The Minister of State is welcome.
Commencement Matters
Drainage Schemes
I thank the Cathaoirleach and Leas-Chathaoirleach for selecting this Commencement matter for debate on what I expect is our last sitting day. I also thank the Minister of State for taking this matter and all of his work to date regarding shorter and longer term flood relief measures in Crossmolina. He travelled there and met stakeholders this week, including the Government agencies Inland Fisheries Ireland and the National Parks and Wildlife Service, NPWS, Mayo County Council, representatives of the Irish Farmers Association, IFA, and members of the Crossmolina flood action committee. It was a constructive meeting and it was great that the Minister of State could take the time to hear first hand from some of the people affected by the devastation caused by two floods last November and December.
At the meeting we were given confirmation that work was progressing on some of the shorter term measures, namely, flood defences and mitigation works, including an embankment and the building of a flood wall, and that we might see works commencing on the ground come September. The Minister of State is pressing the issue of the provision of flood gates which are helpful when floods are at a certain level and has directed that a short section of the river downstream be cleared, which is welcome.
This is our last sitting day and it is my last opportunity to raise this Commencement matter. There needs to be a clearing out of the river upstream of Crossmolina towards the Nephin mountains range. People are puzzled by how the OPW, Inland Fisheries Ireland, Mayo County Council and the NPWS are not responsible. The upstream is significant, as it is where the water comes from to flood the town. The OPW is responsible on the far side of the bridge downstream, although, a responsibility that arises from a drainage scheme that was implemented pursuant to the Arterial Drainage Act 1945. For people who are desperate for something to be done, it is difficult to understand how a body can be responsible on one side of the bridge but not on the other side upstream. They know that it is not the be all and end all of solutions but they want something to be done.
Much has been said about the need for a single authority to be responsible for rivers, but we do not need a new one. We have the OPW which is capable of doing and has the expertise to do the work. Section 12 of the 1945 Act gives the Minister the power to extend upstream the drainage scheme that covers the area downstream of Crossmolina between the town and Lough Conn. This would answer the question of who is responsible for what happens upstream. Something must be done.
We cannot simply leave people in no man's land; this is too serious. The Minister of State has heard about the devastation of people's homes and how they were flooded, as well as the damage to businesses and how businesses are and will be reluctant to invest because of the threat of more flooding.
I look forward to the response of the Minister of State to a point I have flagged in this Commencement matter. What maintenance work has been done downstream where the OPW is responsible? My understanding is that the only work done involves some trees being cut and they were below the waterline. To me, that is a simply a cosmetic exercise because those responsible believe something needs to be done.
Has a scoping exercise been carried out by the OPW? Has an action plan been put in place? These are more important than ad hoc works and would show that the OPW is carrying out maintenance as required and pursuant to section 37 of the Arterial Drainage Act. When the OPW has a scheme it is obliged to maintain and clear the channel. The Minister of State heard about it at the meeting. My understanding is that in the past ten years, other than the tree cutting - a futile exercise - the OPW has not been cleaning or clearing. All the way downstream vegetation is encroaching on the river channel. Silt is building up and nothing is being done with any of it. Not only is it a request on the part of the community, there is a statutory responsibility on the part of the OPW to do this work. It should be a simple job to do it.
I thank the Senator for tabling the question and giving me the opportunity to come to the House to speak on the matter of flood relief measures in Crossmolina. I was there on Monday.
The River Deal downstream from Crossmolina is part of the River Moy catchment drainage scheme carried out by the Office of Public Works between 1960 and 1971 under powers set out in the Arterial Drainage Act 1945. As with other schemes carried out under the 1945 Act, the primary purpose was to provide outfall for the drainage of agricultural lands. The scheme also contributed significantly to reducing the flood risk in the urban areas it serves. The OPW continues to have statutory responsibility for maintaining completed arterial drainage schemes, including the Moy scheme, in proper repair and effective condition. In fulfilment of this responsibility, the OPW is responsible for the maintenance of over 11,500 km of channel, 730 km of embankments, 18,500 bridges and 750 ancillary structures such as sluice gates, pumping stations and tidal barges throughout the country. While the average cycle of maintenance is generally in the range of between four and seven years, the OPW routinely inspects all channels and structures for which it has maintenance responsibility. The timing of the work on individual projects is determined having regard to the need of regular maintenance and the prioritisation of urgent jobs. Maintenance work is carried out in accordance with OPW environmental management protocols and standard operating procedures which have been developed to minimise the potential environmental impact of the operations.
