Electricity (Supply) (Amendment) (No. 2) Bill, 1934—Final Stages.

Question—"That the Bill be received for final consideration"—put and agreed to.
Question proposed: "That the Bill do now pass."

Since this Bill was debated on Second Reading and in Committee certain statements have appeared in the public Press which give ground for alarm. I suggest it is desirable that they should be brought to the notice of the Minister with a view to having an official explanation. The House will remember that the Shannon Scheme was undertaken after an exhaustive inquiry by experts. Those experts gave, as their considered opinion, on page 97 of their report, that: "About 153,000,000 k.w.h. per year at the transmission busbars of the power station, which output is in accordance with the curve of requirements estimated by the experts. This quantity will be available even during a dry year." That was the essential data on which the whole scheme was undertaken. Well we have had two dry years. In the year 1933 the water generation only produced 143,000,000 units. The balance had to be supplied by steam. These figures have appeared in the public Press. The Minister, of course, may say that they are incorrect. I am assuming for the moment, as the basis of my argument, that they are correct. In the year 1934 water power supplied 103,000,000 units and steam 82,000,000 units. These figures certainly give ground for serious alarm. What is done is done. It may be remedied but it cannot be undone. Now we are being asked to spend further moneys on the development of the Shannon. The same experts have been called in and, presumably, it is on their report that this is being done. We have not seen their report. We do not know what explanation they have to offer with regard to what appears to be their original and erroneous calculations. The whole position now appears to be one that calls for the exercise of their responsibilities by members of the House and for very serious consideration indeed as to whether we are right, merely on the representations of the Supply Board, in assenting to the proposals in this Bill.

This Bill, presumably, is based on the experts' report and is vouched for by the Minister. I feel very strongly on this. I have no expert knowledge. As an original critic of the scheme I do not wish in any way to take credit for the alarm that I then felt, but it appears now that my alarm then has been fully justified. Apart altogether from the financial grounds, which were the main grounds on which my earlier criticisms were based, on purely technical grounds there has been a very serious miscalculation. Now, without inquiry, or at any rate without revealed inquiry, we are asked to spend further moneys on the Shannon scheme while we are not in a position to consider whether it would not be better to let that scheme remain as it is and to spend money on other sources of water supply, the Liffey or some other.

On this general question I want to ask the Minister to give us certain essential figures: what is the cost of generation by water as against that by coal. I have searched the reports of the Electricity Supply Board to see if these figures are available, but I could not find them. One would like to know the costs under essential headings, especially distinguishing between direct costs and overheads. One would imagine, of course, that in the case of water supply the overheads must be much higher because of the very heavy capital charges that have to be carried, and that the direct charges should be lower. In the case of steam it should be the other way about: that the direct charges would be higher and the overhead charges less. I feel that we have a right to know what these costs are. We are faced with this serious miscalculation—I speak subject to correction—with regard to the generating power of the Shannon. I think that we are entitled to have those figures even at this the last moment and not allow this Bill to pass but that it should be sent back to the Government for further investigation.

I should like to ask the Minister to make the position clear on another aspect of this publicity to which Senator Sir John Keane has referred. Whether it is the same publication or not, I am not sure, but I have before me an extract from theSunday Times which is headed: “Free State Electricity Surprise”; “Shannon's Smaller Supply”; “Increased Use of Coal”; “Five Million Pounds Project Costs Ten Million Pounds.” Those are the headings, and the second paragraph reads:

"The scheme as originally envisaged promised electricity supplies to the whole of the Free State at a stated outlay of £5,200,000. Actually to date more than £10,000,000 has been expended on it—all out of the taxpayer's pocket—and at least £1,000,000 and possibly £3,000,000 further expenditure is contemplated."

I think it will be agreed that the £5,200,000 that was envisaged was in regard to the constructional side of this scheme and the interest accruing until it began working. The juxtaposition of £5,200,000 and £10,000,000 is certainly misleading because the extra votes have not had to do at all with the constructional side of the scheme—at least, not all of them although some of them perhaps have. There is, however, the further point that it says that all this £10,000,000 has been expended out of the taxpayer's pocket. Again, I think that is misleading. It would imply that this sum of £10,000,000 has been paid out of revenue. I wish it had, but it has actually been paid out of loans and to say that that is out of the taxpayer's pocket is to my mind very misleading and more or less justifies the sub-editors of this journal putting this heading "£5,000,000 Project Costs £10,000,000." I think the Minister ought to take the opportunity to make whatever correction he thinks is necessary of that statement.

Does Senator Johnson think that when the State borrows money it does not come out of the taxpayer's pocket? Of course it does. The money borrowed for a project like this was provided by the State and the State is simply in the position of a shareholder.

Who pays for the current?

I am talking now of the manufacture and nothing else. The State is a shareholder in this scheme of the Shannon for £10,000,000. We put that amount of money into it and that is what we are enquiring about.

As taxpayers?

As taxpayers, certainly. It is a debt on the taxpayers and we have to provide the sinking fund and interest on it.

