some high targets for the renewable energy area. We have surprised many people with the progress and success we have achieved so far in that regard.

The integration of energy policy at European level will involve a drive towards further interconnection and ultimately the development of regional energy markets. These are policies that will deliver more competition and greater security of supply to our electricity system. They can only help to lower energy costs for hard pressed electricity consumers and we are actively promoting their development in Europe as committed members of the European Union. Many business sectors find themselves challenged by the change in our financial circumstances. These challenges were not envisaged 12 or 24 months ago. Those working in the renewable energy sector, however, can feel sure of the future because we will see much greater activity and investment there.

We should acknowledge the measures the Government has put in place to empower ordinary consumers better to manage and ultimately reduce their electricity usage, and to protect the most vulnerable in society from the effects of high and volatile energy prices.

Even before the recent dispute between Russia and the Ukraine, energy policy and climate change had risen to the top of the EU agenda. This reflects the ongoing concern for energy security and competitiveness, and the central linkage between energy policy and the climate change challenge.

The energy policy for Europe, adopted by Heads of State and Government in 2007, together with the Internal Market and energy climate change packages, form the framework for an intensive work programme on energy policy over the next five years. Part of that policy involves EU commitments to achieving 20% of energy from renewable sources and a unilateral commitment to a 20% reduction in greenhouse gas emissions by 2020. The EU has also committed to a 30% reduction in emissions in the same timeframe, in the context of an international agreement to follow the Kyoto Protocol.

The recently announced draft European economic recovery programme reinforces this commitment. The package includes the welcome proposal of €100 million in financial aid to develop the east-west interconnector. The Government will work to ensure that this aid is retained in negotiations on the package. We will also work to ensure that the aid, if forthcoming together with financing from the European Investment Bank, is used in a manner that benefits Irish energy consumers. We will also continue to seek assistance from Europe on the further development of our infrastructure where any such aid can be obtained.

EirGrid, the national transmission system operator, is currently reviewing the potential for further interconnection with European energy markets on completion of the east-west interconnector. The single electricity market committee, which governs the operation of the all-island market, has also recently commenced a project to study how best to achieve the harmonisation of markets.

Consumers have experienced increases in electricity and gas bills under last year's unavoidable price increases. Much has been said about the regulator in this debate but last year the regulator was faced with a difficult decision, given the large oil and gas price increases globally, as well as the increases that were sought nationally. A decision was made towards the end of last summer to provide increases in both the price of electricity and gas. However, the regulator decided that, rather than sanctioning the large increases sought, the matter would be reviewed towards the end of the year. That proved to be a wise decision which resulted in a reduction in the price of electricity and gas towards the end of last year. I acknowledge the welcome decision of the regulator at that time.

Deputy Liz McManus

That was thanks to Bord Gáis Éireann.

Deputy Seán Power

There were a number of factors at play.

Deputy Liz McManus

I disagree, but I will not argue with the Minister of State.

Deputy Seán Power

The regulator took a decision that was in the interest of consumers. There was much hype at the time and there was talk of oil going to $147 a barrel. People were tripping over themselves telling us how they predicted it would be €200 before the year was out. We all know what happened.

We are hopeful that the downward trend in global fuel prices will be reflected in decreases this year. To address concerns of consumers, we are adopting an integrated cross-Government approach to tackling the issues of energy affordability and fuel poverty. One of the root causes of fuel poverty is the legacy of older housing with poor energy efficiency standards, an issue that was discussed in the House recently. In order to address this, the Minister will shortly announce the launch of the national home energy saving scheme, with a multimillion euro budget, in 2009. This will support those with inefficient houses to upgrade their homes, making them warmer and more comfortable. This is a scheme that makes sense and is one that has been sought by Members on all sides.

Government policy in recent years has also focused on increasing primary social welfare rates significantly, to ensure that people on social welfare can meet their basic living costs, including heating costs, throughout the year. In addition to improved basic payments, expenditure by the Department of Social and Family Affairs on the fuel allowance and electricity or gas allowance is expected to be more than €426 million this year.