The original scheme for the Moy catchment was designed to cater for all arterial channels which could be included within reasonable cost limits and which would be practical from an engineering point of view. The legal responsibilities of the OPW in respect of the maintenance of the Moy catchment are limited to the arterial drainage scheme as confirmed by the Minister for Finance under the 1945 Act and as certified to have been completed. The OPW has no authority to carry out maintenance work in channels such as those upstream of Crossmolina that are not part of the scheme.
The Senator will be aware that apart from the responsibilities of the Moy catchment drainage scheme, the OPW is engaging in the development of a flood relief scheme for the town of Crossmolina. I am altogether aware of the extent of the damage there. I have visited the site. Since I come from Galway, where there has been extensive flooding, I understand well the suffering in Crossmolina as a result of recent and previous flood events. Moreover, I understand that flooding continues to be an ongoing threat to people and businesses in the town.
A public information day was held in the town in June 2014 to present an emerging preferred solution which involved flood defence walls in the town and raised parapets on the bridge. Consultants have jsince been working to finalise the design scheme and the environmental impact statement with a view to being in a position to bring the outline scheme forward to formal exhibition at the earliest possible date. However, new information relating to the bridge became available to the consultants which led them to conclude that the bridge was not sufficiently structurally sound for the purposes of the scheme and would need to be replaced. This would involve significant additional cost. While not affecting the overall economic feasibility of the scheme, it requires the options to be re-evaluated, including the option of diverting the channel.
A review of the options will also take into account the most up-to-date hydrological data and other relevant information arising from the Storm Desmond flood event which recorded the highest ever levels on the river. To assist in the re-evaluation process, a hydrological assessment is under way to assess the local karst regime. It is critical to understand the nature of the karst drainage system and its relationship with surface water drainage before the diversion option can be brought further. It is likely that the assessment will take at least until the end of 2016. The options report will be finalised on completion of these investigations. While this has meant a delay to the scheme, the most important point is that the best possible solution is found for the town flooding problem.
A further public information day was held on 8 April outlining this information to the public. If the survey confirms that the diversion option is feasible and if design work on the option progresses satisfactorily, a public exhibition of this option is likely in the second quarter of 2017. In the event that the diversion option does not prove to be feasible, the original option of walls and bridge replacement could be progressed at an accelerated rate since considerable work on this has already been completed. The public exhibition of this proposal could happen possibly in the first quarter.
If the proposed scheme is acceptable locally, it will move to the detailed design stage which will be followed by the formal confirmation stage, as requested under the Arterial Drainage Acts. As an interim measure to help mitigate any further flood damage and pending the completion of the flood defence scheme, the OPW and Mayo County Council are working together on a pilot project of individual property protection. The council has carried out a survey of households and has received expressions of interest from 60 homeowners for the installation of flood gates. The OPW hopes to appoint consultants shortly to undertake surveys of individual properties to determine their suitability for floodgates. This work will be funded through the OPW minor flood mitigation works and coastal protection scheme. In addition Mayo County Council is also preparing a flood emergency plan for Crossmolina.
In addition to meeting the people there last Monday, a further meeting will take place today involving Inland Fisheries Ireland, the National Parks and Wildlife Service, Mayo County Council and the Office of Public Works to determine what works can be carried out upstream and come up with a solution. That is the best I can do because changing Acts will not happen today. I await the outcome of that deliberation today. The OPW remains fully committed to delivering an effective flood defence scheme for Crossmolina and has included provisions for the costs of the scheme in its multiannual profiles for the period 2016 to 2019.
It is welcome that a meeting is to take place today. Ideally, this conversation with the Minister of State would happen after the meeting, but the reality is nothing new will be discussed. The problem is that the upstream section is falling between two stools and no one is taking responsibility. My suggestion is a simple one. I am suggesting an extension pursuant to section 12 of the Arterial Drainage Act 1945 to include upstream as part of the existing drainage scheme. That would make it the responsibility of the OPW. It would assist in making it the responsibility of someone.