Then, I protest against the Electricity Supply Board charging us anything for our current except ordinary running expenses.

We are talking business and not all this kind of thing.

It is taxpayers' money, but it is not lost.

There is no question about it. The State has spent £10,000,000, and the citizens of the State have got to pay it. The money has been borrowed, and we have to find interest and sinking fund, because, so far as I hear, no interest has been paid on it. Am I right?

Perhaps the Minister will tell us, when he comes to speak, to what extent the citizens of the State have been relied on in regard to the payment of interest and sinking fund, because I have seen figures showing that these are met out of profits made by selling current. I do not know why Senator Johnson should be objecting to the references in that article. I think it would be a very serious slur on the whole of the Free State if these things are not carefully examined and the Minister given an opportunity of explaining the facts.

I should like to ask Senator Sir John Keane if the original estimate of the output of the Shannon scheme was 150,000,000 kilowatts?

It was originally estimated that there would be a minimum production, on the partial development, of 150,000,000 units.

Was it not always understood that the undertaking would cost more than £5,000,000?

Of course, it was.

Apparently, last year it produced 143,000,000 kilowatts, if I understand it rightly. What it comes back to, from our point of view, is what the ordinary expenses, including certainly interest but scarcely sinking fund, and the actual running costs, are and what is the revenue produced. That ought to be a very simple figure that could be got without, I think, very much trouble, and I think we ought to know that. Furthermore, is it now intended to go on with the further scheme on the Liffey, and what number of extra kilowatts will the expenditure we are asked to sanction to-day produce, and what will be the running costs of producing them?

I am rather surprised at the statement made by Senator Jameson. I think it is very desirable that it should be corrected forthwith so that any person who may be under the same misapprehensions as to the position as he is should be put right. The taxpayer has provided no money whatever for the electricity supply scheme. It is not even correct to say that the State is in the position of a shareholder in the scheme. The State is in theory, according to the terms of the Electricity Supply Acts, in the position of a person who lent money at interest to enable the electricity supply scheme to be undertaken, requiring not merely the payment of interest as it falls due upon the money lent but also the repayment of the amount lent in due course. A shareholder in a commercial undertaking provides the capital and is satisfied with the payment of interest upon his shares according to the profits earned. He does not demand back the capital in addition to the interest within a specified period. The State is asking, not merely interest from the Electricity Supply Board on the money advanced to it, but also the repayment of the advances. The repayment of the advances has not commenced but the Board is paying interest upon those advances at the rate of 5½ per cent. The rate of interest is high and it has, in fact, been argued, in the Dáil and in this House, that the rate of interest charged on these advances to the board is too high. I announced, during the discussions upon earlier stages of this Bill, that a reduction in the rate of interest was likely to be made in the very near future.

Senator Jameson said that he had not seen it stated that the Electricity Supply Board was paying interest on these advances but in the published accounts of the Board for the year ending 31st March, 1933, the profit and loss account indicates that there was paid to the Exchequer in respect of interest on advances that year the sum of £494,861. I think Senator Johnson also did good service in drawing attention to the statement, which was obviously considered of sufficient importance to justify a sub-title to the article which appeared in theSunday Times on Sunday last, to the effect that the Shannon scheme, which was estimated to cost £5,000,000, has, in fact, cost £10,000,000, and that the taxpayers have had to provide the difference. I have already made it clear that the taxpayers have had to provide nothing, but even the statement that the scheme, which was estimated to cost £5,000,000, has cost £10,000,000, is altogether and completely incorrect. The amount advanced to the 31st of March, 1933, to the Shannon Power Development Fund for the Shannon scheme was £5,815,000. Included in that sum were certain advances in respect of additional works not contemplated when the scheme was being inaugurated, works which were provided for in a Bill which passed the Oireachtas in 1931.

It is true that the Shannon works did cost a certain amount more than was originally estimated. But the amount which they cost did not exceed the percentage which was allowed for when the original estimates were being prepared. It is not always possible in respect of large works to estimate to within a penny of the cost. Prudent persons always will allow a percentage, 5 per cent. or 10 per cent., for extras and these excess costs in the case of the Shannon scheme were within the 5 per cent. originally provided for when the works were being undertaken.

The capital advances to the Electricity Supply Board amount to more than £10,000,000, but that capital was not all advanced for the purpose of constructing the works on the Shannon. The capital was advanced to enable the Electricity Supply Board to carry out its functions as a distributor of electricity, also as a provider of electrical installations and as a trader in electrical equipment. The Electricity Supply Board had, in fact, utilised a very substantial amount of the capital advanced to it in financing a system of selling equipment on the hire purchase system.

Senators are aware that the original scheme upon which the Shannon works were undertaken was departed from while, in fact, the works were in course of construction. It was originally intended that the Shannon scheme would produce electricity for sale wholesale to electrical undertakers in the various towns throughout the country. Subsequently, it was decided that the whole business of producing and distributing electricity should be nationalised and the Electricity Supply Board was brought into existence to take over either free of charge or payment of a sum in compensation, all or nearly all the existing generating stations in the country. They proceeded to carry out functions in relation to the distribution and sale of electricity which it was not contemplated would be done by those in charge of the Shannon works.

