Seanad Éireann díospóireacht -
Tuesday, 21 Jun 1988

Vol. 120 No. 6

Electricity (Supply) (Amendment) Bill, 1987: Committee and Final Stages.

Section 1 agreed to.

SECTION 2.

Mr. Bradford

I move amendment No. 1:

In page 3, line 29 and in page 4, lines 1 to 13, to delete subsection (5) and substitute the following subsections:

(5) The Board shall establish each of its ancillary activities as subsidiary companies.

(6) The Board shall publish separate accounts for each of its subsidiary companies, along with its Annual Report. Such Report shall include details of any long-term contracts entered into by a company.

(7) (a) All such subsidiary companies and each of its ancillary activities shall conduct their affairs in a commercial manner in order to earn profits for their shareholders.

(b) The Board shall assess the operation of each company established within five years of its establishment and each five years thereafter and consider inter alia

(i) the return on capital achieved,

(ii) the dividend paid to shareholders,

(iii) the desirability of the Board retaining its shareholding in the company.

(8) The Board shall treat its subsidiary companies as commercially independent entities. In particular—

(a) The Board shall not make preferential loans to a company.

(b) The Board shall not provide any subsidies to a company

(c) The Board shall not provide any loan guarantees to a company.

(d) The Board shall price any goods or services purchased from it by a company on the basis of full cost, and the prices charged shall be reported in the Annual Report of the company.

(e) The Board shall not become involved in personnel management or industrial relations of a company.

In my Second Stage speech I made the point that I certainly had no ideological or, indeed, any other objection to this Bill and was delighted that the ESB, as a result of these new proposals, would be able to diversify into other forms of business. This should be helpful to the Electricity Supply Board and to our economy. However, I said I felt that it was most important that those companies who as a result of this legislation will be dealing with the ESB in direct competition should be able to do so in an equal and a fair fashion. Because of our concern that some of the provisions in the Bill are in a sense too advantageous to the Electricity Supply Board vis-a-vis those other companies we put down amendment No. 1.

The main part of this amendment involves the deletion of subsection (5) of section 2 which allows the Electricity Supply Board to lend money to those subsidiary companies which they will be setting up. The point was made in the other House that this provision more or less allows the ESB to become a banking organisation. While that term may be a little strong, the provision would obviously allow the Electricity Supply Board to be quite liberal in the way they could lend money to their subsidiary companies. We are concerned that this would allow the subsidiary companies set by the Electricity Supply Board to have a major and, indeed, an unfair advantage over people attempting to compete with them on a fair and equal basis.

We are, of course, also concerned about the guarantees which the Electricity Supply Board are able to give in relation to these loans. We believe that this is a provision which will give their subsidiary companies unfair advantages. One would also have to be concerned about it from the economic point of view. Some of the subsidiary companies might not be as careful or as diligent in their dealings as they should be and might not worry about the consequences of mismanagement as their loans would be guaranteed by the parent body, the Electricity Supply Board.

Amendment No. 1 deals with what was referred to commonly in the other House as the "arm's length" subsidiaries of the Electricity Supply Board. We are trying to ensure that those subsidiaries to be set up as a result of this legislation will be set up on an entirely separate basis and far removed from the Electricity Supply Board, that they will conduct their affairs as separate entities, on an economic and, hopefully, profitable basis and that they will not use the parent body, the ESB, as a crutch in difficult times.

Subsection (7) (a) of our amendment states:

All such subsidiary companies and each of its ancillary activities shall conduct their affairs in a commercial manner in order to earn profits for their shareholders.

This is very important. There is no point in allowing the ESB to branch out their activities into wide and varied fields unless we are sure that the legislation allowing this also ensures that these subsidiary companies will attempt to be profitable and that the ESB will not set up subsidiary companies for the sake of setting them up. We feel it is very important that a close eye should be kept on all the subsidiary companies of the Electricity Supply Board and, in particular, that we should take note of the return on capital achieved by these subsidiary companies, the dividends paid to shareholders, and the desirability of the board retaining their shareholding in the company.

The amendment says that: "The Board shall treat its subsidiary companies as commercially independent entities" and that it "shall not make preferential loans to a company" and "shall not provide any subsidies to a company", that it "shall not provide any loan guarantees to a company.""The Board shall price any goods or services purchased from it by a company on the basis of full cost, and the prices charged shall be reported in the Annual Report of the company." Finally, "The Board shall not become involved in personnel management or industrial relations of a company". Those overall provisions are extremely important if we are to ensure that this Bill will result in some excellent companies being formed by the ESB. We are seeking to ensure that the subsidiary companies will enhance the reputation of the ESB and the overall economic wellbeing of the community and are not established for the sake of allowing the ESB to vary their activities. We are particularly concerned that the companies should not be able to bring down their competitors because of their structure. When this point was debated in the other House, many Members stated their concern about matters such as this.

We are giving the Electricity Supply Board many new powers. We are allowing them into many areas of activity from which they were shut off previously. We are not objecting to that. However, we are trying to ensure that they play the game fairly in the new field and that they will not undermine in any way those companies who will be in direct competition with their subsidiary companies.

Minister for Energy (Mr. R. Burke)

May I start by commenting not just directly on this amendment but on the main thrust of the amendments put down? The primary function of this Bill is to give commercial freedom to the ESB. Amendment No. 1 and others are unduly restrictive and would erode the freedom that the Bill purports to give to the ESB. For example the main purpose of the Bill is to allow the ESB to set up subsidiary companies. It is important that the board should have commercial freedom to decide for themselves when and where it is appropriate to establish subsidiary companies. It is the board's intention to set up subsidiary companies to handle their external consultancies, for example, fisheries and coal trading activities. I cannot, therefore, accept the amendment as put forward by the Senator.

Mr. Bradford

The Minister's main defence is that these amendments would restrict the commercial activities of the Electricity Supply Board. I cannot see the point he is making. We want to ensure that the Electricity Supply Board get involved in commercially viable and profitable activities and that they operate their subsidiary companies in a fair, equitable and profitable fashion.