In the second part of the matter I have raised I asked what maintenance has been carried out. An official has provided the Minister of State with an answer, but he has not described any work. No work has been carried out. The Minister of State will have seen the photographs of the vegetation and overgrowth downstream. I appreciate the Minister of State could not see the silt because there was water in the channel. Nothing has been done. I guarantee the Minister of State that if he asked his officials or the people in the area, he will find out that there is no action plan or scoping document on how the OPW is going to do the maintenance. It is not simply a case of us asking the OPW to do it, the OPW is obliged to do so.
I accept the point about the cost. We can all talk pie in the sky. This is a simple matter. We are not talking about dredging. I have made inquiries on the matter. The work involves putting a machine on the bank and taking away the vegetation encroaching into the river channel as well as the silt. This work would clear the channel and allow the water to flow more freely from the town to Lough Conn. This, in turn, would I hope assist in mitigating the risk of flooding. The first flood saw two inches of water going in. One could not but argue that this work would at least assist in allowing water to move more freely.
The Senator has made her point.
There was talk about the birds directive and that we could not go in. It is very simple: we can go in.
There is already a derogation under the birds directive where public health requires works to be carried out. Local authorities use this derogation all the time for hedge cutting and there is absolutely no reason work cannot be done by the OPW to get into the channel from the river downstream to the lake. I cannot understand the resistance. I believe the Minister of State is grasping the nettle. In his previous capacity, he spoke about the problems of flooding in Galway. No more than myself, I am sure he is endeavouring to the best of his ability to get this solved. However, it is over to the Minister of State really. This is being complicated. There is a legal obligation on the OPW which it has not lived up to in Crossmolina in relation to the clearance of this channel. I ask the Minister of State not to allow people who have been at this for years to give him the run-around. This is an old chestnut within the OPW and it has not been responding. Given that there is no problem with the National Parks and Wildlife Service or the IFA, why is it not being done?
I have grasped the nettle and reassure the Senator and the House that nobody will run around me for sure. Since I got involved in the project in Crossmolina, I have instigated the downstream cleaning of the river. It is going to happen as we told representatives last Monday. In fairness, the Senator must let that happen. I am not here to go into the technical issues and the type of machinery that should be used, but that is going to happen. I have made it happen.
What is happening upstream is something about which we could talk forever. Last Monday, however, I instigated that the four people involved would look at it and see what solution they can come up with. That is the best possible progress from Monday to the meeting today with all the people involved. That is as much as I am going to do until I see what emerges from that. Perhaps this matter might not need to have been tabled if we had waited until we saw the result.
Constitutional Convention Recommendations
The Minister of State, Deputy Damien English, is very welcome.
I thank the Minister of State for attending. I am delighted we are getting the opportunity to discuss this very important issue on the last sitting day before we rise for the summer recess. This is an issue that is very close to many people's hearts, particularly those of us who are Irish citizens but do not have a vote in presidential elections at this point in time.
The Constitutional Convention made a call for and heard contributions from people across Irish life, including submissions on politics and civic life in the North. The convention recommended extending the franchise to Irish citizens not just in the North but also the diaspora. Senator Billy Lawless made an articulate and wonderful maiden speech in the House yesterday and outlined the significant connection we have to the diaspora. I imagine that everything we can do to further harness that connection would be welcomed.
The President is the President of the Irish people as opposed to the President of the Irish landmass. As such, it makes practical sense to take this very progressive and, some might say, modest step. It is modest because 20 years after the Good Friday Agreement was ratified, we still do not have the ability to vote for the President, notwithstanding the anomaly that someone from the North can run and, as has happened, become a very fine President of the Irish people. I thank the Minister of State for being here and look forward to the discussion and work ahead.
I thank the Senator for raising this important issue. It is important that we discuss the implications around it. In its fifth report the Constitutional Convention recommended that voting rights be extended in presidential elections to Irish citizens resident outside the State. The then Government considered this recommendation last year and decided that it would be necessary to analyse the full range of legal, practical and policy issues arising before any decision could be made on the holding of a referendum on the matter. The estimated costs arising also need to be fully analysed and considered.