Senator Sir John Keane was good enough to indicate to me that he was to refer to this article in theSunday Times. The Sunday Times article was obviously written by somebody who had access to the figures. He got those figures accurately enough but did not understand some of them. He proceeded to write his article, leaving out of account the most essential fact relating to the Electricity Supply Scheme last year. Senator Sir John Keane is quite right when he says that when the experts prepared their estimates these estimates were designed to produce a minimum of 150,000,000 units per year, and that this estimate was based on the lowest rainfall which had, in fact, occurred during the previous 30 years.

Whether the Government which undertook to embark upon the Shannon works were wise in doing so, knowing that the works were planned upon the basis that they would be economic in any year in which the rainfall was as low as the lowest of the previous 30 years, is something that I am not prepared to say. The fact is that last year we had an unprecedented drought. The rainfall last year was lower than the lowest in any recorded year——

The year before was below the estimate.

Yes, it was unprecedentedly low. Last year was below the lowest year of which we have any record. Last year we had an unprecedentedly low rainfall. For the first six months of the year 1932 the rainfall was lower than that of last year for the same period, but in 1932 rain came at the right time. Those operating the scheme always estimated that the rain was to come during the months of September, October and November. The peculiarity of last year was that the rains did not come in September and October, and up to November last year there was an unprecedented drought. The situation was critical in so far as the Electricity Supply Board's stand-by plant was not at that time sufficient to make good the deficiency in the output from Ardnacrusha; it would not if rain fortunately had not come at the time when it looked as if a serious situation was to arise.

The early months of this year were also unprecedentedly dry, but fortunately the rain has come and it is not expected that any difficulty will arise this year. The answer to Sir John Keane is that whereas it is quite true that the Shannon works were planned by persons who had estimated that the lowest rainfall we were likely to experience in this country would be the lowest in the 30 years previous to the time, they made their estimate. Since they have commenced to operate there has been one year in which the rainfall was substantially lower than the lowest rainfall previously recorded at any time, and that was last year. It is because of that unprecedented drought that the Shannon works were unable to produce the minimum of 150,000,000 units that were always contemplated. The steam station had to be brought into commission and kept in commission for a great part of the year. Of the total number of units generated, 80,000,000 units were produced by steam.

Senator Sir John Keane says we are now asked to spend further moneys upon the Shannon works. I want to make it clear that these storage works have no relation to the drought of last year. These storage works would be undertaken whether there had been a drought last year or not. These are highly essential works which will prove remunerative to the Electricity Supply Board. I explained already the position with regard to the difference between the economic cost of producing electricity as a result of these storage works and the cost of producing electricity by steam. I explained why, in fact, we were providing in the Bill for the making of a grant as against an advance. But I have also explained that in so far as a reduction in the rate of interest is to be expected, the actual cost of the works and the economic value of the works will coincide and the Board will be able to sell the 14,000,000 units which will result from these storage works at a price to meet the interest and sinking fund on the charges which will fall upon it because of these advances. These works would be undertaken no matter what the rainfall experience of the Board had been as an essential part of the development of the Shannon works and in order to enable it to meet the growing demands for electricity that is taking place here.

In consequence of the Board's experience in the last year, the only additional capital charge that would fall on it would arise out of the necessity of enlarging upon its stand-by plant. Its stand-by plant was based upon previous rainfall experience. That rainfall experience has now been added to, in so far as we have had an exceptionally dry year and consequently the Board's stand-by plant will have to be enlarged so as to enable it to produce a larger number of units when required, but, in fact, the construction of these storage works, in so far as they will make a greater volume of water available and make the supply of water more secure, will reduce rather than increase the necessity for using steam plant.

Senator Sir John Keane asked to be told the cost per unit generated at Ardnacrusha and the cost per unit generated at the Pigeon House. I regret that I am not able to give him those figures in the form in which he wants them. I can give the direct cost of producing a unit of electricity at Ardnacrusha and at the Pigeon House, but the final analysis of the Shannon works costs have not yet been made, and, as the Senator quite rightly stated, by far the greater part of the cost per unit generated at Ardnacrusha is represented by the capital charges, whereas the greater part of the cost per unit generated at the Pigeon House represents charges other than capital charges. The direct cost per unit generated at Ardnacrusha is 0264 of a penny, while the direct cost per unit generated at the Pigeon House is .3835 of a penny. I expect it will be possible to get the final analysis of the Shannon works effected and communicated to the Board at quite an early date, in which case it is possible that the Board may be able to embody in its next report the information which Senator Sir John Keane desires.

Mr. Crosbie rose.


You have already spoken Senator.

I only desire to ask the Minister a question.


I regret that the Rules do not allow it.

Question put and agreed to.
The Seanad adjourned at 8.5 p.m. until Thursday, 6th September, at 3 p.m.