Priority Questions.
1 Deputy Simon Coveney asked the Minister for Communications, Energy and Natural Resources if he plans to change the electricity price regulation structure here to allow the ESB to compete on price in the domestic household market; and if he will make a statement on the matter. [10713/09]
Amharc ar fhreagraThe Commission for Energy Regulation has statutory responsibility for the regulation of electricity prices under the Electricity Regulation Act. In 2006 the CER ended the regulation of ESB tariffs for large energy users. Some 90% of business has now switched to independent suppliers. The CER has made clear that it intends to exit from the regulation of ESB retail prices when sufficient competition has taken hold in the domestic market. This is in line with overall EU requirements for the internal energy market.
I welcome the fact that the benefits of competition in electricity supply, which have previously been confined to large industrial and commercial customers, are finally available to domestic consumers. The entry into the domestic electricity market of two new suppliers, Airtricity and Bord Gáis Energy, demonstrates that Government and regulatory policy to encourage competition in electricity generation and supply is paying dividends for consumers.
The independent suppliers are offering discounts of between 10% and 14% on ESB tariffs. These discounts will apply even after the 10% reduction to ESB prices now proposed by the Commission for Energy Regulation. Customers will then be able to avail of reductions of up to 24% on current ESB tariffs.
The independent suppliers are also offering domestic consumers fresh choices, such as the proportion of renewable electricity they purchase, as well as alternative billing arrangements.
In recent weeks, domestic customers have been switching to the independent suppliers in unprecedented numbers. However, it is important to remember there are close to 2 million domestic electricity customers and that ESB still retains some 95% of the market share.
The regulation of ESB tariffs will only continue until competition has taken firm hold in the market. Energy price regulation is designed to ensure that a dominant player cannot engage in uncompetitive, short-term pricing practices, which could undermine or drive out emerging competition. The CER will continue to review overall energy tariff structures over the coming months taking account of global fuel prices, the importance of regulatory and market certainty for the energy sector, and the competitiveness challenges facing industry.
Why is it still necessary to keep a set price in the domestic electricity supply market? Why is the Government preventing ESB from competing with the two new competitors that have entered the market in recent months? Will the Minister of State correct himself? He stated the CER is responsible for regulation policy but it is not. The CER is responsible for setting prices; the Government decides on policy on the advice of CER. Could the Minister of State give a timescale for the introduction of a directive that will require the CER to allow for open competition in the domestic electricity supply market so we can see these three major companies competing with one another to drive prices down? Currently, regulation is keeping ESB prices artificially high because it is not allowed to compete aggressively with two other companies that have entered the market and that are capable of dealing with that competition.
We all agree competition is necessary and that ESB had a monopoly for too long. Both Airtricity and Bord Gáis, however, are recent entrants to the domestic electricity market. Bord Gáis Energy has advised that in excess of 80,000 customers have switched and while that volume of change-over exceeded expectations, the numbers remain small in comparison to the domestic market of 2 million consumers.
How many customers must switch before the Government takes action?
The intention was to make it attractive for other companies to enter the market and provide competition. To achieve that we had to provide a guarantee for new entrants. If ESB was allowed to compete on price in the early days of competition in the domestic market, it could seriously undermine the new market entrants. For that reason the new entrants had to be given some certainty about the future. It was important to give them an indication that it was a viable proposition.
What percentage of the domestic electricity supply market must new entrants take before ESB is allowed to compete with them? Currently we are deliberately undermining ESB market share in the domestic power supply market to facilitate competition. Currently it is a no-brainer; why would anyone stay with ESB if he could get the exact same service for 10% to 14% less? A phone call is all that is needed. The ESB is being put at a significant disadvantage deliberately by the Government and the CER. How long will that policy remain in place? From what the Minister of State has said, the only way to measure it is a percentage of market share going to the opposition. What is that percentage?
I cannot give a percentage but it will be reviewed as the market develops. At this stage it is not necessary to decide what the figure will be.
The ESB might like to know what it is.