The Government requested the Minister for the Environment, Community and Local Government to undertake this analysis in co-operation with the Minister for Foreign Affairs and Trade and the Minister of State with responsibility for diaspora affairs. A range of complex and interrelated issues are being examined as part of the analysis being undertaken. I will briefly refer to some of the issues that arise. They are ones I would have mentioned during the debate last week on extending the Seanad franchise.
The wider Irish diaspora is estimated by some at 70 million people. The number of those in the 70 million who are entitled to Irish citizenship is not known and would be difficult to determine. However, the potentially very high number of citizens outside the State relative to those within it must be an important consideration in examining the extension of the franchise at presidential elections. Many questions arise in this regard. Should voting rights be extended to all citizens resident outside the State or only to passport holders? Should it be extended only to those born in Ireland or to citizens who have lived outside the State for a limited period? What would be an appropriate time limit? Would it be five, ten or 20 years, for example? How would this be administered or verified? This is not an exhaustive list of questions that arise when considering this particular issue, but they are ones we will have to talk through at some stage and make decisions on. The Departments are analysing them and trying to come up with suggestions.
Clearly, a robust system for the registration of voters resident outside the State is a prerequisite for any extension of the franchise. The operational arrangements for the registration of electors in the State would likely not be suitable for an extended franchise. Much work would be needed in this area and this has already been flagged in relation to the establishment of an electoral commission. How would citizens outside the State vote? Arrangements must be workable. Embassy voting allows for in-person voting such as we have at polling stations. While in-person voting is generally viewed as the most secure method of voting, many practical issues appear to mitigate against such an arrangement being workable for us. Postal voting is an alternative for consideration but security of the ballot and verification of identity must be carefully considered if we are to use this method on a very large scale as could arise in an extended franchise.
The Government recognises that an extension of voting rights at presidential elections to citizens resident outside the State would be welcomed by many. An amendment to the Constitution would be required to give effect to the convention's recommendation. There is a need, however, to ensure we carry out a thorough analysis of the issues arising before putting a question to the people at a referendum. My Department is undertaking that analysis in close co-operation with the Department of Foreign Affairs and Trade and the office of the Minister of State with responsibility for diaspora affairs. I do not have a date as to when the analysis will be concluded. It is a complicated issue and there is a lot in it. That does not mean that we are not going to do it. It must all be looked at. There is a desire there to do this but there is also a fair bit of work involved. I said during last week's debate on the extension of the Seanad vote that the use of technology is important and that we must explore all options there. At all times, we must ensure the system is secure and usable. We must try to learn from those countries which do this best.
I appreciate the work the Minister of State has committed to do on this issue. The work is necessary and I appreciate that it is not a simple matter. However, it needs to be done. There is a huge onus on us. I appreciate that the diaspora are in a unique set of circumstances and I do not mean to be dismissive of that, but it would be relatively easy for me to go to St. Matthew's primary school in Seaforde Street in east Belfast to cast my vote for the President. Perhaps, in parallel with those broader issues, given the size of the diaspora internationally, we might run a dedicated consideration through the North-South Ministerial Council and our colleagues in the Executive and Electoral Commission in the North on how to utilise the existing facilities there. They are ready to be utilised through co-operation and a good working relationship with the Minister of State's colleagues in the North. We need to put a fire under this, expedite it and ensure we are not lost in bureaucracy, albeit I appreciate what the Minister of State points out. Without putting a timeframe on it per se, it would be useful for the Minister of State to consider ensuring it would not run perpetually to ensure we would not end up sitting here for another 20 years after the Good Friday Agreement and the Constitutional Convention. Who knows, we might even have another Northern President in that time. What we should definitely have is our vote.
I agree that if at all possible, we should try to get a timeframe for it. It is difficult to do. It might be a case of coming back with recommendations to do this step by step. There are easier paths to doing it. Extending it to the full option of 70 million people when we do not even know how many of them could be citizens would be an awkward process to develop. It is about coming back with different answers and trying to move it on. We also have a lot of work to do to get the register of electors up to date for both Dáil and local authority elections. It is not completely out of date, but we all come across a lot of problems with it on a daily basis. The first phase of any work is to get it in order, while looking at all of the options.
The Department is working hard and we have meetings scheduled during August to try to get a handle on the timeframes involved. It probably means that a decision will have to be made to allocate more staff and resources, but the work has begun. Whether it needs to be fast-tracked will need to be decided. These are the discussions we are having. I will be able to update the Senator in the autumn. The matter is not being put on the long finger.
