I am pleased to have the opportunity to present this Bill for consideration by Seanad Éireann. Before I proceed to outline the detail of it, section by section, I would like to spend a little time in explaining its significant elements, namely, providing the Commission for Energy Regulation, CER, with powers to impose administrative sanctions, the renaming of the CER and providing for a wider definition of the existing single electricity market, SEM.
The Bill has been designed to revise, consolidate, update and expand energy legislation in various areas, one of which concerns the enhancement of the enforcement powers of the Commission for Energy Regulation. The Bill also provides for the renaming of the CER to reflect its current range of responsibilities. In addition, it addresses a wider definition of the existing single electricity market, bringing it into full EU compliance, known as the integrated single electricity market or I-SEM project. Another element restates the REMIT provisions currently included in secondary legislation. This relates to market-abuse offences in the wholesale electricity and gas markets and is required by the EU regulation on wholesale energy market integrity and transparency, otherwise known as REMIT. The Bill also contains various amendments to the Electricity Regulation Act 1999, the Gas Act 1976, the National Oil Reserves Agency Act 2007, the Sustainable Energy Act 2002 and the Registration of Title Act 1964. In essence, therefore, this is a miscellaneous provisions Bill and the amendments proposed will result in more robust energy legislation.
I will describe the background to the powers to apply administrative sanctions which it is proposed to give to the CER. The role of the CER has expanded considerably since its establishment in 1999. For a regulator to be effective in the performance of its duties, it should have available to it sufficient powers to ensure its decisions, properly taken in accordance with the law and the objectives of EU and national energy legislation, are implemented. The Forfás 2013 report on sectoral regulation stated regulatory sanctions were an essential feature of a regulatory enforcement toolkit and central to achieving compliance. Sanctions have a deterrent effect and demonstrate that non-compliance will not be tolerated. Effective enforcement, underpinned by an adequate sanctions regime, ensures non-compliance results in consequences that will put the violator in a worse position than those who have complied with their regulatory obligations. Additionally, the International Energy Agency, in its most recent review of Ireland's energy policy in 2012, stated Ireland should ensure the powers of the CER were enhanced, as necessary, in order to ensure market and competition rules were strictly adhered to and that the interests of consumers were protected.
The CER possesses a range of enforcement powers, including directions, determinations, fines in certain limited circumstances and licence revocation. However, it is missing an effective range of administrative sanctions beneath the ultimate measure of licence revocation. The Bill provides for enhanced powers of investigation by the CER and specifically for the imposition of administrative sanctions, including financial penalties, in respect of defined "improper conduct" by energy undertakings. The Bill sets out a defined and structured process, both for the investigation of improper conduct by energy undertakings and for the related imposition of sanctions. The CER will be empowered to carry out an investigation, as it considers necessary, in order to identify improper conduct by an energy undertaking. Inspectors can be appointed to carry out such investigations. The Bill empowers the CER to impose either major or minor sanctions, at the appropriate stage in the process, if it is satisfied that improper conduct, as defined, has been identified. A "major sanction" is a financial penalty, while a "minor sanction" means the issue by the commission of an advice, a caution, a warning or a reprimand, or any combination of these. The High Court will be involved in the case of imposition of major sanctions.
I will address the proposed change of name for the commission. The role of the CER now also includes the economic regulation of water services. In view of its expanded portfolio, it is both appropriate and timely to change its name from the Commission for Energy Regulation to reflect its current role. It is proposed, therefore, that the electricity, gas and water regulator will be known as the Commission for Regulation of Utilities, CRU.
I turn to the integrated single electricity market or I-SEM project. The Bill provides for a wider definition of the existing single electricity market. This will facilitate the North-South regulators' project, known as I-SEM. This is a project that brings the single electricity market into full EU compliance. Compliance with new EU cross-border trading electricity codes, to enable closer integration with European electricity markets, is the responsibility of the Governments of Ireland and Northern Ireland. The current rules governing the existing all-island wholesale electricity market, the single electricity market, are not compatible with these new EU trading codes. Therefore, both Governments have tasked the SEM committee with developing new market arrangements for the all-island wholesale electricity markets. As I said, the new market is called the integrated single electricity market, I-SEM. This project is well under way and expected to be completed by the end of 2017. The Bill, accordingly, contains a change to the current SEM definition in the legislation to encompass I-SEM.