Of course it would but it was important to have these measures in place if we were going introduce competition. The regulator admitted in recent consultation papers its intention to withdraw from regulation when sufficient competition develops in the market. Competition is in its infancy and we will have to see how it grows. We are talking about 80,000 customers in a few weeks compared to 2 million in the market place. More progress is necessary and it is too early to make any decisions. It is a short-term strategy until there is real competition in the market place.
2 Deputy Liz McManus asked the Minister for Communications, Energy and Natural Resources his views, in the context of the Broadcasting Bill, on setting up one regulator, combining ComReg and the authority, particularly in view of the economic climate and the convergence of technologies taking place in the communications area; and if he will make a statement on the matter. [10717/09]
Amharc ar fhreagraThe Broadcasting Bill 2008 proposes the establishment of a single content regulator, the Broadcasting Authority of Ireland, which will encompass the existing functions of the Broadcasting Commission of Ireland and the Broadcasting Complaints Commission and any remaining content regulatory functions of the RTE Authority.
In formulating the Bill consideration was given to the question of whether there was merit in amalgamating the Commission for Communications Regulation — ComReg — and the proposed new content regulator. However on reflection it was decided not to proceed with such a combination.
The principal rationale for such a decision is that the two regulators address very different sectors and as a consequence require very different skill sets. In essence the Broadcasting Authority of Ireland is intended to be a content regulator whilst ComReg is a network or distribution regulator.
Whilst convergence is undoubtedly happening, the Broadcasting Authority of Ireland and ComReg will continue into the future to address separate questions, for example, how we encourage Irish language programming or objective and impartial current affairs journalism in the case of the Broadcasting Authority of Ireland as opposed to how we ensure the development of next generation telecommunications infrastructure in the case of ComReg.
There is no doubt there needs to be close liaison between the two regulators, as is the case at present between the Broadcasting Commission of Ireland and ComReg, for example in the allocation of spectrum for radio services and digital terrestrial television services. In addition there may be scope for the proposed Broadcasting Authority of Ireland and ComReg entering into an agreement to share common services in an effort to achieve administrative savings. Indeed the Broadcasting Commission of Ireland and the Broadcasting Complaints Commission, although two distinct statutory bodies, have an agreement to share services, with the Broadcasting Commission of Ireland providing staff to service the administrative needs of the Broadcasting Complaints Commission.
While different arrangements may be required in the future, at present we are best served by two separate regulators. The matter, however, will be kept under ongoing review.
Does the Minister of State accept that other countries are adopting a different approach by having one regulator dealing with content, communications and technologies? It is an affront to people who are being forced to pay a heavy price for the economic crisis to find that the Government is insisting on pursuing the establishment of another regulator in the communications area, which will involve a costly levy on broadcasters, including RTE. Is the Minister of State aware of the terrible straits RTE is currently in due to a €68 million shortfall in advertising revenue this year? The Minister of State should ensure that this legislation will not be unpicked as soon as it is passed, which is essentially the message in his reply. We should do this correctly by pooling resources in one regulator and recognising that convergence is the future, if not the present. We should not continue on this crazy plan of having two regulators, which is costly to the industry and ineffective in terms of streamlined, joined-up Government. The Minister of State should submit that case to the Minister and the Government generally.
We gave that serious consideration and while a good case might be made for joining the two together, weighing up the pros and cons, it was decided that at this stage we would not amalgamate the two, but have two separate regulators. The forum on broadcasting, which was set up in 2002 and is the genesis for the current Broadcasting Bill, recommended what we are doing. It also recommended certain co-operation and liaison between both groups. One can argue a good case for amalgamation, but taking everything into consideration we are making the right decision. Two separate sets of knowledge are required. In essence, the commissioner for communications regulation is a network regulator, while the RTE authority, the BCI and BCC are content regulators. In a single organisation there is always a danger that broadcasting regulation might not receive the level of attention it is due in comparison to the sheer size of the telecommunications sector. The turnover of the latter sector is a multiple of the broadcasting sector's.
That is not the experience elsewhere, if the Minister of State looks at it. When this was considered, the economy still appeared to be doing well, whereas it is in a desperate state now. Surely that should inform the Minister of State's judgment. We will move to converge both regulators at some point in the future. Quite apart from the economic argument, we must also meet the needs of changing technologies by adopting a modern day approach instead of one that applied seven years ago.