Library Services Provision
Is the Minister of State taking this matter also?
Very good.
I like to stay when I am here.
The Minister of State is welcome.
I thank the Cathaoirleach's office for selecting this matter which relates to library services in County Sligo. I live in Dublin, but the issue has appeared consistently on my desk in recent weeks. Community representatives from County Sligo and the county's mayor, Councillor Marie Casserly, have raised it with me.
There are three principal libraries and a mobile library service in County Sligo. We all know the benefits of a library service. Anyone living in rural Ireland, in particular, knows what they are. It is not just about books but also the associated services in terms of the arts, culture, heritage and the availability of after-school clubs. Many things are happening in these three amazing libraries. I salute the chief executive of Sligo County Council who has a very difficult job, as do the elected members, in difficult financial circumstances in dealing with management and governance issues that we need not detail but about which we all know. Every local authority must manage its own finances which councillors of all parties and none accept. One of the three libraries mentioned will close for three weeks during the summer because of resourcing issues. The service is operating at half staff capacity. Arriving at a library to find its doors locked because someone is out sick has been known to happen. If it does not have the staff, it cannot open. There are many good reasons for this.
I will not use too much time, as I want to hear the Minister of State's response to this important issue. His response is more important. I might comment subsequently.
I thank the Senator for raising this important issue. It is one I have debated several times, as there is some confusion about what lies in store for libraries.
My Department has been in discussions with the Local Government Management Agency, LGMA, and local authorities' chief executives on the introduction of a new library management model as outlined in the report, Managing the Delivery of Effective Library Services. The areas being considered for the new approach include counties Sligo, Leitrim and Roscommon, among others. The proposed model seeks to put in place planning and implementation arrangements that will deliver more effective and efficient public libraries, thus securing the delivery of an enhanced quality and range of services and the long-term sustainability of the library service. Moreover, it has been identified as a means of achieving a greater and more equitable standard of library service across all library authorities, rather than the requirement to drive greater cost efficiency. Accordingly, there will be no closure of libraries in County Sligo or any other local authority area as a result of the proposed model. Nor will there be any reduction in the library services available in these areas consequent on the changes we are trying to introduce. Instead of cutting funding and services, the model aims to secure the strategic capacity and scale of operations required to ensure the long-term sustainability of library services in smaller counties such as Sligo. In this regard, the model focuses on enhancing the services available, while safeguarding the role of local representatives and local authorities which will still be responsible for the policies, priorities and budgets of their respective library services.
Libraries are evolving and becoming a focal point for community engagement. As the Senator mentioned, the library service plays a very important role in community life. In addition to what many still perceive to be the traditional preserve of the library, namely, book lending, the local library now provides educational supports, community meeting facilities, study spaces, cultural supports and supports for businesses in terms of research and innovation. It provides a space and a range of services that communities may not otherwise be able to access. We want to build on this, enhance the services available and ensure library services across all local authorities are in the best position to respond to emerging local needs and priorities. To this end, we will continue to engage with the respective local authorities to identify the optimum solution for the counties concerned. An alternative approach that seeks to deliver the same strategic objectives has been submitted for my Department's consideration. We made it clear that we would be willing to consider alternatives. We will work with the local authorities concerned in the coming weeks to explore how this approach might be implemented to achieve the best possible outcome for all concerned.
It is not a question of cutting front-line services; rather, it is about management and making strategic decisions. We want to enhance front-line services. The importance of a library to a community, particularly in smaller towns and villages, is clear to me. Often, it can help communities that run many events. We want to protect that aspect and I am fully behind it. The closure of libraries in County Sligo is not the result of the changes we are introducing; rather, it is down to the local authority's budgetary decisions. I can investigate the matter if the Senator wants me to do so, but the closure is not due to the changes we have requested to be made at this level.
