Seanad Éireann díospóireacht -
Wednesday, 11 Dec 1957

Vol. 48 No. 13

Gas Regulation Bill, 1957—Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Minister for Industry and Commerce (Mr. Lemass)

This Bill is not dissimilar from the Bill we have just been discussing. The only reason why the provisions of this Bill were not incorporated in the Prices Bill is that it was deemed to be desirable to keep legislation relating to the control of gas prices in a separate statute because there is quite a code of law in existence dealing with the regulation of the price and quality of gas.

The Bill is, otherwise, however, identical in most respects with the Bill which has now passed from the Seanad. It provides for the introduction of control of gas charges in certain cases in certain circumstances, either when a committee has reported that gas charges are unduly high for reasons within the control of the sellers of gas or when temporary supply difficulties create the risk of the public being exploited in respect of gas charges.

I should explain that gas charges are at present controlled under the Supplies and Services Act, which will, as I have already said, lapse on 31st December. Before the war, there were a large number of Acts relating to gas charges—some applying to gas charges generally and others applying to the charges of individual companies. Some of these Acts provided for control on the basis of fixing maximum charges and others for control on a sliding scale arrangement which related the price of gas to the dividends paid to the shareholders. These Acts provided that, when the price went up, dividends had to come down. These Acts became completely inoperative and difficult, due to the circumstances of the war and the low quality of the coal. The problems of that day made regulations on that basis impossible. Consequently, control was exercised under the war-time emergency legislation and has up to now been exercised under the Supplies and Services Act.

When that Act has lapsed, unless this Bill is enacted, these old Acts will come back into question, and, while I do not want to deprive the Seanad of its power to insert amendments, I should point out that, if they do so, these Acts which relate the price of gas to the profits taken by a company will be back in operation and these companies will, I think, have to remain out of production until the necessary changes in legislation have been made, although it would not be beyond human ingenuity to find a way out of that problem. I am proposing in this Bill that control shall be exercised in the future only in relation to the larger undertakings which are in private ownership.

There are quite a number of small undertakings which supply gas to the smaller towns which I am not proposing to control at all, because most of them are continuing in business only with great difficulty and their problem is not so much that they want to increase the price of gas, but that they cannot get for the gas they sell in competition with other sources of energy and heat a price that will enable them to cover their operating costs. It would be rather futile to talk about control in their case. Nor do I purpose control in the case of undertakings owned by municipal councils. There are a number of such undertakings in this country. If they are presumably managed, conducted and operated in the interests of the ratepayers of the locality, the representatives of the ratepayers on the council can exercise all the control necessary.

The Bill, therefore, is limited in its operation to the undertakings which are listed in the First Schedule. These are privately-owned undertakings engaged on a larger scale of operations than the remainder. The principles of control are the same—no control at all, unless a temporary position of scarcity arises, or unless a committee has reported, on investigation, that circumstances which are capable of being remedied and which are within the control of those engaged in the undertaking are operated to cause charges to be unduly high.

Dr. Sheehy Skeffington

The Minister has shown us that this Bill is necessary by reason of the automatic lapsing of the Supplies and Services Act at the end of the year. He has told us also that the control of the price of gas is also due to the fact that the terms of the previous legislation were completely inoperable during war conditions. He mentioned just now and in the Dáil also that one of the provisions of the pre-war legislation in relation to the price of gas was a simple one: if you wanted to raise the dividend rate, you had to lower the price. There was, in fact—I think I am correct in saying this—an actual proportion laid down which was that for every one-eighth of 1 per cent. you wanted to raise the dividend, you had to reduce the price of gas one-fifth of a penny per therm.

The Minister said that that kind of thing was quite impossible during the war. He did not explain why it would be quite impossible now. I am not prepared to say it would be possible, but if I am to be told that it would not be possible now, I should like to know why. What are the circumstances which would make it absolutely impossible to relate the price of gas to the dividend rate? It seems to me that although the pre-war figures, percentages and so on, might not now be operable, the idea was a good one, for if the gas company, by its efficiency, was enabled to pay an increased dividend, it was asked, before doing so, to reduce the price. In other words, the results of increased efficiency went partly to the shareholders and partly to the consumers.

