Vol. 36 No. 3
I beg formally to move the motion standing in the name of Senator Hayes:—
That the Cork Gas Order, 1948, proposed to be made by the Minister for Industry and Commerce, and laid in draft before Seanad Éireann on the 9th day of December, 1948, under sub-section (4) of Section 10, Gas Regulation Act, 1920, be approved, subject to the following modification:—
‘Deletion of Article 17'.
The Cork Gas Consumers' Company has made an application to the Minister for Industry and Commerce under Section 10 of the Gas Regulation Act, 1920, and the Gas Regulation (Special Orders) Rules, 1940, for a special Order to effect certain modifications of the Cork Gas Act, 1868, and the Cork Gas Order, 1940, for the purpose of making better provision for the proper and efficient conduct of the company's undertaking. The principal object of the Order is to provide for increased, borrowing powers to the extent of £150,000; and to authorise the creation, issue and redemption of debenture stock, the interest being limited to 4 per cent. Section 17 of the Cork Gas Act, 1868, authorised the issue of £150,000 capital, the issue of which was not completed until 1947. The immediate purpose for which the new capital is required is to acquire additional plant to a total value of £133,000.
The Cork Gas Act of 1868, which fixed the original capital at £150,000 and limited the rate of interest of debenture stock to 5½ per cent. requires modification accordingly.
It is proposed also to create a redemption fund from the profits of the company for the purpose of redeeming the loan, mortgage, debenture or debenture stock raised or created by the company. Another proposal is to secure power to grant pensions, gratuities or allowances to employees of the company, and to create schemes allowing employees to participate in the profits of the company as part of the terms of remuneration. Power is also sought to improve the internal management of the company.
It is necessary to repeal Section 27 of the Cork Gas Act, 1868, which formerly provided for the creation and issue of stock, and Section 57 of the same Act, which empowered the company to cut off gas; and Articles 4,5, 6, and 21 of the proposed Order replace the repealed provisions.
The Gas Regulation Act of 1920 altered the old and cumbersome procedure whereby statutory gas undertakings were obliged to secure their powers by way of Private Act or provisional Order confirmed by a special Act of Parliament, and provided instead that powers or additional powers could be secured by a special Order approved by a resolution of both Houses.
The procedure, as now laid down, requires that the draft Order be prepared by the Gas Undertaking, and that full publicity of the intention to apply for the Order, and of the contents of the draft, be given by notices in Iris Oifigiúil and local newspapers. Notification must also be given to the State and to private interests involved. One month is given for the lodging of objections; the subsequent stages being dealt with in accordance with the Gas Regulation Act, 1920.
If there are objections, an inquiry may be held and after considering the report of the person who held the inquiry the Minister may modify the draft before submission to the Oireachtas, or he may decline to submit the draft. As the representations from objectors have been disposed of by agreement, no inquiry is necessary in this instance.
It will be observed that the draft Order, as now before the House, contains Article 17, whereby the company applied for powers to make a minimum charge of 10/- per quarter for gas supplied. Shortly, the company's case was that as they were required by law to supply gas on demand, a minimum charge of 10/- per quarter would be reasonable. I felt, however, in view of all the circumstances, that I could not recommend the grant of powers which might possibly result in hardship for consumers from the lowest income groups. The company subsequently agreed to the omission of Article 17 from the proposed Order. Subject, therefore, to the deletion of Article 17, I submit the draft for approval of the Seanad.
Might I be allowed to say a few words? This is the kind of Order that we have been discussing for the past two or three years as being a desirable type of Order, that is to say an Order which is laid in draft before both Houses so that it might be considered before being confirmed by the Minister. Under recent statutes relating to companies it has been the practice to permit the Minister to make an Order and to provide for its annulment by either House within a specified time. These older Acts proceed along different lines. They require that an Order be tabled in draft and provide that it shall have no effect unless or until it is confirmed by resolution of both Houses.
We are asked to-night to confirm the Order described in the motion moved by Senator Douglas. There are one or two points concerned with this undertaking which I think require some clarification. As I understand it the company, when it was first incorporated under the Act of 1868, had an authorised capital of £150,000. I think that £120,000 of that capital was actually paid over to the old companies whose property was purchased by the present undertakers, the Cork Gas Company, leaving a sum of £30,000 as being the total amount of new capital which could be raised under the Act of 1868, but Section 25 of that Act provided that independently of its capital the company might borrow £25,800.