Looking at the experience of some other countries, Ofcom in the UK and the Australian communications and media authority are unitary organisations. Both have separate internal structures to deal with broadcasting content and telecommunications regulations.
That is exactly what I am talking about.
That is what Deputy McManus is proposing.
At the same time they are separate and have separate internal structures.
No problem. They share resources.
There can still be a sharing of resources, while making savings and having efficiencies between the two. At the moment we thought it was not the appropriate thing to do, but it is something we will keep under review.
3 Deputy Simon Coveney asked the Minister for Communications, Energy and Natural Resources if he is satisfied that the mineral oil tax relief scheme II is adequate to develop an indigenous bio-fuel industry; if it will stimulate investment in Irish bio-fuel plants; his views on changes to this scheme or if he is considering changes for the next phase of this scheme; and if he will make a statement on the matter. [10714/09]
Amharc ar fhreagraThe bio-fuels mineral oil tax relief schemes resulted in 18 projects being awarded excise relief for the years 2005 to 2010. The schemes were designed as an interim measure to enhance the level of bio-fuels in the fuel mix and to encourage the development of an indigenous bio-fuels industry.
The Government's bio-energy action plan, which was published in 2007, made clear that a national bio-fuels obligation would replace the relief schemes by the time those schemes came to a close at the end of 2010. Proposals are being finalised for the introduction of the obligation scheme next year. Another excise scheme will not be introduced.
Since the start of the relief schemes there has been a steady increase in bio-fuels used in Ireland, albeit from a very low base. Prior to the introduction of the schemes, market penetration of bio-fuels was almost non-existent. In 2007, the latest year for which figures are available, market penetration had risen to 0.6%. Continued increase in penetration is anticipated in the 2008 statistics.
At least five bio-fuels plants have been constructed or redeveloped on foot of excise relief granted under the scheme. A number of others are either at an advanced stage of planning, or have received planning permission.
It is the case that, generally, the European bio-fuels industry has experienced difficulties with a prolonged period of price volatility culminating in recent negative trends, which have seen the price of mineral diesel falling considerably. This has been exacerbated by rises in the price of feedstock for bio-fuels production. These two factors have caused severe competitive difficulties for the European and Irish bio-fuels sector. In addition, the availability of US subsidised bio-diesel, known as B99, has placed considerable commercial pressure on the European and Irish industries.
In this overall context, progress on constructing all of the facilities benefiting under the mineral oil tax relief scheme has been inevitably slow, despite some early successes. The Department has been working closely with the Department of Enterprise, Trade and Employment to support official EU measures to counter the US export subsidy accorded to B99. A response from the EU Commission was made today, which I am sure will be well received both by European and Irish producers. Both EU action in the short term and the introduction of the bio-fuels obligation in 2010 should provide the Irish bio-fuels sector with the certainty it needs to invest and grow its business in a sustainable way.
One of the problems of doing this on a Thursday afternoon, particularly this week, is that one gets the distinct impression that nobody is listening. Nonetheless, this is really important. Will the Minister of State inform the House how much money the State has lost in tax relief on imported fuel under this scheme since 2006? Can he provide an estimate? I expect it is well over €100 million.
The Minister of State said there were 18 successful applicants. Under the award scheme exercise, relief was applicable in the two big volume areas — 306 million litres of bioethanol and 290 million litres of bio-diesel. It would be very welcome if we were producing even a large proportion of that volume in Ireland. Of the 18 successful applicants, how many plants are being or have been constructed in the bioethanol and bio-diesel areas? My understanding is that there is only one.
Between schemes one and two there are four projects in the bioethanol category.
We are talking about scheme two here.
I will have to check that, but between both schemes there were four projects.
I am not referring to the pure plant oil.
I will check and get a more specific answer to the Deputy's question. I must point out, however, that the mineral oil tax relief schemes for bio-fuels were introduced under which 18 projects were awarded excise relief until 2010.
On the specific——
Allow the Minister of State without interruption.