I thank the Minister of State for his comprehensive report. I agree that there is a need to reform the library service. We both acknowledge the importance of libraries and the services they provide for communities, in particular, rural communities. What I am taking from the Minister of State's response is that there will be no library closures in County Sligo - I am glad that he has confirmed that fact - and no service reductions. We can take these two positives from our deliberations. Will the Minister of State or his Department seek clarification and reassurance from the chief executive of Sligo County Council to the effect that no libraries will be closed for three or four weeks this summer? That is important. What the Minister of State has told the House is good news and we will not be slow in telling the people of County Sligo. Fair play to him for standing by them and making this commitment, for which I thank him. Will he give an undertaking to make contact with the chief executive of the county council to determine whether there has been a misunderstanding or lack of resources or whether anything can be done to ensure no library service will be curtailed during the summer months?
To be clear, the Department has constantly stated it is open to discussing with chief executives and the LGMA the changes we want to introduce in some places. These changes should not and will not affect front-line services. If members of Sligo County Council decide to close a library for a week or two owing to their existing budget, that is not something we are asking them to do. The changes we are introducing are not focused on cost reduction but on enhancing the service provided. As they have not even been introduced, they are not the reason behind the closing of a library for a week or two during the summer. These are two separate issues. A local decision is just that, but our strategy will not affect library opening hours. We are introducing new initiatives. I have complimented front-line library services many times on the various initiatives they have tried. One on which they are working involves longer opening hours, in respect of which libraries may be accessed using swipe cards and pin numbers without the need for any staff member to be present out of hours. In some cases, libraries are open everyday, including Christmas Day, for example, in Tullamore and Tubbercurry and a third location. The pilot scheme has worked well and is being extended. Libraries can remain open for longer hours without the need for staff to be present. That is an option. The idea for this reform came from the library service. We are constantly trying to change and examine new ideas to extend opening hours and the availability of library services, but the proposed changes do not call for a reduction in services.
Will the Minister of State contact the chief executive?
Public Service Obligation Levy Increase
I welcome the Minister of State.
I thank the Cathaoirleach, the Leas-Chathaoirleach or whoever was responsible for selecting this Commencement matter. I welcome the Minister of State for what is his first debate on a matter in which I have been involved. I also congratulate him on his appointment.
I was contacted by a number of businesses about the public service obligation, PSO, levy, which it is proposed be increased by approximately 36% from October. A Government levy on the electricity bills of commercial and domestic users, it is used to subsidise the use of renewable energy sources, which is laudable, and peat-burning power plants. However, the levy has been increased by 226% since 2010.
I think there were small decreases at some stages - perhaps there was one last year - but this year's increase is one of the biggest.
I will put this matter in context. I was contacted by representatives of a quarry in the Minister of State's constituency. The quarry is paying €5,520 a month, or €66,240 a year, as part of the levy. If this increase goes ahead in October, the quarry's new payment will be approximately €7,500 a month, or €90,000 a year. The annual increase will be €23,000. That is just an example of what will happen if this increase is sanctioned. We are talking about small businesses that pay rates and various other charges, rather than the businesses that are availing of the 12.5% corporation tax rate. It is impossible for them to budget or plan ahead.
As the Minister of State knows, Irish electricity prices are among the highest in Europe. A large increase in the PSO levy would exacerbate that imbalance. As the small businesses to which I refer are providing jobs, it is clear that issues such as job creation, job security and the competitiveness of Irish companies in Ireland and abroad are at stake. Companies that export are having to deal with the outcome of the Brexit referendum in Britain. The weaker sterling is causing its own problems. If this additional issue arises, these companies will have more difficulties. Is it proposed that this increase will go ahead? I am aware that there was a consultation period. I am calling for this to be looked at again in the context of all the issues I have mentioned. I refer particularly to the effect it would have on small businesses. I appreciate that both commercial and domestic users would be affected by this increase, but in raising this matter today I am thinking particularly of job creation.
I thank the Senator and congratulate him on his nomination to the Seanad. I am taking this Commencement matter on behalf of the Minister, Deputy Denis Naughten. I thank the Senator for giving me an opportunity to comment on this important issue.
While the calculation of the PSO levy is technically and strictly a matter for the CER which is independent in this function as it is in its other statutory functions, I welcome this chance to discuss the levy. It has been proposed that the PSO levy for 2016-17 will be €441 million, which would equate to less than €7 per month for domestic consumers. The levy which is charged to all customers is designed to compensate suppliers for the additional costs they incur by meeting their obligations to purchase electricity from renewable sources and indigenous sources and to ensure security of supply.