There was also power, I think, in Section 27 for the creation of debentures and I do not know whether there is any limit to the sum which could be raised by way of debentures. What is being proposed under this Order is that the company shall be empowered to create new debentures. The company is authorised by the State to issue redeemable debenture stock to the extent of £150,000, a sum equal to the total capital. I do not know whether that is a good system or not, but it is one at any rate, which might seem the subject of some inquiry. I take it that the Parliamentary Secretary has made some inquiry into the structure of the company, its financial prospects and methods of operation, but I would like if the House could get some assurance that the company is in a position to issue debentures for £150,000 and to meet the charges of 4 per cent. which would be guaranteed in respect of these debentures. I do not want to oppose the motion but I would have asked the House to resist the confirmation of the Order were it not that Article 17 was deleted, because it would be a preposterous proposition for the gas company to have a minimum charge of £2 a year whether the gas were used or not or that anybody that was linked up with the company should have to pay a minimum fee of £2 a year whether he used the gas or not. It was the practice with regard to electricity in Cork to pay 7/6 a quarter as a minimum fee in the old days, and maybe the gas company are trying to get away with something similar. I have no objection to make to this Order but I think we should have some further explanation as to what is implied as far as capital structure is concerned.
Senator Duffy has asked for further particulars. The position is that the company requires to carry out certain improvements. They are in a position to acquire plant which was not available during the war but the company require to increase their capital to purchase it and also certain other equipment. The Senator is anxious to know whether the company is in a sound financial position. I can assure him that it is and that all the capital which is now required will be profit earning.
Will it be provided by the State or by State agency or will it be freely borrowed on the open market?
They are free to take any steps the company see fit. I do not know whether it is proposed to apply to any other State companies or not, but I imagine they will go on the open market. I would like to say in connection with this that the Cork Gas Company have reduced their prices by 4d. a therm, so that from the point of view of prices the company is satisfactory and I think that the fact that they require this money for capital purposes is an indication of the successful way they have operated. In addition to the plant required there is, approximately, £133,000 for certain other works they wish to carry out, and that makes up the balance of the £150,000.
The Senator referred earlier to the form of the Order. This Order is, as he says himself, in a desirable form, because it gives the members of the Oireachtas the opportunity of reading the proposed Order before it is actually made and of refusing to confirm it rather than annul it by resolution, as is the case with most Orders under the Emergency Powers Act. The Senator will realise, as the House will realise, that this Order is made under an old statute when Orders of this kind were not as urgent as orders in the present day.
This statute goes back only to 1920. It was made after the first World War.
That is the Gas Regulation Act of 1920, but there is the Cork Gas Act of 1868. There have been modifications of that under the Gas Regulation Act of 1920 and the Cork Gas Act Rules Order of 1940.
You are actually proceeding under Section 10 of the Act of 1920.
That is so, but the original Act, which was modified by the 1920 Act——
The only point I make is that Section 10 is the section which requires the laying on the Table of this Order in draft. It is not a very ancient statute—it is a case of our getting ancient rapidly.
It is an Act of 28 years ago and, in that time, a lot of more streamlined, if less satisfactory, methods have been employed by Parliaments in every country to get through Orders of this kind.
I think we ought to have some definite assurance that the company is able to meet its obligations on £300,000, because that is what it means. They are already liable to pay dividends on an issued capital of £150,000 which is fully subscribed and this is a proposal to give them £150,000 additional, by way of redeemable debentures. The question for the Parliamentary Secretary is, if he is satisfied that they are able to meet their obligations in respect of £300,000 in the future.
Quite satisfied. When the draft Order was submitted to me we carefully examined the structure of the company and the Order. As a result, we deleted the proviso under which the company proposed to have a minimum charge, and in fact only this year did the Cork Gas Company reduce the price of gas in Cork by 4d. per therm, so that not only is the company working efficiently but its financial structure is eminently satisfactory.
I should like the Parliamentary Secretary to say if he has inquired whether it would not be more satisfactory to have requested the Gas Company to make a new Order, without Article 17, rather than for this House to proceed to confirm the Order with Article 17 deleted.
It would have meant holding a full inquiry. This Order is submitted after it has been published and after provision has been made for the holding of an inquiry, if there are objectors. Any difficulties there were were resolved by agreement and consequently no inquiry was necessary. It is the company make the draft Order and the Department submitted to the company that they should delete Article 17, which they agreed to do; but if they were to redraft the Order, they would have to republish it and a further period of a month would have to elapse before any inquiry with all the necessary publication and detail attached to it. For that reason, and only for that reason, this Article 17 appeared in the Order as it is. It is really only a question of procedure.