Sustainable Energy Ireland's low income housing programme was also established by the Government to systematically address the underlying causes of fuel poverty. The programme's primary focus is the warmer homes scheme, which provides attic insulation, draught proofing, lagging jackets, energy efficient lighting, cavity wall insulation and energy advice at little or no cost to eligible households. The warmer homes scheme allocation for 2009 is €5 million, with a further €5 million being leveraged from ESB and BGE. This means over 8,000 low income homes are being made more energy efficient this year.

The roll-out of smart meters nationally will allow people make choices with regard to how they use and how much electricity they use.

Deputy Simon Coveney

People cannot get smart meters even if they want them. Only the chosen people on the pilot project are getting them in the next three years.

Deputy Seán Power

We are planning the roll-out of smart meters nationally. These meters are a tool that put the control of electricity demand directly into the hands of consumers. They will provide consumers with a means of monitoring and managing their demand. The programme also has the potential to change significantly the way in which many of the activities of the energy supply are undertaken, therefore improving the efficiency with which energy is produced, transported and used. Smart meters have been a wonderful success as those who have used them would agree.

The roll-out of a national smart meter programme is progressing in line with the commitment in the Government's energy policy framework and in the programme for Government. A pilot phase, involving the installation of 20,000 smart meters, is already under way and is expected to be completed by the end of 2010. The pilot phase will also test the capability of advanced meters to distinguish between the import and export of electricity. This capacity will facilitate the development of micro-generation, where consumers are able to generate their own electricity and even to sell their surplus electricity back to the grid. This measure has enormous potential for changing the relationship between electricity supplier and customer, as innovative new products and tariffs are facilitated and supplier switching becomes commonplace. Smart metering makes sense and saves energy and money.

The Opposition has reflected the legitimate concerns of enterprise about energy costs, but we all share those concerns. All our efforts are focused on trying to reduce energy costs, whether for business or households. However, I share the concern of the Minister, Deputy Eamon Ryan, that ill-warranted Government interventions in the market could hinder rather than promote reform and undermine investor confidence in the energy market at this time.

Ultimately, it is only a transparent and a credible energy regulatory and policy regime that can deliver the effective changes and energy competitiveness that we need to drive down our electricity costs. The imposition of artificial prices for energy simply means putting off until tomorrow the bills that we should be paying today. This runs counter to the plans announced earlier today by the Taoiseach, which aim to place our economy on a sound footing.

As Members said earlier, we are an island nation with a 90% dependency on imported energy. This is something that cannot continue. For that reason we have been engaging with the private sector and investing our own money in seeking alternatives. We have made great strides in recent years, particularly with regard to wind-generated electricity. We will continue to see this area develop. Our dependence on fossil fuels cannot be tolerated much longer and we must continue to provide incentives to people to develop alternatives. The time has come for cleaner energy.

I compliment Deputy Coveney on the contribution he has made in this area, which has long been neglected in this country and has not got the priority it deserves. We now realise the importance of this area and I thank the Deputy for giving us all the opportunity to speak on the subject this evening.

Deputy Liz McManus

I wish to share time with Deputies Martin Ferris and Joe Costello.

Acting Chairman (Deputy Jack Wall)

Is that agreed? Agreed.

Deputy Liz McManus

I welcome the introduction of this motion and congratulate Deputy Coveney on raising it. It is a thoughtful and strategic approach to the issue and highlights a central aspect of the current economic crisis that needs urgent attention. The cost of energy in Ireland must be tackled and the future security of energy must be ensured if we are to ride out the storm.

I was thinking as I was waiting to speak about families and individuals who have heard the news about the inroads the Government is about to make into their family incomes. Many of them will now be trying to figure out how they can meet their household bills. Judging from what the Minister and Minister of State have said, I am not sure they are conscious of how difficult it is, both for employers and householders, to meet those high prices.