I do not think there is anything in the amendment which would prevent the Electricity Supply Board from setting up a company which would work but it would prevent them from dealing in an unfair fashion with the competitors of their subsidiary companies. There is nothing wrong with that. It is a necessary protection which should be put into the Bill.

Mr. J. O'Toole

I have listened to the arguments in support of this amendment but I admit, with regret, to my colleague that I fail to be convinced. It seems that the purpose of this legislation in the first place was to remove restrictions. In my Second Stage contribution I made a comparison between the legislation setting up the ESB and the legislation setting up Aer Lingus. For instance, because they had much broader remit, Aer Lingus were enabled to set up a chain of hotels and other profit-making subsidiaries, whereas the ESB were not allowed to do that.

What we are trying to do, as I understand it, in the part of the legislation dealing with the formation of new companies and new subsidiaries is to let them do precisely what is possible in the commercial world, that is, to take commercial risks after due consideration. This amendment is not in any sense a help, but purely a hindrance. It worries me a little. Only last week we discussed the setting up of the ESB. The ESB were set up under a storm of protest from people selling over-priced electricity in small towns all around Ireland who objected to the provision of a cheaper national electricity service.

I would be very slow to put any restrictions on the commercial viability of the company and the subsidiaries. In commercial or in corporate discussions, the word synergy is an in term to describe the movement of resources, energy, money and expertise from one company to another within the whole chain. For example, the Smurfit Group own a bank at the corner of the square. I would see nothing commercially wrong with that bank making loans available under special terms to an associated company — which is something that they do anyway. The banks do it when they set up their leasing companies etc, and give them special treatment. I see nothing wrong with that. The whole idea of allowing the ESB to set up subsidiary companies is that they can take the expertise in the main company and use it in productive terms in a subsidiary company. Dealing with the general terms of the second half of the amendment, for instance, "The Board shall not become involved in personnel management" would be seriously restrictive. Looking around at present, I can see without any difficulty many opportunities for the ESB. There are engineering companies, not quite small but medium sized electrical engineering companies into which the ESB could move. They could set up a subsidiary company who would buy out 51 per cent or 49 per cent, as appropriate. The subsidiary company could say to the existing people in the company: "Go ahead and do your own thing. We will supply the management and the personnel resources". Unless there is something I fail to interpret in this amendment, I fail to be convinced about it.

Mr. Hogan

I am surprised at Senator O'Toole's failure to be convinced about this amendment. Essentially this amendment is to give the public more information on the subsidiary companies to be established by the ESB. More information about the wellbeing or otherwise of a subsidiary company of a semi-State body can certainly allay many of the fears the public have had over the years about semi-State subsidiaries. It was often the case that the subsidiary company brought the finances of the semi-State body further and further into the mire over a period and caused serious and severe pruning to take place in that company many years afterwards. The public are entitled to information on the ancillary activities of the ESB. They are entitled to see the financial situation of the subsidiary companies.

The amendment provides: "The Board shall publish separate accounts for each of its subsidiary companies along with its Annual Report." We should also be given an indication about the return on the capital, the dividend paid to the shareholders and, above all, the desirability of the ESB board retaining their shareholding in that subsidiary company. There is nothing sinister about this amendment. It is trying to ensure that the public and the taxpayer will know what is going on in the ESB rather than having something hidden away in some of their subsidiary companies.

Mr. J. O'Toole

I would like to correct a point. The reasons people should not be surprised at my view is that, as far as I am concerned, in a semi-State or State company the public should have the same access to information, no more and no less, as the shareholders in an ordinary company. That matter should be dealt with under the Companies (No. 2) Bill and will be when we finally get to it. I do not accept that there should be special and more restrictive practices laid down for the operation of semi-State companies than for an ordinary company. They should all be made to work as honestly, and openly as is commercially allowable.

Mr. Bradford

I am glad to get that point of clarification from Senator O'Toole. While he and I approach this Bill from different ideological standpoints, we both agree that we would like to see the ESB strengthening their activities and their overall position. I would not like to see the ESB using the advantage of their monopoly in their core business to give an unfair advantage to their subsidiary companies in their dealings with their competitors. This is an inherent danger and we must try to provide against it.

The Senator made the point that he would not mind seeing the Smurfit bank up the street setting up other subsidiary companies and funding them. I have no disagreement with that. If those subsidiary companies got into financial difficulties the Smurfit bank or the parent company would have to bail them out. If some subsidiary companies of the ESB got into financial difficulties the taxpayer would have to bail them out, perhaps through higher domestic charges or some other equally difficult levies. We must try to ensure that this does not happen and the only way to ensure that the ESB and their subsidiary companies deal in a fair and efficient manner is by placing these restrictions on them. I do not think they are severe. They are very manageable and are carefully worded. They will allow the ESB to broaden out their activities but will ensure that they do so in an equitable and fair manner.

Mr. R. Burke

That is where I differ from the Senator in relation to the severity of this and the other amendments in his name. I believe that the point made by Senator O'Toole is correct. This would impose restrictions on the ESB which their competitors will not have to face. We would be going totally contrary to the whole spirit of this Bill if this and the other similar type of amendments are accepted. I cannot accept this amendment.

Question put: "That the words proposed to be deleted stand."

The Committee divided: Tá, 23; Níl, 11.

Tá

• Bohan, Edward Joseph.
• Byrne, Seán.
• Cassidy, Donie.
• Doherty, Michael.
• Fallon, Seán.
• Farrell, Willie.
• Fitzgerald, Tom.
• Fitzsimons, Jack.
• Hanafin, Des.
• Hillery, Brian.
• Kiely, Rory.
• Lanigan, Mick.
• McEllistrim, Tom.
• McKenna, Tony.
• Mooney, Paschal.
• Mulroy, Jimmy.
• Murphy, John A.
• O'Callaghan, Vivian.
• O'Connell, John.
• O'Toole, Joe.
• O'Toole, Martin J.
• Ross, Shane P.N.
• Ryan, William.

