I am pleased to be back in the Seanad to report on this Bill which was initially passed by the Seanad last October. Since then the Bill has been the subject of much lively and interesting debate in the Dáil and has been amended both on Committee and Report Stages in the Lower House.
Of the amendments taken in the Dáil, five were of a substantial nature. One of these was inserted into the Bill at the request of my colleague, the Minister for the Marine and Natural Resources, Deputy Fahey, and deals with access to upstream pipelines, that is, pipelines that connect gas production platforms with onshore terminals. The amendment ensures that Ireland fully meets its EU obligations in regard to this issue.
The other four substantial amendments are set out as new sections to the Bill dealing with codes of conduct, declarations of interest, disclosure of interests and provision of information. These all impose, in one way or another, various obligations on the commission for energy regulation. Seven of the amendments were accepted on the advice of the Office of the Attorney General to ensure that the Bill fully meets Ireland's obligations under the EU gas directive. A further number made improvements to the proposed regulatory framework by, for example, strengthening the commission's powers in relation to certain undertakings.
Over half the amendments taken in the Dáil were to clarify the existing text, to amend incorrect references or were consequential on other amendments. For the benefit of Senators, I will explain the effects of the more important amendments made in the Dáil.
In section 2, the definition of "storage" has been refined to exclude any gas contained within a pipeline at any one time. This basically means that line-packing, which is the stocking of extra gas in a pipeline by an operator by increasing the pressure in that pipeline, cannot be taken to be a type of storage. Line-packing is an important facility used by pipeline operators in balancing the system and if the definition remained as it was, other gas undertakings would be entitled to access this as a form of storage which, in turn, would have created difficulties for the system operator's ability to manage the daily operation of the system.
Section 7 has been amended by replacing all references to the word "section" in subsections (3) to (7) by the word "Act". This change ensures that the provisions of these subsections apply both to functions being transferred by way of the Schedule and functions being otherwise transferred under this Bill.
Senators will notice that there are three new sections inserted as sections 8, 9 and 10 in the Bill. Section 8 ensures that the commission is obliged to draw up and publish a code of conduct for its members and staff. Section 9 imposes obligations on the commission's members and staff, as well as consultants and advisers employed by the commission, in regard to declarations of interest. Section 9 imposes similar obligations in regard to disclosures of interest.
An additional paragraph has been inserted in section 12(5) of the Bill which deals with the com mission's powers to hold a competition for the selection of a person to be granted consent to build a pipeline in a particular area. The new paragraph clarifies that any regulations made under this subsection can provide the power to the commission to impose appropriate terms or conditions on a successful applicant. A similar amendment has been made to section 23 of the Bill to the equivalent provision dealing with the commission's power to hold competitive processes for the granting of orders under section 2 of the 1987 Act to confer town-gas functions on persons.
There are a number of important changes to section 14(1), which amends the third party access provisions contained in the Gas Act, 1976. As Senators will recall, persons who are entitled to third party access rights are those who are entitled to obtain a supply of gas from suppliers other than BGE, or to arrange for the transportation of gas on their behalf through the BGE system. The first change that has been made was to extend the categories of person eligible for third party access to cover all natural gas licence holders and holders of petroleum leases, that is, producers of natural gas. This change ensured that the third party access provisions in the Bill fully comply with Ireland's obligations under article 16 of the EU gas directive.
Second, a new section 10B of the Gas Act, 1976, is now being inserted by section 14(1) of the Bill. This has been done at the request of my colleague, the Minister for the Marine and Natural Resources, who has responsibility for upstream pipelines. These are pipelines that link gas production platforms with the onshore terminal where the gas is processed and the new section 10B ensures that Ireland meets its obligations in regard to third party access to upstream pipelines under the EU gas directive. The new section 10B has been modelled to the greatest extent possible on the section 10A that was already proposed in the Bill. This is because the provisions of section 10A have been in force since 1995 and market players are familiar with their rights and obligations under these provisions. Allowing for a matching framework for the upstream end of the market provides continuity and certainty for market players.
A further improvement in this section is the inclusion of a new subsection (9) in section 10A. This imposes an obligation on the commission to consult the relevant national regulatory authority in another member state in the event of a cross-border dispute concerning access to a pipeline. This deals with an obligation that already exists under the EU gas directive.