There is a pressing case for reform in the regulatory framework on initial pricing. The measures outlined in the motion can and should be taken up by the Government. Currently, we have some of the highest energy costs in Europe. Irish industrial electricity costs are the second highest in the European Union. It is interesting that Irish prices have increased at more than twice the average rate of increase across the European Union.

On account of our dependence on fossil fuels, electricity is particularly exposed to global price rises, and it is very easy to blame external factors. In 2004, it was estimated that domestic controllable costs account for 30% of the difference between our prices and EU prices. This arises from higher generation distribution charges. It is clear that the capacity to reduce costs lies, to a significant extent, here at home, with the Minister, Deputy Ryan, having a direct responsibility in reducing the costs to businesses, employers and householders.

In the economic crisis we are now trying to weather, it is vital that the Minister adopts the priority of the issue of prices and their impact on consumers. For too long, the Government has presided over a regime in which competitiveness has been sacrificed on the altar of competition. I listened to the Minister's contribution, but found it slightly muddled. On the one hand, he said, we must make all these sacrifices in order to have a competitive market, but on the other, we have not reached the point at which we can, in his words, "distort the market" in the interest of the consumer and bring down prices.

Frankly, the undue emphasis on competition means the market has been distorted for quite a while. It has been engineered to attract in operators and the end result is higher prices, which negate the purpose of the exercise. At present, we have a great deal of competition in the electricity market and none in the gas market. However, we still have high prices.

We also have the issue of the change required due to climate change. The cost of carbon allowance is already charged by the Government to consumers. It is worth noting that the Government has not reached its own targets. It has failed abysmally to meet the 3% reduction in carbon emissions in the Government programme. It would make sense on a temporary basis to withdraw the charges or, preferably, to put them into a carbon fund.

For a long time, the Minister has avoided the central issue of price. As far as he was concerned, the cost to businesses and householders was a matter for the regulator and the issue of fuel poverty was something he could ignore. As it turns out this was an untenable position and some type of response has been cobbled together in recognition of the need to reform.

It is not up to the Opposition to drive Government policy. However, it appears that this Private Members' motion has been helpful in serving as a stimulus for this much needed change. I welcome the response from the Government, albeit a modest one, in terms of a fast-track review of prices. This is an obvious recognition and admission that the status quo is not working.

We have seen the price of gas and electricity being fixed in an extremely rigid way over a considerable period of time. The consumer has suffered as has the national interest in terms of our competitiveness. All one has to do is examine the National Competitiveness Council's report on the difficulties which have arisen. We had a 17.5% increase in the price of electricity and a 20% increase in the price of gas. This locked consumers into higher bills during a time of growing economic crisis. As has been pointed out, since then oil prices have plummeted and the price of petrol at the pumps also dropped although it is rising again. However, the bulk of increases people pay for utilities is still in place.

The motion proposes that the Government instruct the regulator towards a price ceiling rather than a fixed price and Deputy Coveney has raised this point on a number of occasions. It would be welcomed by providers as well as consumers and it is coherent and responsive.

Deputy Coveney's motion includes a paragraph relating to the transfer of assets from the ESB to EirGrid and I acknowledge that Deputy Coveney recognised the difficulty I have with this. The Government and Fine Gael have an agreement on this point. I do not believe it is necessary. It would be a diversion. I was interested to hear the chairman of the ESB, Lochlann Quinn, make the point that it was not necessary for this to take place. It would cause a certain amount of difficulties and it would mean the focus of the two organisations would be diverted at a time when their sole focus should be on developing the grid and ensuring the development of renewables is going to plan.

We all think renewables are lovely and we all want to support the Minister but let us not fool ourselves. The track record is not all that great. For example, a year after the €26 million ocean energy programme was announced apparently no grants have been given out. All the private investment to match it has been lost. This is extremely concerning. The system does not operate quickly enough. We have seen wind power develop. We are not in any way advanced but we are making good progress. However, offshore wind requires legislation. When will we see this?