Whether or not such a regulation would now be operable, I should like to ask the Minister whether, in his view, it would be a good thing if the principle inherent in that legislation were borne in mind by the advisory committees which may be set up. In other words, does he contemplate that there shall be in the minds of the members of the committees some kind of basic relationship between the dividends being paid and the charges being recommended by the advisory committees? I think it is quite a good principle, particularly with a monopoly enterprise, to relate the price of the commodity, in so far as you are attempting to fix it, to the dividend rate; and we must recognise that these are monopoly enterprises and that, consequently, the State, in assuming the right to regulate the charge, might bear in mind the kind of profits being made, the kind of dividend that is being paid, arising out of those charges.

The Minister also suggested—I hope I am not misinterpreting him—that unless we pass this Gas Regulation Bill through all its stages to-day, or at any rate before the end of this year, the gas companies will not be able to operate. That was the horrible picture that he held up before us. Now, this Bill went through the final stages in the Dáil only on 5th December. To-day is 11th December. The Minister comes in here on 11th December, having piloted his Bill through the last stages in the Dáil on 5th December, and tells us that if we do not pass every stage here to-day, all these poor towns will be completely without gas, with the implication that it will be our fault.

I should just like to make the point that, if it is anybody's fault, it is the fault of whoever is responsible—I am not suggesting that it was necessarily the Minister—for not bringing us this Bill in time at least to allow for theoretical amendments. I do not suggest that any amendments are necessary, but it is wrong for a Minister to assume that any Bill coming to this House is incapable of useful amendment. If any Minister has got it into his head that that is so, he is making a mistake, and that impression should be corrected.

Mr. Lemass

May I make it quite clear that I did not suggest at all that it was necessary to pass all stages of this Bill to-day? What is necessary, if the pre-war statute is not to come back into operation, is that it should have passed all stages before 31st December. The effect of not having it passed by 31st December would be to bring back into operation the statutes relating to gas prices which were suspended by Orders under the Supplies and Services Act. That would not prevent any gas company from selling gas, but, in respect of those companies which were subject to regulation on that sliding scale principle, it would force them to bring about such a reduction in the price of gas that it is unlikely that they would be willing to sell it, unless they were given relief in that respect.

Dr. Sheehy Skeffington

Is that because the dividend has gone up so much? They are bound to reduce the price only if the dividend goes up.

Mr. Lemass

A lot of these prices are related to a price per therm which has no relation to present day values. Prices have run on to the top of the scale fixed by any of these Acts and, even on the basis of paying no dividends, a substantial reduction in price would still be in force. I do not think it would be desirable to try to reintroduce control of gas prices on that principle again, even by amending the statute so as to relate the price to present day values.

First of all, I want to make it clear that I am not proposing to exercise any control over the price of gas, unless in the circumstances I mentioned, of some situation arising which would cause a scarcity or an advisory committee, having conducted an investigation, reporting that unduly high prices are being charged for a reason within the control of those operating the undertaking. If, therefore, control is reintroduced in any particular case, it will be either a temporary control to deal with a temporary situation or a penal measure designed to force rectification of the circumstances which cause prices to be unduly high.

Another consideration in that regard is that these Acts were passed when gas was practically the only means of lighting, heating and cooking available to urban dwellers and that monopoly situation of the gas undertakings has now been undermined very considerably. They are now engaged in vigorous competition with electricity and oil and consequently there is now, I think, no real danger of their position being exploited unjustifiably in the sense that people would be forced to pay an unnecessarily high price for gas, with no alternative to the use of gas.

In any case, having regard to the number of companies to which this Bill will apply, that is not likely to be their problem. The problem is that they are incurring increased costs because of increased prices for coal and increased operating expenditures and are finding it difficult to recover those increased costs in their charges by reason of the competition they are encountering. I do not think, therefore, there is any real danger of a position of de-control being exploited, but, if that danger does arise, then the procedure of the investigation and statutory Order will be followed.

I think, therefore, it is far better to work upon the principle of a simple maximum prices Order rather than bring back into operation, in amended form, a system of legislation which was certainly complicated and which envisaged control as a permanent arrangement. I do not envisage it as a permanent arrangement at all.

Question put and agreed to.

Agreed to take remaining stages to-day.

Bill passed through Committee, reported without amendment, received for final consideration and passed.