I propose to outline the provisions of the Bill. For the convenience of the House, a detailed explanatory memorandum has been published and it provides a synopsis of the provisions of the Bill. The Bill consists of 27 sections. Section 1 in Part 1 contains standard provisions concerning the Short Title and commencement. Section 2 is also a standard provision which provides for a number of definitions for ease of reference.
Section 3 provides for the repeal of a small number of redundant legislative provisions. It includes the repeal of the Intoxicating Liquor Act 1946 which is an obsolete provision. The Minister for Transport, Tourism and Sport is the "relevant Minister" with regard to this Act; however, that Department has requested that this provision be progressed via this Bill. Section 3 also provides for the repeal of section 27 of the Electricity Regulation Act 1999 and section 13(5) of the Gas Act 2002. These provisions are deemed to be obsolete.
Section 4 in Part 2 provides for the renaming of the Commission for Energy Regulation. I have already explained how this is to reflect its expanded regulatory role.
Section 5 in Part 3 amends the Electricity Regulation Act 1999. These amendments will enhance the commission's powers of investigation and allow for the imposition of administrative sanctions on energy undertakings for improper conduct. Consequently, a number of new sections are being inserted into the Electricity Regulation Act 1999.
These new sections are as follows: a new section 55 is inserted into the 1999 Act, which provides for a range of definitions, including definition of improper conduct; a new section 56 provides for the appointment of an inspector to carry out an investigation on behalf of the commission; and a new section 57 sets out that the commission can carry out an investigation of the performance of any of the functions conferred on it by the Electricity Regulation Act 1999, or any other Acts of the Oireachtas. The commission may call such an investigation, as it thinks fit to be carried out, to identify any improper conduct by any energy undertaking. It also provides for the terms and conditions in regard to the appointment of an inspector.
A new section 58 sets out the powers of an inspector. These powers provide for the following: to enter and search premises and vehicles; to carry out examinations or inquiries; and to acquire the production of documents. An inspector may, if necessary, be accompanied by a member of the Garda, and may seek a warrant from the District Court to enable him or her to enter a relevant premises or private dwelling. Any person who obstructs or impedes an inspector is guilty of an offence. An inspector may, if he or she thinks proper, conduct an oral hearing on his or her own initiative, or if requested to do so by the energy undertaking.
A new section 59 sets out the actions to be taken by an inspector on completion of an investigation, including the drafting of the report following the investigation. Where the inspector is satisfied that improper conduct has occurred or is occurring, he or she cannot make any recommendation as to the sanction to be imposed on the energy undertaking.
A new section 60 sets out the action to be taken by the commission upon its receipt of the inspector's final report into the improper conduct. The commission must review and evaluate the inspector's report. The level of sanction to be imposed is a matter for the commission and not the inspector. Having considered an investigation report, and if it is satisfied on reasonable grounds that improper conduct is occurring or has occurred, the commission may impose either a major or a minor sanction. The commission may request the inspector to carry out further investigation or to take no further action, as it considers appropriate. Before making a decision, the commission may conduct an oral hearing or invite the energy undertaking to make submissions on the investigation report.
Factors to be taken into account by the commission in deciding the sanction to be imposed are set out in section 65. Any financial penalty imposed by the commission is subject to confirmation by the High Court, which can confirm or reject it, or impose a different sanction.
