We are very pleased to be given the opportunity to address the committee. With me is Mr. Pat Dalton, our chief financial officer, Mr. Michael O'Sullivan, who looks after our transportation division and Mr. Will Roche who looks after our strategy and regulation.
A document was circulated to the committee yesterday covering a range of topics in some detail. I trust the members found that useful. We had intended to use a Powerpoint presentation but inevitably the technology has let us down. I will take a few minutes to look at a number of the slides and in particular the "big picture" issues impacting on the natural gas industry which I know is of particular interest to the committee. This will be a little awkward but from the hard copies of the document supplied to members I will point to the slide to which I refer.
The committee is aware that Bord Gáis was set up in 1976. Over the 30 years of its existence it has grown steadily year on year, starting with providing gas to the IFI fertiliser plant and to the Aghada power station in Cork. The network was then extended to Cork and Dublin and Bord Gáis became involved in providing gas to householders in the mid-1980s by means of the takeover of the towns gas companies.
The residential gas market developed over the intervening years. The steady average growth of about 20,000 houses per annum is currently accelerating on the back of the growth in new housing countrywide. The key driver in this growth in residential customers as reflected in the chart provided was essentially cost effectiveness and environmental benefit.
The map provided shows the current extent of the high pressure gas grid and the main centres of population now supplied with natural gas. The map essentially reflects the development of the business, starting with the Kinsale Head field. The Cork-Dublin pipeline led to the connection of Limerick and Waterford and many communities on the route. Continued demand resulted in the first interconnector being built with the UK. In more recent years a second interconnector was completed with a connection to a power station in the Isle of Man. The pipeline to the west provides a ring configuration feeding the midlands and Galway as well as connections to power off-takes in Aughinish Alumina and Tynagh. I draw the committee's attention to the proposed connection to the Corrib gas field currently under development and to the development of pipelines in Northern Ireland which will be connected to the grid in the Republic by the end of next year. The development of this grid has been enabled by the existence of significant baseload, in many cases an industrial or large commercial off-taker. Extensions to the grid are very capital intensive. They are subject to rigorous economic tests which underpin the board's commercial mandate and are subject to an overview of the regulatory authorities.
Bord Gáis has more than €2 billion in assets and serves half a million customers. Business has been developed without recourse to Exchequer funds and has contributed more than €600 million in dividends to the Exchequer over the years. It has two business frames, one engaged in building and operating pipeline networks and the other, retail activity, which in recent years entered the electricity market. I will not talk about that because it was expressly excluded from the scope of today's discussion.
Bord Gáis employs more than 800 staff. There are up to 2,000 others working in the wider industry with contractors and service providers. The company is financially sound, as evidenced by our strong investment credit rating with both Standard & Poor's and Moody's. In the pie chart in slide 7 one sees that the'lion's share of gas sold in Ireland relates to power generation. This is to be expected as it provides a competitive solution to meeting the growing demand for electricity and reflects what other EU countries are doing in the absence of nuclear energy. Our retail activity has been subject to competition for several years and currently accounts for 49% of gas sales in the Republic of Ireland.
A company called RWE, which is a large German utility, is the second largest supplier. In slide 9 we attempt to reflect the European landscape. In a recent publication the EU Commission has been complimentary on the development of competition in Ireland, ranking us next to the UK and the Netherlands. It is interesting that this is measured by the development of competition and the presence of foreign players in the local utility markets. Accordingly, the liberalisation of energy markets in the EU has led to the development of large international utilities, which grow by acquisition across borders. Slide 9 shows on the right-hand side the relativity of some of those players compared to the size of Bord Gáis.
Slide 10 shows that our main points of focus for the future are as follows: to provide a safe and reliable service for our customers; to ensure a quality service to customers as our business model changes, with the advent of the opening of the full market; managing the full market, from October 2005; and it is imperative to grow the business where there are viable opportunities.
Slide 11 shows our main priority as a company is to provide a safe and reliable service to our customers. Our track record in this regard has been quite good. We manage all our networks in accordance with best international practice. Accordingly, we have been engaged in systematically replacing our older networks over the past 17 years. We have replaced two thirds of them with modern polyethylene pipes. During 2004 we developed a plan in conjunction with the energy regulator to renew the final third of the system over the next five years. This project is now being put in place.
The accelerated renewals plan is being driven by a number of issues. A pipe failure in Rathfarnham led to an incident there about a year ago and there is a proliferation of construction activity and excavations on our streets which often impacts on our networks. Local authorities are becoming more and more impatient at having new pavement disturbed for maintenance and repair and there are operational efficiencies to be gained from having an all-polyethylene network.