Níl

• Bradford, Paul.
• Bulbulia, Katharine.
• Cregan, Denis.
• Ferris, Michael.
• Hogan, Philip.
• Kelleher, Peter.
• Kennedy, Patrick.
• Loughrey, Joachim.
• McDonald, Charlie.
• O'Shea, Brian.
• Reynolds, Gerry.

Tellers: Tá, Senators W. Ryan and M. O'Toole; Níl, Senators Cregan and Kelleher.

Question declared carried.

Amendment declared lost.

Section 2 agreed to.

SECTION 3.

Mr. Bradford

I move amendment No. 2:

In page 4, between lines 29 and 30, to insert the following subsection:

"(3) Every regulation made by the Minister under this Act shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution seeking to annual the regulation is tabled in either House within the next 21 days on which that House has sat after the regulation is laid before it, and is subsequently passed, the regulation shall be annulled accordingly but without prejudice to the validity of anything previously done thereunder."

Again this goes back to our view of the necessity for tight control over those companies which are to be set up. Also, we hope that there will be a full examination of them, that they will be accountable and that the public will be fully aware of their activities and their continued commercial viability. Accordingly, it is only right that the regulations should be made available to the Houses of the Oireachtas for scrutiny. We want to ensure that there is a continuing debate on these regulations and that, from time to time, we will be able to comment on the overall operation of this Bill. We want to ensure that what is happening is very closely allied to what we originally intended in this legislation.

Mr. R. Burke

The effect of this amendment would be that once a motion seeking the annulment of a regulations had been tabled, it could not come into force until the motion had been dealt with. Under section 13 of this Bill, which deals with the laying of orders and regulations before the Houses of the Oireachtas, a regulation made by the Minister under this Bill comes into force unless a resolution annulling it has been passed by either House within 21 days.

It is important to look at the main purpose of section 3. It is to allow the ESB to engage in coal trading. However, the opportunity has also been taken to allow the board to engage in the sale and distribution of other products from Moneypoint. As the ESB do not have any particular product or substance in mind at this stage, the Minister must specify, by regulation, the products which they may sell and distribute. The opportunity for trans-shipment of products could arise at short notice and it is felt that the amendment proposed would hamper unduly the commercial activities of the ESB. Motions can remain on the Order Paper for some considerable time before being dealt with. It comes back to the principle of why the ESB should be hampered in their commercial operations. The whole object of this Bill is to loosen the bonds on them and to allow them to operate in a commercial way. Again, I regret that I cannot accept this amendment.

Amendment, by leave, withdrawn.

Section 3 agreed to.

SECTION 4.

Question proposed: "That section 4 stand part of the Bill."

Mr. Bradford

When this Bill was originally published we got a great deal of correspondence from groups in the coal trade and also from many of the harbour authorities stating their fears about what would happen as a result of this Bill. I believe that many of their fears have subsided as a result of the debates on the legislation in the other House. I would like the Minister to make a brief comment on what he feels will happen as a result of this new provision and what he fears will happen to the companies trading in coal at present and what will happen at harbour level.

Mr. R. Burke

At harbour level, there was a certain amount of concern that if the coal trading was to be carried out at Moneypoint and if the coal was to be distributed and transported by road it would mean the death of many of our harbours around the country. I met a number of deputations about this particular issue and I listened to their points of view. I strengthened the wording in the Bill as it had been proposed. I refer the Senator to section 4 (2). This subsection provides that any by-product of coal may only be distributed by cargo vessel from Moneypoint. It not only precludes the ESB from transporting the by-products by rail or road, but it also precludes any other individual who purchases coal by-products at Moneypoint from transporting them by rail or road from Moneypoint. So it is a belt and braces operation. The arrangements are totally copperfastened that it must move by cargo vessel. As far as the companies are concerned that have been operating in coal trading here I should say that, on the wholesale domestic coal side, the ESB will be involving themselves in commercial coal operations in the existing commercial environment and nothing else. The concern about the ports has been met by the provisions of the Bill as passed by the Dáil.

Question put and agreed to.

NEW SECTION.

Mr. Hogan

I move amendment No. 3:

In page 4, before section 5, to insert a new section as follows:

"5.—Where the Board establishes a company under this Act, which is trading on the home market, the Minister shall refer the proposal to the Fair Trade Commission who shall—

(a) establish fair trade rules (including the method of allocating costs in pricing different products) to ensure that fair competition exists between the company and other businesses in the same market;

(b) examine any proposed venture or joint venture to ensure that it shall not lead to a dominant position in the market, liable to conspire against the public interest."

The purpose of this amendment is to ensure that where subsidiary companies engage in ancillary activities they will not occupy a dominant position with an unfair advantage over others in the field. My fear would be that with a semi-State company like the ESB getting involved in an ancillary activity where there are others involved in the same business in the private sector already, taxpayers' money could be utilised to create a dominant position from the point of view of the State resulting in the closure of private companies or interests involved in the same business. In order to ensure that unfair competition will not arise as a result of the ESB engaging in ancillary activities and in order to allay fears that could be generated, this matter should be referred to the Fair Trade Commission by the board initially. I hope the Minister will see the merit in having any such fears allayed initially rather than have a private company take a case against the ESB at a later date on the basis of their having an alleged dominant position in the market place.

Mr. Bradford

I should like to support the sentiments expressed by Senator Hogan. The Minister certainly won the war in relation to amendment No. 1. This will ensure that the Electricity Supply Board will be able to help their subsidiary companies in a liberal fashion. However, the purpose of this amendment is to ensure that such subsidiary companies will be set up only after scrutiny by the Fair Trade Commission ensuring that, even at that stage, the ESB would have to deal with their competitors in a fair and equitable manner.