The amended version of section 11 of the Gas Act, 1976, which is set out in section 15, has also undergone a change. It means that section 11 only deals with the Minister's shareholder powers in regard to the profits and financial objectives of the board. The provisions dealing with directions to the board in regard to pricing policy are now incorporated as part of the commission's powers under the Gas (Amendment) Act, 1987. This is done by way of an amendment set out in section 23(2)(b)(vii) of the Bill.
The section of the Bill dealing with natural gas licences has also been subject to some amendment. The scope of activity allowed by a supply licence has been redefined and simplified. The result is that it is now clear that a person who holds a supply licence can supply natural gas to anyone who is eligible for third party access rights either within the State or in another member state of the EU. This brings the provision fully in line with the requirements of the EU gas directive.
The scope of the commission's powers under subsections (14) to (17) of this section has undergone a necessary enhancement. These subsections, which are based on similar provisions in the Electricity Regulation Act, 1999, give the commission the power to take immediate action to protect public health and safety, the environment or the continuity of supplies of natural gas. The commission's power also covers instances where licensees contravene a term or condition of their licences.
The amendment made to these subsections in the Dáil ensures that the commission's powers also cover people who are exempt from having a licence by virtue of section 16(4) and people who are engaged in town gas activities by virtue of an order made under section 2 of the Gas (Amendment) Act, 1987. In conjunction with this, the amended subsections (16) and (17) ensure that the commission will have the power to modify the duties or obligations conferred on a person by an order made under the 1987 Act and that the provisions of the Electricity Regulation Act apply to the notification of and appeals against such modifications. The amendments to these licensing provisions improve this section of the Bill and strengthen the commission's powers in this area.
Section 22, which deals with the funding of the commission, has had an additional provision inserted into it at paragraph (c). This inserts a clarification into the Schedule to the 1999 Act which ensures that the Commission on Electricity Regulation is clearly able to impose a separate levy order on natural gas undertakings following enactment of the Bill and that such a levy can take immediate effect. This amendment was important to ensure that the commission could begin funding its activities in the natural gas area as soon as possible after the transfer of functions took place.
Two new amendments to sections 26 and 32 of the Gas Act, 1976, have been inserted in section 23, which deals with the area of miscellaneous amendments to the various Gas and Electricity Acts. These amendments rectify an oversight that was made in the previous amendments to these sections in the Gas (Amendment) Act, 2000. The amendments incorporated in this Bill ensure that Bord Gáis Éireann and all other operators in the gas market have exactly the same rights under the Gas Act, 1976, in regard to entry into land and the making of compulsory acquisition orders. The need to ensure that the rules and regulations governing the market do not discriminate unfairly between undertakings is a fundamental principle of EU law.
The discrepancy that existed under section 32 of the Gas Act, 1976, was rectified in November last by the Minister for the Marine and Natural Resources by way of S.I. No. 517 of 2001. The provision contained in the statutory instrument has been replicated in section 23 and the statutory instrument is accordingly being revoked under section 24. Including the amendment in the body of the Bill rather than having it in a separate statutory instrument means greater clarity and transparency in the legislative framework.
A number of important amendments to the Gas (Amendment) Act, 1987, have also been included under section 23. These are set out in section 23(2)(b). In subparagraph (i) of this provision it is made clear that the commission, in addition to having the power to make an order under section 2 of the 1987 Act, has the power to refuse to make an order, when appropriate. The amendment also clarifies that such orders do not confer exclusivity on the undertaking in regard to the area to which the order relates and that the commission may make concurrent orders for certain areas. This is a necessary step towards ensuring that competition may be introduced when and where appropriate.
Subparagraph (ii) sets out clearly the conditions under which the commission may refuse to make a concurrent order in regard to a certain area. The commission is given the power to refuse to make a concurrent town gas order for the provision of pipelines in a specific area where the commission considers that there is already adequate provision for pipelines in that area. However, the amendment requires the commission to refuse to make a concurrent order for the supply or sale of gas in a specific area prior to full liberalisation of the gas market.
This is an important amendment and ensures that the introduction of competition into the sale and supply of town gas is fully in line with the timetable proposed for full liberalisation of the market which will be introduced through the reduction to zero of the annual rate prescribed under the third party access provisions in section 10A of the Gas Act, 1976.