Sections 61 to 65, inclusive, to be inserted into the Act of 1999 deal with court procedures in regard to sanctions imposed by the commission. A new section 61 provides that a decision by the commission to impose a major sanction will not take effect unless the decision is confirmed by the High Court. Section 62 provides that a specified body may appeal a decision of the commission to impose a major sanction to the High Court. The High Court may confirm or counsel the commission's decision, or replace it with such decision as it considers appropriate. Section 63 provides that if the specified body does not appeal the decision of the committee to impose a sanction within the period allowed for such appeal, the commission must apply to the High Court to have its decision confirmed. Section 64 provides for an appeal by the commission or the specified body to the Court of Appeal on a point of law. It provides that any financial penalties imposed by way of major sanction shall be paid into the Exchequer, or disposed of for its benefit, in such manner as the Minister for Public Expenditure and Reform may direct. It also provides that the commission may recover its costs, as a simple contract debt, in any court. Section 65 includes a list of matters that must be considered by either the commission or the Court prior to the confirmation of a major sanction. Section 66 provides that the commission's power to impose administrative sanctions is without prejudice to any other power that the commission has under this or any other Act.
Section 6 inserts a new Schedule 4 into the Electricity Regulation Act 1999. This Schedule provides for the holding of oral hearings by both an inspector and the commission. Sections 7 and 8 of Part 4 provide for the amendment to the definition of the wholesale electricity arrangements in section 2 of the Act of 1999, as inserted by the single electricity market Act of 2007. These are the I-SEM elements that I have previously mentioned. They refer to the arrangements in this State and in Northern Ireland, as described in a memorandum of understanding signed by both Governments in December 2006, relating to the establishment and operation of a single competitive wholesale electricity market. This is referred to as the "gross mandatory pool". An additional transitional provision is also included in the Bill to allow the regulators to continue to operate under the current market definition, while developing the new, EU-compliant market rules, in preparation for the new market going live in late 2017.
Section 9 provides for the restatement of section 4 of the 1999 Act regarding the service of notices by the CER. The restatement provides for the service of notices by electronic means or by fax. Section 10 provides for a minor amendment to the existing provisions in section 6 of the 1999 Act in respect of timelines for the prosecution of offences under that Act. In line with other legislation, it is proposed to extend to 24 months, being the time for which summary proceedings for an offence under this Act may be brought.
Section 11 adjusts stated penalty amounts in the Electricity Regulation Act of 1999. It replaces the reference to a monetary amount with a reference to a "class A fine". This brings the legislation in line with the Fines Act of 2010. It also increases the existing penalty provisions for offences in relation to unregistered gas installers and electrical contractors.
Section 12 makes minor amendments to existing provisions in the 1999 Act regarding the terms and duration of the appointment of authorised officers by the commission. It also provides for replacement of the reference to a penalty provision of €1,500 and up to 12 months imprisonment for obstruction, wilful non-compliance, and supplying false information with a reference to a "class A fine". This is in line with the Fines Act 2010.
Section 13 provides for the closure of the carbon levy account. The carbon revenue levy accounts, as audited by the Comptroller and Auditor General, were laid before the Oireachtas on 3 July 2015. The money in the account was dispersed by the CER on direction from the Minister, with the consent of the Department of Public Expenditure and Reform, in March 2014. Some €35 million went to the energy efficiency fund, and the balance was returned to the Exchequer. The Comptroller and Auditor General suggested that the existing text of the Act did not appear to provide for the formal closure of the account. The proposed textual amendment to section 40(m) of the 1999 Act addresses this and provides for formal closure of the account. Section 14 places a statutory obligation on the CER to produce an energy strategy statement in respect of its energy remit.
Part 5 provides for the restatement in primary legislation of remit penalties. The EU Regulation on Wholesale Energy Market Integrity and Transparency, known as REMIT, is aimed at preventing market abuse in wholesale energy markets across the European Union. This regulation was given further effect in Irish law by statutory instrument No. 480 of 2014. The current legislation provides for offences in regard to contraventions, with fines on conviction of €50,000 for an individual and €500,000 for a body corporate. This is the maximum limit that may be imposed under secondary legislation. However, it is desirable that the current level of sanctions be replaced by a more robust and appropriate sanctions model that is on a par with penalties in neighbouring jurisdictions. The Bill now restates the penalty provisions in primary legislation. This allows for increased penalties of up to €250,000 for an individual and up to 10% of turnover for a body corporate. Section 15 provides for the restatement of penalty provisions. It provides for increased penalties of up to €250,000 for an individual and up to 10% of turnover for a body corporate, as I have indicated.