The Minister and the Minister of State, Deputy Seán Power, speak about various schemes with regard to insulation, such as the warmer homes scheme and the energy efficiency scheme. Let me tell them that a long list of people is trying to find out when these grants will be available. With regard to the warmer homes scheme, there is a long waiting list of hundreds of people living in cold substandard housing who cannot access this fund because the system is not flexible or quick enough to respond to their needs. I represent some of them. We all represent people who would like to be able to avail of this scheme but it is not happening.

The national insulation scheme was the subject of discussion on RTE radio this morning. The Government could introduce a national insulation scheme next week based on tax breaks. It would be cost neutral and would unleash funding through savings which people have and which are giving an extremely poor return at present. It would put people back to work and ensure our energy bill is reduced. It would have a major positive impact in terms of the employment of construction workers. However, it is not mentioned. Why is this?

Deputy Martin Ferris

I thank Deputy McManus for sharing time. I commend Deputy Coveney for tabling this motion, the main points of which I support. However, I would also like to indicate that Sinn Féin supports the Labour Party amendment regarding the transfer of ESB assets to EirGrid. As I stated on previous occasions when this matter has arisen, there appears to be no argument for this other than to prepare the ground for privatisation and the entry of people into the electricity generation market who will cherry pick areas where they believe they can make a profit at the expense of the overall service. It is also worth reminding ourselves that the ESB was established under public control in the first instance only because private enterprise was unable or unwilling to invest in it.

Obviously, energy costs are crucial to domestic and commercial users. As the motion points out, last July's steep increases of 17.5% on electricity prices and 20% on gas prices charged to consumers were justified on the basis of previous increases in the global price for oil. However, the even greater fall in the price of oil per barrel since the summer has not been passed on to the consumer and neither has there been any indication that it will be.

In our travels throughout the country coming to and from here each week, we cannot but be alarmed at the price difference from one petrol station to another, including those operated by the same company. One company in Tralee operates three petrol stations within a 500 m radius of each other and charges a different price at each station.

We cannot escape the effect that energy costs for commercial users is having on job losses at present. Just over two weeks ago, 200 jobs were lost at the Amann plant in Tralee. One of the reasons put forward by the company for this was that energy costs had soared from €1.2 million to €3.4 million in the space of 18 months.

In many instances, the impact of the increases for domestic consumers has been particularly severe. A 2007 study by the Institute of Public Health in Ireland stated that fuel poverty in this country was at an unacceptably high level by international standards. This situation has been exacerbated by last year's price increases. Families on marginal incomes, and particularly elderly people, are most affected, sometimes to the extent of having to go into further debt to heat their homes.

It was estimated that approximately 2,800 deaths per annum in the island of Ireland were due to deficiencies in households being able to meet their energy needs. In my constituency, elderly people in particular seek support to install solid fuel ranges in place of storage heaters. This is because of their belief that due to the increase in energy costs it would be easier for them to heat their homes and survive with fireplaces or solid fuel ranges.

The most alarming aspect of studies on fuel poverty here is that rates of fuel poverty increased during the years of highest economic growth and the level of household income below which families were finding it hard to meet their energy needs also rose steeply. This is an indication that energy prices and the relative proportion of household income required to meet householders' needs were rising at a faster rate than that pertaining to most other essentials. Therefore, I support the proposal that the energy regulator should conduct an immediate review of the prices being charged by the electricity and gas suppliers with a view to passing on, to domestic and commercial consumers, the reductions that should accrue as a result of the decrease in global energy prices.

More emphasis should be placed on the sources of alternative renewable energy, particularly if 15% of our energy demand is to be met from renewable sources by 2010. There is massive scope for wind and wave energy production, which would not only help to meet that target but, more important, contribute to the economy at a time of severe downturn. In spite of this, there is little indication that sufficient attention is being paid to these areas.

