Wednesday, 23 April 1986
Dáil Eireann Debate
That Dáil Éireann calls on the Minister for Energy to make the necessary arrangements with the ESB to pass on, forthwith, to all their domestic consumers the full benefit of the recent reductions in the price of oil.
To delete all words after “That” and substitute: “Dáil Éireann notes and endorses the reduction in electricity prices  announced by the Tánaiste on 11th March, 1986, the favourable impact of reductions in electricity prices to industry on job creation prospects and the fact that prices to consumers generally will fall later in the year, and notes his stated intention to review the situation in the light of circumstances to determine if further reductions can be achieved.”
Minister of State at the Department of the Taoiseach (Mr. F. O'Brien): Notwithstanding anything in Standing Orders, Members will be called in Private Members' Time this evening as follows: 7 p.m. to 7.10 p.m. Fianna Fáil speaker; 7.10 p.m. to 7.25 p.m. Government speaker; 7.25 p.m. to 7.40 p.m. Government speaker; 7.40 p.m. to 7.55 p.m. Fianna Fáil speaker; 7.55 p.m. to 8.10 p.m. Fianna Fáil speaker; 8.10 p.m. to 8.15 p.m. Government speaker and 8.15 p.m. to 8.30 p.m. Fianna Fáil speaker.
Mr. O'Dea: When we adjourned last evening I had just received the script that had been circulated by the Minister for Energy. Since then I have had an opportunity to study that script and I am extremely disappointed with its contents. There are several examples that can be taken from it to illustrate that it does not meet the central thrust of our motion which is to inquire as to why the fall in fuel prices has not been reflected in a decrease in prices to ESB consumers, both domestic and industrial. For example, the Minister said that in common with every other business the ESB have been affected by the worldwide recession, that during a period of several years of falling demand, the company have had to contend with rising imported fuel costs, that they have coped well with the consequences of the recession but have not emerged totally unscathed.
We in Fianna Fáil recognise that the  ESB have had a tough job to survive economically and have had to contend with a world recession which resulted from rising fuel prices. The ESB overcame their problems by raising their income to a level that was greater than their expenditure and they did that by increasing charges to consumers, both domestic and industrial. Our motion seeks to ensure that those consumers who have had to bear the brunt of a movement in fuel prices in one direction will be compensated in a commensurate way when these fuel prices move in the other direction. That is the argument we are putting forward. It is the objective we are trying to achieve but there is no answer or explanation in the Minister's 18 page script as to why the decrease in fuel prices is not being passed on to the consumer. There is a kind of outline history of the ESB and of the effects of the recession on ESB charges but there is no logical answer or explanation as to why the company's prices have not moved in tandem with fuel prices as those prices have moved downwards.
The Fianna Fáil motion highlights one specific aspect of a general problem. Lower oil prices mean lower inflation and we hope higher economic growth for oil importing nations of the industrial world, of which we are one. This will give rise to an increase in real purchasing power in the economy. It is the function of the Government and the function particularly of the Department of Energy to ensure that the effects of lower inflation are passed on quickly and fully to consumers so as to ensure that an increase in real purchasing power will ensure. Real purchasing power will increase in our economy this year for two reasons: first, because the Government pay contracts were entered into before it became apparent that inflation this year would fall to as low a figure as 2 per cent or perhaps even to a zero figure and, secondly, the Minister for Finance indexed tax bands and allowances, basing that indexation on an inflation rate of 4½ per cent. The revised forecast for inflation is 3 per cent and if that turns out to be correct it is a factor that should add  also to real purchasing power but in order to gain the benefits of any such increase we must ensure that these effects quickly percolate down to the consumer.
It is estimated that in money terms, income this year after tax will increase by about 6 per cent. That means that with an inflation rate of 3 per cent, real purchasing power should increase by 3 per cent. As inflation falls the danger is that the effects of that fall will be postponed in terms of reaching the consumer because of the actions of intermediaries. The tendency of those intermediaries will be to confiscate for themselves part of the gains from the falling inflation. This is the case particularly of monopolies and the ESB are a monopoly supplier of electricity.
From the point of view of industrial development and of employment creation we need increased economic activity and that will come through increased purchasing power both from the point of view of profit margins increasing for industry and from the point of view also of increased purchasing power in the hands of the consumer. Whether that increase in economic activity will lead to a significant amount of employment creation is a matter for another debate. It would be more appropriate to a debate on the Finance Bill but suffice it to say that an essential prerequisite of employment creation will be an increased amount of economic activity. It is a matter for economic planners as to how that increased economic activity will be translated directly into extra employment. That question, too, is one for another Minister and for another time but what we are trying to ensure in this motion is that the effects percolate down to the consumer and that the impact is experienced throughout the economy as quickly as possible.
Though this is not directly relevant to this motion, it is deplorable in this context that the Government should have abolished recently the National Prices Commission. The whole area of price control seems to have been put into some sort of twilight zone.
Mr. O'Dea: The underlying assumption seems to be that a mechanism of price control is necessary only in a period of rising inflation but it is equally necessary, if not more so, in many cases when inflation is falling.
The Minister seemed to assume last night that our motion was concerned exclusively with industrial consumers of electricity but Deputies Flynn and Walsh made it clear from those benches that, regardless of how the Minister wishes to read our motion, it is intended to deal with all consumers, domestic and industrial. The script issued by the Minister does not meet the points raised in the motion. We are very anxious that the beneficial effects of falling inflation are passed on to the consumer so that economic activity can be generated and that there can be an improvement also from the social point of view. People have suffered directly because of the recession. Many people who are poor now would not be poor had they not lost their jobs or had their income not been eroded by the increase in fuel prices, an increase that arose out of a world energy situation. This happened both directly and indirectly. We are trying to achieve a position wherby the consumer gains when fuel prices move downwards just as they lost out when fuel prices moved upwards. That is simply what we are about in this motion. I urge the Minister to rethink his position and to accept the motion.