I made the point earlier, in relation to the other amendments, that there was not much point in introducing legislation to allow the ESB to set up companies merely for the sake of doing so. Some of the consequences of this legislation may well be the closure of some of those subsidiary companies in direct competition with the Electricity Supply Board. This amendment would ensure, through referral to the Fair Trade Commission, that this would not happen. We must also examine paragraph (b) of the amendment in relation to the joint ventures. At this stage it is difficult to envisge what type of joint ventures some of the ESB's subsidiary companies might enter into. There must also be some restriction placed on the ESB, some regulation whereby such joint ventures would be dealt with in an equitable manner. There might be those who would contend that, in a sense, we are trying to stymie an increase in activities within a public company before they begin, but such argument is unfounded. We are trying to ensure that public money — which is what the subsidiary companies of the ESB would be using — is used in the best manner possible and not used to restrict competition.

Mr. R. Burke

Already the Fair Trade Commission have wide ranging powers under the Restrictive Practices (Amendment) Act, 1987. If the Commissioner of Restrictive Practices feels that the ESB are operating in an anti-competitive manner, he may initiate an investigation of their practices. He has the same powers in relation to other companies. It would be discriminatory for the Minister of the day to single out the ESB in the manner proposed in this amendment which provides that, before a subsidiary is set up, the Fair Trade Commission must examine it, the assumption being that it is the State only that would be in a dominant position. The whole purpose of this Bill is to allow the ESB to compete in coal trading. There exist already dominant positions within the coal industry. I see no reason to impose restrictions on the operations of the ESB in the manner proposed here. If the Fair Trade Commission anticipate or suspect that the ESB are abusing their position in an anti-competitive manner, they have power under the Restrictive Practices (Amendment) Act to find against the ESB, the same as everybody else. I have no intention of imposing this type of restriction on them.

Amendment, by leave, withdrawn.

SECTION 5.

Mr. Hogan

I move amendment No. 4:

In page 4, between lines 47 and 48, to insert a new paragraph as follows:

"(c) the business of the extraction of coal or other mineral resources in the State,"

There is a problem in relation to this proposed amendment to section 5. I think I have it wrongly categorised on the amendment sheet in that paragraph (c) refers to the business of the extraction of coal or other minerals resources. I will speak on it but I will not press it to a vote if that is in order. With your permission, I will speak on it in relation to section 5.

An Leas-Chathaoirleach

We are on section 5 and it is quite in order.

Mr. Hogan

I tabled this amendment to ascertain from the Minister if, in view of the fact that he is granting the ESB powers to become involved in ancillary activities by way of subsidiary companies, he considers that the business of the extraction of coal or other mineral resources would form part of that activity.

In the course of my Second Stage contribution I emphasised the difficulties private interests were experiencing, following the granting of mineral licences by the Department, in getting funds together to extract coal resources in places like the Leinster coalfields, the Slieve Ardagh coalfields and such areas where there have been many efforts made to extract coal resources over a long period. The Minister will be aware that there are significant coal resources in these areas. The history of those areas has led me to the belief that their financing by private individuals does not lead to the utilisation of those coal resources for the benefit of the nation. I hope that the Electricity Supply Board, with their new-found powers under the provisions of this Bill, will devise a joint venture arrangement with the public and private sectors working together to provide the necessary finance to extract coal resources from the Leinster, Slieve Ardagh or whatever other coalfields we have. Perhaps the Minister would inform the House of his thinking on this matter.

Mr. R. Burke

Under the provisions of the Bill the ESB will become involved in activities which are related directly to their present activities which have profit potential, that is the idea behind it. The reason for allowing the ESB to engage in coal trading is to enable them take advantage of the fact that, as a large coal user — with the finest deep water facility in the country at Moneypoint — they are in a position to obtain large quantities of coal on the world market at the most competitive prices. It is envisaged that some of this benefit will be passed on to the consumer in the form of reduced coal prices. Coal burned at Moneypoint must be of a specific standard. The use of native coal there would create technical difficulties as well as creating large cost penalties for the ESB. In the circumstances there is no advantage to be gained from empowering the ESB to engage in coal mining.

The provisions of the Bill are geared to extend the ESB's powers and operations into areas where they have associations. For example, foreign consultancies — to use the knowledge they have gained in their operations at home and to reap profit operating abroad in areas where their service and expertise are saleable products. For example, the importation of coal for the power station at Moneypoint will have a spin-off benefit to the economy. They are able to buy in such large quantities that they should be able to pass on the benefits to our economy. Because of their deep water facilities at Moneypoint there may be other specific products as well as coal in which they may be able to trade further into Europe from time to time. The intent is that they should use their existing facilities, but to involve them in coal mining would be going outside their remit.

Mr. Hogan

In view of the Minister's reply would he tell the House what role, if any, the State would have in relation to coal mining activity in the future. For example does he see a role for the National Development Corporation pursuing a line, with public and private investment, in extracting some of our existing coal resources. I see no future for private interests and/or involvement in coal mining activity bearing in mind its history to date. Perhaps the Minister would give the House the benefit of his views in that also.

Mr. R. Burke

This seems to me to be a subject for a very interesting debate on another occasion but does not seem relevant to the Electricity Bill before us.

Mr. Hogan

I am anxious to establish whether the ESB have any specific subsidiary activity in mind in relation to coal mining. I was disappointed to hear the Minister say that he did not envisage them getting involved in an activity such as coal mining in view of his anxiety to see them become involved in many ancillary activities. The people of north Kilkenny and many other areas will be most disappointed to learn that under the provisions of this Bill the Minister will not be availing of an opportunity to extend his remit to ensure public and private investment in this area that would result in much needed employment in the extraction of much of our natural resources lying dormant but which could be utilised to the benefit of the ESB at Moneypoint and of the country generally. I hope the Minister will give the House the benefit of how he envisages coal resources being extracted from that area in order to ensure continuity of supply on the part of the ESB at Moneypoint in the future.

Mr. J. O'Toole

In the light of the serious defeat inflicted on Kilkenny on Sunday I ask the Minister to be as supportive as possible of my colleague.

Mr. R. Burke

I can assure Senator O'Toole that I have already been very supportive of this natural resource in the Kilkenny area. It is the desire of the Government to ensure that, as far as possible, all our natural resources will be utilised for the benefit of our people.