Tidal energy also offers considerable potential and efforts are being made to exploit it. I have no doubt about its potential and would like to see it advanced. The same applies to the production of energy crops, in which very few farmers are involved although production has increased from a low base in recent years given the ambitious targets for wood energy tied to local processing. This sector also requires further investment and development but progress will be hindered by the recent budget cuts affecting Teagasc. Incentives are required so those on marginal incomes, farmers in particular, will be able to exploit the potential in this area with a view to producing alternative energy.

The Minister for Foreign Affairs, Deputy Martin, referred recently to the ongoing delay in bringing ashore the gas from the Corrib field and pointed to the boost it would have for the economy at a time of global uncertainty regarding supply and pricing. Undoubtedly, the bringing ashore of the Corrib gas, which has an estimated value of billions of euro, would be beneficial but there are major questions over whether this would be the case given the current licensing terms that apply. Furthermore, at present only 18 of the Twenty-six Counties in the State are connected to the natural gas network. The Corrib pipeline, as currently projected, will not supply most of those living in the immediate area.

Apart from these facts, one must consider the taxation and royalties and the fact that this State will gain little or nothing in real terms by comparison with the revenue flow that plays such a big part in sustaining a successful economy like that of Norway. The Norwegians, for example, have a state pension fund of $240 billion, largely built from oil and gas revenue. During the first nine months of 2008, while the rest of the world's economies were reeling under the impact of the stock market decline and bank crisis, the Norwegian Government earned $18 billion in royalties from its oil and gas. This is an example of good management and a negotiated deal in the interest of the people of the country. It has contributed to a public service envied by most other countries. However, there has been little indication that the Irish Government or its predecessors have had any intention of seriously addressing this matter with specific regard to the Corrib field.

Aside from the Corrib field, there is considerable potential in other areas off the Irish coast. Estimates, including one from the petroleum affairs division of the Minister's Department, suggest there are 10 billion barrels of oil lying off the west coast of Ireland, valued at over $500 billion at current prices. That is in addition to a natural gas reserve estimated to amount to 50 trillion cu. ft., which is sufficient to supply the whole of western Europe for some time. Some 200 km off the coast of Kerry is the Dunquin gas field, which is estimated to contain 25 trillion cu. ft. of natural gas and 4,130 million barrels of oil.

Deputy Eamon Ryan

The Minister for Finance will be out after it tomorrow to pay off our debt.

Deputy Martin Ferris

The gas alone would meet our gas needs, at present consumption levels, for the next 62 years. Exploration rights for Dunquin are licensed to Exxon and its partners, which estimate that the supply will come on stream after 2013.

Off the coast of Clare is the Spanish Point field, with known gas reserves of 1.25 trillion cu. ft. and 206 million barrels of oil, valued at €30 billion. It is hoped that production will begin in 2011. Again, as with the Corrib field, this State would only benefit fully if the taxation and royalty regime were changed to undo the terrible deal made, for whatever reason, in 1992. Tax rates are extremely low and most of the current 25% tax on profits can be written off against exploration and operation costs.

I appreciate that the Minister was successful in having a new rate of 40% introduced but this only applies to new exploration licences and does not cover the existing oil and gas licences. It should be extended to all licences to ensure that when the gas and oil come on stream, they will provide, as they can, a considerable boost to the country in terms of meeting energy needs and generating revenue. One should bear in mind all the benefits of the revenue during an international economic downturn.

Consider the potential of using our oil and gas to establish security of supply. At present, we import 85% of our fuel. We are also at the end of a supply line that extends from Russia all the way across Europe to Britain and, finally, Ireland. The dangers of being dependent on this supply were highlighted recently during the stand-off between Russia and the Ukraine.

I support the motion along with the Labour Party amendment. Support for an alternative energy initiative involving the creation of green, clean energy must come from the Government if it is to have any success.

Debate adjourned.