There was always going to have to be imports. This is an interim measure, not a permanent solution. The US undercutting European and Irish companies made it difficult for the sector.
Today, the Commission announced its decision to impose an anti-dumping duty on US biodiesel. While the regulation in question is long and complex, the bottom line is that some importing companies will be hit harder than others. Our initial estimate is that the duty will be 16 cent per litre on average. We will be advising the industry about this change.
I am trying to get at the fact that there are a relatively small number of companies which are importing large volumes of bio-diesel into Ireland to blend it with fuel that is sold at the pumps. I do not have a problem with the importation but I have an issue with the State subsidising it. As a result, we are not seeing the development of a biodiesel industry in Ireland.
Have any of the companies successful under this scheme built or intend to build bio-fuel production plants in Ireland? Does the Government plan to re-evaluate the project so as to encourage an Irish industry rather than subsiding imported biodiesel which is not environmentally friendly as it has to be transported across the Atlantic?
Plants have been built in Ireland. At European level, we have set a 10% target of renewable energy in transport by 2020. Bio-fuels will make a significant contribution to the achievement of that target. It will be reviewed on an ongoing basis as more evidence comes to light of the effects of bio-fuels on world food markets and as new technologies come on stream.
This relief scheme was very much an interim measure. The bio-fuels obligation is the key and will be put in place through legislation next year.
How much of that fuel will be produced in Ireland? It makes no economic sense to import bio-fuels.
The Deputy has made his point.
It is imperative the bio-fuels in Ireland are compliant with the EU sustainability criteria which will be used as the basis when drafting the legislation.
No one is listening.
4 Deputy Simon Coveney asked the Minister for Communications, Energy and Natural Resources his views on whether the export tariff recently announced to facilitate the sale of electricity onto the grid from small domestically owned microgeneration is sufficient to kick start significant investment in this area; and if he will make a statement on the matter. [10715/09]
Amharc ar fhreagraThe Minister recently launched the microgeneration programme, which is being operated by ESB Customer Supply and supported by ESB Networks. The programme will provide up to 4,000 domestic customers investing in microscale projects with a financial payment for electricity exported back to the grid. It will also enable two way metering to be installed without additional charge to the customer. The electricity producer will be paid a price of 19 cent per kilowatt-hour, which will help to offset the start up costs. The microtechnologies in question include wind and hydro as well as combined heat and power.
It is the case that microscale electricity production will benefit the participating customers up-front by offsetting their purchase of electricity from their electricity suppliers. The additional incentive of a guaranteed price for electricity exported back to the grid is a significant encouragement to invest. This competitive feed-in tariff will apply to the first 4,000 microgeneration installations countrywide over the next three years.
Sustainable Energy Ireland has also launched a microgeneration pilot programme involving research and field trials, including support for between 50 and 60 installations on a pilot basis, of microscale projects. The field trials will address a range of issues including grid connection and technical standards to ensure the power security, safety and quality of installations.
The Minister is satisfied the guaranteed price under the new programme and the grant support available from SEI for testing technical issues will attract sufficient market interest to ensure investment and underpin the steady development of a national micro generation capability.
I welcome the Minister's move as a start to what can be a whole new industry. Ireland should be aspiring to have a large percentage of its households generating their own power in an efficient and environmentally sustainable manner, selling it back to the grid at night-time when not using power.
However, other European countries offer far more attractive incentives to encourage people to invest in microgeneration in the home. For example, in France the home electricity producer is paid a price of 30 cent per kilowatt-hour with a 50% tax credit for installation costs. An incentive of 42 cent per kilowatt-hour has resulted in Spain being ranked fourth in the world in home microgeneration. In Italy, the feed-in tariff ranges from 45 cent to 49 cent per kilowatt-hour with up to 80% of the capital costs available under grant aid.
Ireland, with a Green Minister who aspires to decentralise power generation into people's homes, farms and small businesses, is giving a miserly tariff of 19 cent. Will the Government examine increasing this rate to give the microgeneration industry a boost?