When I came into office in March 1987 I immediately set about rationalising the Leinster coalfield which was in a total mess at that time, first, by advertising a series of tenders for exploration work, some mining leases, including co-operative effort by some people in the Kilkenny region, some of the former coal miners involved there. I set aside a specific area — in view of the fact that they were in a co-operative — to allow them to involve themselves in the coal mining operations in the Leinster coalfield. I can assure the Senator that I will give every possible encouragement to ensure that we have proper extraction of our natural resources in the Leinster coalfield and in any other potential areas.

As far as the involvement of the State is concerned, my Department do not have the sort of funds the Senator has in mind and which would be required to open a mine. I see this as being a matter for the private sector. However, I can assure the Senator that I have had discussions with the Irish Transport and General Workers' Union, the main union representing the men who worked in the Leinster coalfield in the past. They have come forward with some suggestions which have been examined. I also assured them that I will give them every assistance possible by way of applications to the National Development Corporation for any proposals they might have themselves or by way of their bringing forward a consortium to try to develop any part of that coalfield. The Senator can be assured of my total commitment to the usage of our natural resources where coal has a high priority. I must say that I had considerable difficulty, on coming into office, in trying to rationalise the mess I had inherited. The Senator can be assured, as can the people of Kilkenny, that everything possible is being done and will be done to try to provide employment by way of the extraction of natural resources in the area.

Mr. Hogan

I thank the Minister for his most expansive reply in relation to the Leinster coalfields. I hope he will not mind my pursuing the matter a little further. While we all appreciate that successive Ministers for Energy have encountered difficulties in the Leinster coalfield area, it will be of very little comfort to the people of the area that the Minister himself has had difficulties in relation to the extraction of those same mineral resources over the past 15 months. The level of activity there is a monument to the efforts being made and an indication that private investment will not be readily available in order to provide much needed employment in that area. It appears that private investment will not be put into coal mining activities in that area in view of the events of the previous few years there. I know the Minister is more than well aware of that.

I was glad to hear him referring to the recent meetings he had with the Irish Transport and General Workers' Union. I contend the Minister missed an opportunity by way of the provisions of this Bill to ensure that the State would have some role to play in ensuring that the Electricity Supply Board, as an agency concerned with energy and with getting involved in the coal area at Moneypoint, would not expand their remit and become more involved in the extraction of coal resources, the very resource they need to become more self-sufficient and independent in relation to the general usage of fuel at Moneypoint. I suppose I have to be thankful for small mercies on this occasion.

Mr. J. O'Toole

May I ask the connection between that most interesting discussion and section 5 which deals with the terms, conditions and tenure of office of the chairman of the board?

An Leas-Chathaoirleach

For the information of Senator O'Toole, section 5 deals with the powers of the board in relation to by-products of electricity generation.

Amendment, by leave, withdrawn.

Section 5 agreed to.

Section 6 agreed to.

SECTION 7.

Question proposed: "That section 7 stand part of the Bill."

Mr. J. O'Toole

This section has to do with the commercial viability of the company. One of its important provisions is that people should be paid the due rate for the job. Whereas chief executives in the public sector are often considered to be over-paid and in receipt of huge saleries, when their salaries are compared with those of their counterparts in the private sector very often it is discovered that they are under-paid. This leads to the private sector head-hunting in the semi-State and State sector.

I want an assurance from the Minister that the provisions of this section will not be used in any sense to restrict the salary of the chief executive of the ESB, in other words, that the saver written in — which says with the consent of the Minister for Finance — will not be used in any way to restrict the salary of the chief executive. The Minister and House will know what I am referring to. This type of practice has taken place before. We have lost excellent people from the public sector, people whose services we could have done with and could still do with, particularly at this time when we need the best brains, talents and abilities available. I would certainly hate to be a party to the creation of circumstances in which people might be attracted out of a job, such as that of chief executive of the ESB, because they were offered a more lucratively-paid job in the private sector.

Mr. R. Burke

I could not agree more with the Senator. I would be very anxious to ensure that nothing like that happened. I assure the Senator that all the provisions of this section do bring the ESB into line with the standard remuneration controls in other semi-State bodies. It has not been the practice in the ESB and is the standard as of now.

Question put and agreed to.

SECTION 8.

Question proposed: "That section 8 stand part of the Bill."

Mr. J. O'Toole

This is the section which has given me most cause for concern. I cannot see how I could support it in any way. The history of it is this: the ESB do not pay rates for what were probably historically quite good reasons. In their teething period in the twenties and thirties the ESB were not asked to pay rates; it was a protectionist policy which was quite common at the time. The provisions of this Bill do two things. For example in the next section they allow the Minister to repeal their exemption from rates. Let me say immediately, the ESB should pay rates. They should operate in as commercially viable a way as possible. What is happening now is quite unjust. It is unjust that the ESB are being asked, in the words of this Bill, to pay annually to the Minister for the Environment — I know the Minister does not receive such sums personally but to the Department of the Environment and, through the Department to the Exchequer — such sum as the Government may determine.

On Second Stage Senators spoke of the high cost of electricity in this country. Likewise people, in their homes, pubs or elsewhere say it is extraordinary the price we have to pay for electricity compared with our European partners. There is much play made of the fact that we pay slightly more, on average, for electricity than is paid in the rest of Europe. I should stress that it is slightly more only. For that reason we should examine some of the reasons for it. It is my belief — here I stand to be corrected and I have no doubt I will be corrected because there are no figures available — that the ESB pay the State annually of the order of £25 million. It is my understanding — and I have spoken to a number of people about this — that if we were to value the property of the ESB and ask them to pay the commercial rates any other factory or industry does then, in fact, they would be paying half that amount only. In other words, the provisions of this section facilitate a surcharge on the ESB at a time when people are seeking cheaper electricity, are demanding the ESB to be more competitive. While they are out in the marketplace doing their best, we propose to surcharge them in a totally unacceptable manner.