The existence of the PSO is vital if we are to deliver on our renewable energy targets, ensure security of supply and support hundreds of jobs in the midlands that are associated with the peat industry. The PSO has supported the connection of over 2,000 MW of renewable energy to the electricity grid. It will continue to support the development of renewable energy so that we can meet our target of boosting renewable penetration by 40% by 2020. Recent studies have shown that Ireland has one of the lowest per-unit supports for renewable energy in the European Union. The biggest driver for the proposed increase in the levy is the lower predicted wholesale market electricity price which is estimated to be approximately 28% lower than it was last year. This results in lower predicted market income for the PSO plants. Therefore, a higher levy is required to cover the allowed costs.
The lower wholesale electricity price is being driven by lower international gas prices. This drives up the PSO levy. These reduced gas prices help to reduce the wholesale cost of electricity that suppliers pay. This should enable suppliers to reduce their retail prices and offset the PSO levy increase. Electricity prices are deregulated. The CER will continue to actively monitor suppliers and the retail market generally. While the support of renewable electricity generation adds to the PSO levy and to customer bills, it should be noted that wind also tends to reduce the wholesale price of electricity because the operating cost of wind power is close to zero. Renewable generation therefore displaces fossil fuel generation.
Like the Senator, I am concerned about increases in the electricity costs of industry, households and the small businesses he has mentioned. It should be noted in the context of the proposed increase that as the wholesale electricity price is falling, this should be passed on to electricity customers, thereby acting as a counterweight to the increase in the PSO levy. In recent months, a number of electricity suppliers have announced price reductions on their standard tariffs. Most suppliers offer significant discounts to new customers. I urge all domestic and commercial consumers to seek the best-value offer available to them.
The reductions in the market that are available to customers outweigh the PSO levy increase. As the increased levy is partly driven by lower wholesale electricity prices, I expect all suppliers will reduce their prices. It is worth noting that the current decision is a proposed decision by the regulator. The CER may use a revised figure for the wholesale electricity price in the final decision paper if forecast fuel prices change for 2016-17. A final decision on the PSO levy for 2016-17 will be published before 1 August next. Changes in the forecast wholesale price will affect the amount of the PSO levy, increasing it if the forecast wholesale price decreases and reducing it if the wholesale price increases.
I thank the Minister of State for his reply. I suppose the reality of what he has said is that the PSO levy increases when prices decrease. That drives people crazy. In other words, the benefits of price decreases are wiped out by something else. While I understand perfectly the point made by the Minister of State about the independence of the CER in setting the levy, I suggest that if an issue here is affecting jobs and competitiveness, it needs to be approached. It is important for that point to be made to energy regulator when he is making his decision.
When I served as Chairman of the Joint Committee on Transport and Communications, the current Minister, Deputy Denis Naughten, who was not a Minister at the time raised this point with the energy regulator. I expect him to take an interest in it now. I would like the Minister of State to ask the Minister whether he intends to raise these concerns again in order that they will be taken into account when the final decision is being made in October.
I thank the Senator for his comments. I will liaise with the Minister, Deputy Denis Naughten, on the issue and ask him to liaise with the CER. I accept that there is uncertainty about issues pertaining to the levy. This is associated with factors outside our control that relate to the global market for energy. A number of factors are applying upward pressure to the PSO levy, including the lower Single Energy Market and wholesale market prices. As I said, the wholesale market price is 20% lower than the price used to calculate the current 2015-16 PSO levy. That creates a major complication.
I reiterate that a lower wholesale price means that the payment to companies engaged in the PSO increases. In addition, there are more renewables. The REFIT scheme supported 2,080 MW of renewable generation in 2015. It is estimated that 2,943 MW of renewable energy, mostly wind energy, will be supported by the PSO next year. As this is 863 MW, or 41%, more than the level supported in the current PSO period, it is driving up the levy. The CER estimates that all renewables account for approximately €334 million of the total of €444 million. While there are a number of complicating factors, they are predominantly based on the lower gas prices in the present market. I will discuss the concerns raised by the Senator with the Minister. In particular, I will ask him to liaise with the CER on the impact this is having on small businesses.
Sitting suspended at 11.20 a.m. and resumed at 11.30 a.m.