I am glad the Deputy welcomes the scheme. We have worked with the energy regulator and the ESB in developing the scheme. It is in its early stages but has the potential for enormous development. With the current difficult economic times, people are looking for new opportunities. This is one area that could present opportunities for families across the country.
On the cost, it should be remembered the ESB will be providing the import-export metering free of charge to the first 4,000 domestic customers installing microgenerators over the next three years. Comparing prices with other countries sometimes does not tell the real story. It is a relatively new scheme and it will be interesting to see the take-up for the scheme. If people believe it is worthwhile, they will get involved. I believe it will appear as an attractive scheme to many.
Unfortunately, the price tells the whole story.
A brief question, please Deputy.
The price will persuade people to invest or not. It is a commercial decision. Will the Minister of State agree that the roll-out phase of a programme such as this is the time to get a high return on investment to kick-start it? We can return to 19 cent per kilowatt-hour in five years time when the scheme is up and running with 15% of households producing their own power. Will the Minister of State accept Ireland is very poorly positioned in the context of how it benchmarks itself against other countries that are serious with regard to decentralising power generation and encouraging micro-generation?
I do not agree that Ireland is poorly positioned.
Is the Minister of State in a position to name any other country which pays less in the context of tariffs?
We are embarking on a process which probably should have commenced 20 or 30 years ago. However, it is not possible to turn back the clock. We have made what will prove to be an attractive proposition to many farming households.
Can the Minister of State name any other country which pays less in the context of tariffs?
I do not have in my possession information relating to the prices charged in other countries. The price we are proposing was not plucked out of thin air. We devised the scheme in consultation with the regulator and the ESB and we are of the view that it will be quite attractive. It is only natural that changes will have to be made and the scheme will be reviewed on a regular basis. If the rate of take-up is not sufficiently high and if there is a need to make the scheme more attractive, we will take action.
5 Deputy Simon Coveney asked the Minister for Communications, Energy and Natural Resources his plans to privatise or sell off State assets or State companies under the remit of his Department as a revenue raising measure; and if he will make a statement on the matter. [10716/09]
Amharc ar fhreagraMy Department is responsible for overseeing general policy and the State shareholder interest in a number of commercial state bodies, namely, the ESB, EirGrid, Bord Gáis Éireann, Bord na Móna, the INPC, RTE, TG4 and An Post. These bodies employ in the region of 23,300 people and had, according to the latest published figures, a total turnover of some €6.7 billion in 2007. They play a critical role and, in most cases, hold strategic national infrastructure in the sectors in which they operate.
In line with Government policy on the matter, the Minister has no plans to sell off or privatise State companies under the remit of the Department as part of a revenue-raising programme for Government. The shareholder priority with respect to these companies is to ensure profitable commercial operations, competitive provision of services to the economy as a whole, nationwide delivery of services in certain cases and a strongly positive contribution to the strategic development of the sectors in which they operate, in areas such as infrastructure development and environmental sustainability.
Is the Minister of State in a position to provide a guarantee that the Government will not sell, in full or in part, any of the companies that come under the aegis of his Department during the next two years?
The programme for Government contains a commitment with regard to retaining the electricity and gas network infrastructures, as strategic national assets, in State ownership. It is intended to ensure these assets are never privatised.
With respect, my question did not relate to that matter.
We have no intention of selling off any of our assets.
I am referring to the companies.
We also have no intention of selling off any of the companies. Even if it was our intention, I cannot think of a worse environment in which to contemplate their sale. We attach great importance to these companies and consideration has not been given to selling any of them.
I accept what the Minister of State says regarding the intention of the State to refrain from selling assets such as gas pipeline infrastructure and electricity infrastructure. However, my original question was somewhat more specific in respect of the actual companies involved. The State owns three or four energy companies. I am trying to establish whether the Minister of State's Department or the Department of Finance are considering raising money through the sale or partial sale of these or any of the other companies to which he referred.
I can only provide the Deputy with the information at my disposal. While I appreciate the Exchequer currently has a pressing need for funds, as I stated earlier, I could not think of a worse time to be contemplating the sale of State resources. We have not given consideration to selling any of the bodies that come under the remit of my Department nor is it our intention to do so.