This section is unnecessary because the next section — I will not pre-empt the discussion on it — allows the Minister to charge the ESB or facilitate them in the payment of rates. All the provisions of this section do is bridge the gap. Unfortunately, there is no time limit on that gap. It is an enormously attractive proposition for the Government if they receive £15 million or so annually more than they might receive otherwise. I do not believe there should be a surcharge imposed.

With due respect to the Leas-Chathaoirleach, I am sorry the Cathaoirleach is not in the Chair because I am going to rush to the defence of Clare County Council again. Moneypoint, which as the Minister so rightly said, is the largest deep water port in the country, an enormous facility in that area is a huge expense on Clare County Council. I expect that the rest of my colleagues in this House who are dependent on the votes of county councillors — and I have no axe to grind in this respect — to be elected, who have spoken time and again about the lack of money for local authorities will support me on this issue. We are saying to Clare County Council, a rural county council with not a lot of money: "You must supply the roads, water, sewerage facilities; you must cover the cost of that huge industry in your county without getting any return". As I said also on Second Stage, at one stage it became so embarrassing for the ESB that, as far as I understand the position, they paid some premium to Clare County Council toward the cost of building roads around Moneypoint. Anybody who has been in that area will have seen the new roads that have had to be built solely to accommodate the ESB. It is unfair on local authorities that they are losing out and that the money is being paid to central funds or the Exchequer.

In summary I contend that Clare County Council should get their due rate, that the ESB should pay their rates and that the Government should not surcharge the ESB. That is a very simple operation. All we need to do is eliminate this section and allow the remainder of the Bill go through, as it stands, and the ESB will pay rates like other commercial companies. That would have the effect of reducing the surcharge on the ESB and, certainly, will have the effect of reducing the cost of electricity. That would be a very attractive proposition creating more money for the local authority, reducing the cost of electricity brining the ESB into line with other commercial enterprises. How could the Minister resist it?

Mr. Bradford

I must admit that Senator O'Toole's brief contribution has given me some food for thought. He made two important points: first, that this provision is a surcharge or levy by a backdoor method. It certainly makes one think, since we are seeking cheaper electricity, that such a practice is allowed to continue and is adding anything up to £25 million to the ESB's annual bill. I am not sure if that amount is correct. Perhaps the Minister will correct me if I am wrong.

Earlier we spoke of fair competition, about allowing the ESB to expand their activities and compete with other companies through their subsidiaries. That being the case, we must try to ensure that they compete on as fair and equitable a basis as possible. Senator O'Toole's comments in relation to that are worthy of thought. Since a giant factory or even a small business is expected to pay rates, the same provision should apply to the Electricity Supply Board. Senator O'Toole made a fair point about one county where there has been expenditure of large amounts of money to bring the facilities up to the requisite standard of the people dealing with Moneypoint jetty with no return, as such, to the Clare County Council. I shall be most interested in hearing the Minister's reaction. As Senator O'Toole has said, it would involve simply a deletion of the section. I shall be glad to hear what the Minister has to say.

Mr. R. Burke

This section is there merely to clarify the legislative effects of the 1982 Act which gave power for the imposition of the levy. These payments — and I want to assure Senator O'Toole on this — are intended only as an interim measure until, as in accordance with the Valuation Act of 1988, all ESB property has been valued and the ESB become liable for the payment of rates in the normal way.

Senator O'Toole's concern seems to be that this is an open-ended levy and there is no final date for when it will be rates as distinct from levies. There is a valuation procedure under way at the moment and it is expected that, not in 1988 but from 1990 on, they will be paying rates in the normal way rather than the levy that exists. That is covered in section 9. Up to now certain properties have been exempted from rates. Section 9 provides for the repeal of these sections by way of ministerial order at a future date and the intention is that it will be as soon as possible. Because of the amount of property the ESB have throughout the country, the earliest date it can be is the beginning of January 1990. It is not a never ending matter.

I accept fully the point made by Senators in relation to the levy. It is undesirable and it is far preferable that there should be rating. The Government have accepted that principle. Under the Valuation Act, 1988, all ESB properties have to be valued and we intend to go ahead with it as fast as possible.

Mr. J. O'Toole

I thank the Minister for his reply. I am aware of the arrangements under the next section of the Bill which will bring this into effect down the road. The Minister is asking us to vote on a levy over the next two years of anything up to £30 million on the ESB. When I say "levy" I mean in excess of what they might have to pay under their rateable valuation. I have great difficulty here. The Minister is asking us to vote in favour of reducing the profits of the ESB, and the board could not go along with this. It is unfair. What is the position about the local authority in the intervening period? Will some grant be made to the local authority in the meantime? Both of those lose out.

Mr. R. Burke

When this was introduced in 1982, 1983 was the first operative year and the levy at that stage was about £10 million. It has been running around £24 million to £25 million every year since then. It is not a question of £30 million above what they would have been paying in rates. That £24 million was intended to be in lieu of all of the rates. The sooner this is clarified by a proper valuation across the board, as is intended in the Valuation Act, 1988, the better. That is the way to go forward. I accept fully the Senator's point of view and we are trying to achieve that and get there as fast as possible. In 1988 the levy figure is £24 million.

Mr. J. O'Toole

I am aware of that. I got the figure of £30 million because I knew the figure was around £25 million a year. I am assessing their rate bill at between £10 million and £15 million, perhaps £12 million or £13 million a year. It is very hard to make a judgement on it. If it was only £10 million a year for instance, they are now being charged for the next two years £15 million more than they would need to pay.

Perhaps the Minister would respond also on the area of the local authorities involved, particularly Clare County Council. Even though I stood up fully intending to put this matter to a vote, on the basis of the Minister's response to me I do not feel inclined to push it to that level. I accept the Minister's commitment to bring this in at the end of next year to take effect from 1990. If I was absolutely certain that was going to happen, I would accept it. I am concerned about both the local authority and the ESB, and time is of the essence. What type of support is being given to Clare County Council on this issue, if any?