Part 6 amends the Sustainable Energy Act 2002. Section 16 provides that any reference in this Part to "the Act of 2002" is to be read as a reference to the Sustainable Energy Act 2002.
Section 17 provides for amendments to the Sustainable Energy Act 2002 in respect of Sustainable Energy Authority of Ireland, SEAI, board appointments. It removes the requirement that on 1 May each year the three longest serving members on the board of SEAI must retire. Instead, it provides that members may be appointed for a period not exceeding five years, subject to a maximum of ten years of service.
Section 18 makes a minor technical amendment to the same Act in relation to the annual report of the authority. The Bill places an obligation on the Sustainable Energy Authority of Ireland to submit its annual report to the Minister within six months of the end of the financial year.
Part 7 amends the National Oil Reserves Agency Act 2007. It seeks to provide for greater flexibility by NORA in the administration of the biofuels obligations scheme. Section 19 provides that any reference in this part of the Bill to the Act of 2007 is to be read as a reference to National Oil Reserves Agency Act 2007. Section 20 amends the 2007 Act by the insertion of a new subsection 43A in the 2007 Act to provide arrangements between the Revenue Commissioners and the Minister for Communications, Energy and Natural Resources regarding the exchange of oil data. These data transfer arrangements will enable the Department to cross-check data received by it and, thereby, ensure that all oil importing companies are correctly paying the NORA levy in accordance with the Act.
Section 21 provides for minor amendments to section 44A of the Act to provide for a definition of a the term "reporting period" in the NORA Act 2007. Section 22 amends section 44G of the NORA Act 2007. The amendment enables the National Oil Reserves Agency to make a determination as to the deadlines in respect of each biofuel obligation period that are to apply to biofuel obligation account holders for submitting the relevant information to the agency; the closing date for receipt of applications for biofuel obligation certificates for an obligation period; and the timing and dates within an obligation period for biofuel obligation account holders to apply for certificates. It is provided that NORA shall publish this determination on its website.
Section 23 amends section 44H of the NORA Act 2007 to remove the specified deadlines for NORA to issue notices. Section 44H(2) of the Act is to be deleted. Section 44H(3) of the Act is to be amended to provide that NORA shall make a determination specifying the date by which it will issue a statement on any revised deadlines and that this shall be published on its website. Section 24 amends the 2007 Act to increase the deadline under section 44I, from 35 to 75 days, to provide for increased flexibility by the National Oil Reserves Agency.
Part 8 covers sections 25 to 27, inclusive. This Part provides for miscellaneous amendments to existing legislation. Section 25 provides for an amendment to the text of section 72(4)(b) of the Registration of Title Act 1964 to clarify that existing telecommunications deeds of easement shall have the same legal effect that section 72 of that Act already confers on deeds of easement for gas pipelines. Section 26 provides for a technical amendment to correct a numbering error that occurs within section 6 of the Continental Shelf Act 1968. Section 6 was inserted into the 1968 Act by the Petroleum (Exploration and Extraction) Safety Act 2015. Section 27 provides for the correction of a typographical error in section 13(1) of the Gas (Interim) (Regulation) Act 2002.
I look forward to working constructively with Senators and to an informed and meaningful debate, as is always the case in this House. The input from Senators on all sides of the House will help to advance the measures provided for in the Bill. I ask the House to note that I intend to bring forward a number of amendments on Committee Stage. I hope to introduce amendments to make provision for the imposition of a legal obligation on oil and energy companies to supply data to the Sustainable Energy Authority of Ireland and to the Minister for Communications, Energy and Natural Resources. This is to address reporting obligations by virtue of Ireland's membership of the International Energy Agency and other international organisations. I also hope to introduce additional provisions on the definition of improper conduct in the Bill. I look forward to working closely with the commission on ensuring the speedy implementation of the Bill's provisions following enactment.