Mr. R. Burke

As far as the final figure that will be assessed is concerned, obviously that is a matter for conjecture. Nobody knows at this stage. The ESB have their assessment of it. We have ours which is around £24 million to £25 million which is equivalent to the levy for this year, but nobody will know until the work of valuing each individual ESB property is finalised. As to the apportionment of that rate, we are into a very detailed and deep debate, again for another day. Should Clare County Council have the full benefit——

Mr. J. O'Toole

No.

Mr. R. Burke

——of all of the rates on Moneypoint whereas the adjoining county, Galway, which might not have the same ESB infrastructure, would not have the same income from rates? Clare would also have the benefit of all the jobs in Moneypoint and the spin-off of having Moneypoint in the area. Should an area that is fortunate enough to have a power station in it and all the jobs involved, also have the benefit of all the rates or should the overall national rate paid by the ESB on a proper valuation system be apportioned by the Minister for the Environment? We believe it is fairer for the Minister for the Environment to apportion it rather than leaving one county to get all the benefit and another to get nothing.

As regards the payments to Clare County Council for road upsets and other problems that have arisen, as is normal in any major development whether in the Dublin region or anywhere else, development levies are paid and development levies were paid by the ESB in the Moneypoint area in Clare for the improvement of road structures etc. It is only right and proper because of extra weight, extra structure and extra demands on the road network in the area.

Mr. Fallon

The Minister said that ESB properties had been valued under the Valuation Act. That Bill was introduced in the Seanad in 1988. It was debated at length. One of the key features of that Bill was the fact that the ESB would now be valued on a global basis. The Minister referred to ESB properties. I made the point in that debate that it seemed that whoever prepared the section dealing with the ESB must have been an electrical engineer brought from the ESB because not alone did it refer to properties, office blocks and so on, but it went into conduits and ESB wires. It covered the whole area. The Minister has been modest about it. The whole ESB structures in so far as valuations are concerned are properly covered under the Valuation Bill of 1988, a Bill that was discussed at length in this House and subsequently in the other House.

Mr. J. O'Toole

To correct the record for Senator Fallon. I am not objecting to the valuation system set up. I agree with it. My contribution was to the effect that section 8 which we are now debating is merely a bridge between the present arrangement of a surcharge and the establishment of the rate, the setting of a rate and the distribution of the rate. I have no objection to what is going to happen when it comes into being. My problem now is that in standing up to oppose this section, I was doing so because until that happens, (1) we are surcharging the ESB and causing an increase in electricity prices, (2) we are depriving Clare County Council of a rate which they are entitled to and, (3) I believe it takes from the commercial viability of the State sector in providing a utility service. The Minister has accepted my arguments on it. For that reason I have great difficulty in pushing the amendment because he is such a nice man in many other ways as well. For that reason, I reluctantly withdraw my objection and look forward to the introduction of rates in the ESB in 1990.

Question put and agreed to.

SECTION 9.

Mr. Bradford

I move amendment No. 5:

In page 5, line 35, after "order" to insert "which shall be not later than 31st December, 1989".

This again is very much related to our earlier amendments in trying to ensure that the public and we here in the Houses of the Oireachtas are kept fully aware of the activities of the ESB and their subsidiary companies. I do not think there is anything else that can be added to it. It would strengthen slightly the ability of the public to know exactly what is going on within these companies.

Mr. R. Burke

The same applies to this amendment as to other amendments in this area.

Amendment, by leave, withdrawn.

Section 9 agreed to.

Sections 10 to 15, inclusive, agreed to.

NEW SECTION.

Mr. Bradford

I move amendment No. 6:

In page 6, before section 16, to insert a new section as follows:—

"16.—(1) The Board shall satisfy itself that any electrical installation newly connected or reconnected with electricity supply is at the time of connection of a satisfactory standard of safety. Before implementing any scheme to execute this duty, it shall refer the proposed scheme to the Fair Trade Commission to ensure that it does not interfere with fair competition.

(2) Nothing in this section will be construed as making the Board liable for any deficiencies in the said installations."

This amendment, unfortunately, was short lived in the Dáil where, due to the restrictions placed on them, they were not able to deal with it. However, it is extremely important that it should be discussed here in Seanad Éireann and the public made fully aware of what they can and cannot expect from the Electricity Supply Board in relation to the safety aspect of installation work, etc.

Unfortunately, most people have a very wrong view of what the ESB are doing in relation to the safety aspect of installation work and the supply to the domestic consumer. There is a feeling abroad that the ESB are in some way regulating, in a very tight fashion, those people who are doing electrical installation work and the ESB instal the supply of electricity to a domestic consumer only after some sort of rigorous examination. This, however, is a very false picture.

Despite the fact that the original ESB Act of 1927 would seem to allow for something such as this amendment to be brought in and for the setting up of some sort of register, this has not taken place; indeed, it would appear to be the intention of the Electricity Supply Board that it shall not take place. This is very regrettable. We have to try to ensure by some method — we suggest the passage of this amendment or if the Minister is not in agreement he might consider the introduction of a separate Bill to deal with electrical safety, or it could be dealt with in the Building Control Bill, which will be going through the Dáil shortly — that some standards are brought in to provide that electrical installation work is done in a fashion which leaves no room for error or possible danger to the householder.

At present a contractor, obviously unregistered as no registration system exists, can do the wiring in a house. He can fill out a form — in fact I can fill it out for him and sign it and, on the signing of it, I would almost become an electrical contractor — take it to the district office of the ESB where staff could look at it and could, there and then, pass the work, which they had not seen, as being fit and ready for the connection of supply. That very loose system must be questioned. We cannot be satisifed with it. You can go into an ESB office and get one of these forms and a person who is not even an electrical contractor can sign it on behalf of the person who carried out the work and that can, in theory, be passed by the ESB. That is not right.

There has been discussion on this aspect. The point was made that some form of voluntary registration of electrical contractors should or could be brought in. This pertains in some countries throughout Europe. The United Kingdom is one which comes to mind. This system has not worked well. A month or two ago the consumer magazine Which examined this in the United Kingdom and found the voluntary system of registration very haphazard and working very poorly. It has been in operation there for 25 years and that magazine, which always carried out its investigations in a very fair, unbiased and detailed fashion, was of the opinion that it had not worked well and should be changed to a system of tighter control.

At present many countries throughout Europe have a system of registration for electrical contractors. We hear almost daily what will happen when this famous year of 1992 comes with the completion of the internal market. That could mean contractors here would be unable to work in the EC because countries there would have a system of registration and we would not. It could mean that the electrical contractors in European countries who are not considered fit for registration in their own countries and who are unable to pass whatever rigorous examinations are needed to qualify could come and work in this country. It would be regrettable if electrical contractors who are not considered fit by some of our European counterparts to work in their own countries could come and work in this country. On the other hand, it would be a pity if our contractors, because they are not part of a registered set-up, could not work throughout Europe.

I mentioned the fact that a contractor or a person on his behalf has power to sign this famous document without any rigorous examination of the work done. The follow-up is that he goes to an office of the Electricity Supply Board, presents his document and they judge him on it. The Electricity Supply Board tell us they have no registration system, and I am not sure whether they would favour it, I have a document here which shows quite clearly that they have their own system of informal registration and what are called proven and unproven contractors. The contractors are not made aware of this.

You, a Leas-Chathaoirligh, as a contractor would not know whether you were on the proven list or the unproven list. The difference would obviously be that, if you were on the proven list, your work would be passed straight away and if you were on the unproven list you could be weeks or even months waiting for your work to be passed. That would mean that your business would not be able to operate as efficiently or on the same basis as a person who was considered by the ESB to be a proven contractor. It is unfortunate that the electrical contractors have no system of knowing whether the ESB consider them to be proven or unproven. Therefore, three is need for the immediate setting up of a system of registration so that everybody can operate on a fair and equitable basis and the domestic consumer will know when his electricity is installed that everything is O.K.

At present the Electricity Supply Board are responsible only for supplying the electricity to the meter. They are not taking responsibility for work done around the house and they are making that quite clear. More seriously, they are making it quite clear that, when they pass a house as fit for the installation of electricity supply, they are not stating that the work within the house is done correctly. They will not be responsible for any deficiencies which might occur. This is very dangerous. The domestic consumer is guaranteed by nobody in relation to the work done within his house. We are talking about an extremely powerful and dangerous source of energy and it is very important that some system should be set up as soon as possible to ensure that the domestic consumer in particular is safeguarded to the maximum.

Mr. Hogan

I support the remarks made by Senator Bradford in relation to installations and call to mind the number of accidents that occur due to faulty workmanship or the poor standard of installation in many instances in rural areas, in particular in isolated rural areas where perhaps people are not aware of faulty electrical installations and for one reason or another fail to take adequate notice or get appropriate electrical contractors in to have a look at their house and to rewire their dwellings. I was glad that, under the last home improvements grant scheme, an item of grant-aid was the rewiring of pre-1940 dwellings. This indicated the thinking of the Department of the Environment at the time that many rural and older dwellings had faulty electrical installations. The amendment proposed by Senator Bradford, which I am seconding, provides an opportunity for the Minister to ensure that adequate standards are complied with in relation to electrical installations. Perhaps, if he is not prepared to accept this amendment, he will indicate what other measures he would consider in relation to safety for the domestic consumer.

Mr. R. Burke

I share fully the concerns expressed by the two Senators. My Department with the Department of the Environment, the ESB and the Electro-Technical Council of Ireland, ETCI, are at present looking at the question of the safety of electrical installations and, when the examination is completed, any necessary statutory amendments can be considered. My own view, which I am putting forward for examination, is that we should involve a register of approved electrical contractors somewhat along the same lines as we have at the moment in the gas industry.

Section 33 of the 1927 Act gives the ESB authority to make regulations relating to the protection of public safety and I am hoping, therefore, that it will be possible to cater for this matter without recourse to the amending legislation as proposed by Senator Bradford. Senator Bradford said if we cannot accept this amendment we should consider alternative legislation. I do not think I will have to come back with alternative legislation because I think I will be able to do it under regulations in the existing 1927 Act but I share fully the Senator's expressed concern about this matter.

Mr. Bradford

On a point of clarification, can the Minister clarify why he would expect that at this stage the ESB would help out in the setting up of some sort of registration list? Up to now they have done very little about this. They appear even to have tried to ensure that it would not happen. Will the Minister's Department press to ensure that the position will change? Has the thinking within the ESB changed? If so, does he think this general consensus will ensure that within a short time we will see some sort of registration list?

Mr. R. Burke

The Senator can be assured that the ESB themselves are very anxious to see this formalised as soon as possible and the Government are concerned about it. That is why this examination was initiated by my Department and the Department of the Environment. Therefore, the Senator can be assured that the matter is receiving urgent attention and we hope to have the approved electrical contractors list as soon as possible.

Mr. Bradford

Would I be right in thinking that the new system will not be voluntary but mandatory, and will it be based on a certain type of examination, or experience, or criteria as is the case in some European countries?

Mr. R. Burke

We are going into another subject. Rather than discussing the details of the proposals which I do not have before me, I assure the Senator that a mandatory list, as in the gas industry, is on the way. The ESB are anxious to have the situation formalised, and it should meet the expressed concerns of the Senator.

Mr. J. O'Toole

This is a welcome amendment and I urge the Minister to let us know if there is any way in which he could accept it, even in the interim period before bringing in the new legislation. It covers the problem that exists at present and would be useful cover and protection both for the board and for the Minister and a welcome development in the intervening period. Perhaps the Minister could let us know how that would effect legislation next year or the year after.

Mr. R. Burke

We will approach this by regulation under the existing 1927 Act, so we will not need legislation on it. I will not accept this amendment as drafted. I believe it is better to have the examination and the discussions that are going on between the Department of the Environment, my own Department the ESB and the Electro-Technical Council of Ireland and let them come forward with their ideas. We can then put this register into operation. I believe that is the best way forward and I assure the House that this is being treated as a matter of urgency by the Government.

Amendment, by leave, withdrawn.

Section 16 agreed to.

Title agreed to.

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