Mr. Manning: There is something very cynical in the motion this evening coming as it does from a party whose policies in the post-1977 period were directly responsible for much of the increased cost of electricity over the past few years.  Do not forget that after 1977 the Fianna Fáil Government deliberately and cynically used the ESB as a job creation agency and forced the ESB to take on people who were surplus to their needs. They did so in a way which was unplanned and unthought out and in a way which has resulted not just in the ESB having had to face up to harsh reorganisational activities over the past couple of years but has also added significantly to the cost of electricity.
I must say it takes a bit of nerve and a lot of neck to come in here and be critical of high prices for which the policies of a previous Government, as part of their vote buying campaign, were directly responsible. What is also very difficult to take in the motion this evening is the opportunistic nature of the assault launched last evening by the Opposition. It is to argue that an improvement—it is a welcome improvement and hopefully it is one which will continue—in one aspect of the overall cost of electricity can lead in one fell swoop to swingeing cuts all round. Such an approach is not just simplistic and opportunistic—we can expect that—but also, more dangerously, it falsely raises hopes which cannot be met in any realistic way and are dangerous even in the act of their being fanned.
Let us look briefly at the facts. The Minister last evening outlined them very clearly and cogently unlike Deputy O'Dea. The Minister very clearly laid out the realities and constraints under which the ESB have to operate at present whichever Government are in power.
Mr. Manning: The ESB had a loss of £27 million for the year ending 31 March 1985. This brought the cumulative deficit of the board to £64 million. Are the ESB supposed to ignore these facts just because the price of oil has dropped, even if the drop is substantial? Are they supposed to ignore these facts just because the price of one of the components of the overall price of electricity  had this drop? Of course, they cannot. The ESB have a responsibility to themselves and to the nation to maintain their financial viability. Maybe in the present mood of Fianna Fáil financial profligacy, their spending like drunken sailors, the promises made last weekend, this does not matter very much. It is all back to the spirit of 1977. Indeed, that was a great year.
Mr. Manning: I am not worried at all about last week, this week or next week. The only small problem is that, if the ESB are not to be financially viable, the only option open to the board is to resort to the taxpayer to meet the shortfall. Again, that might not worry Fianna Fáil, although I am sure it worries some of the more responsible members of the party and I am certain it would worry Deputy O'Dea who has always been responsible in financial matters.
It has never happened in the history of the ESB that they have had to resort to the Exchequer in this way. The ESB, our oldest State body, have always set an example. If the Fianna Fáil motion were passed tonight, which it will not be, what would happen could well become a real threat in this area. No responsible Government would even contemplate allowing this to happen. If, in some unlikely event, the party opposite were in Government, if there were similar circumstances and if this motion was brought before them, I doubt that in all seriousness they would contemplate it for one sober moment. It is simply a motion which is irresponsible in every way and which, if passed, could add further to the heavy burden already being carried by the taxpayer.
The other important factor in all of this is the mix of energy sources used by the ESB. If we were talking about an energy system which had only one energy source or depended predominantly on one source, as the ESB did in their early years, first on hydro and then on a mix of hydro and turf, the proposal being  made by the Opposition would, of course, make sense. If the drop in oil prices of the kind we are now experiencing had taken place in 1976 when 67 per cent of the energy was generated by oil, then the motion would make sense. If we were talking about 1978 when the figure was 67 per cent or 1979 when it reached an all-time high of 73 per cent, then the motion would make sense. But we are talking about 1986 and 1986 will be very much like 1984 or 1985 when the figure for oil was 20 per cent.
The overall amount of energy generated by oil this year will be in the region of 20 per cent. That is what we are talking about and that is the scope within which we can play around in this debate on this subject. Surely, any prudent, sensible person would say that within the first constraint of the ESB remaining viable the national interest, and that is what this debate is all about, is best served by giving preference in the small scope we have to industrial users. Our priorities have to be jobs, industrial costs and industrial competitiveness. If the reductions continue, as I am sure they will, we will see from the policy adopted by the Government within the scope available to them tangible results and we will see improvements in jobs, lower costs and increased competition.
One of the points made by the Minister and, indeed, a principle underlying the policy of the ESB is that in order to ensure continuity and certainty of supply there must be no over-dependence on any one single source and there must be within the system the capacity to adapt easily should one source dry up or become over-expensive. We must never again find ourselves in a situation like the one we were in 1979 when 73 per cent of our energy came from one single source. The policy to be followed, the policy which is being followed and the policy which makes it difficult to have the swingeing cuts proposed by the Opposition must depend upon a good mix of supply. For that reason, in spite of well-grounded environmental reservations, I am pleased that Moneypoint is coming on stream with the guarantee that the  supplies of coal will be continuous, that they will come at a reasonable price and that we will have a certainty of supply.
In the present climate I am particularly pleased that the situation rules out and rules out indefinitely the nuclear option. It is interesting to remember that in 1970 a decision in principle was taken to build a nuclear station at Carnsore. At that stage it was believed that the station would come into operation in 1980. There were delays and difficulties which proved to be fortunate. Bit by bit the starting date for the project was put back until eventually 1990 was mentioned as the starting date for the generation of nuclear energy at Carnsore. It is important to remember that it was difficulties and problems of an operational and a financial nature and not Government policy which caused these delays. The decision to go ahead with a nuclear station remained firm Government policy in the latter years of the seventies.
It is interesting to note, and I do so in the absence of any member of his party, that Deputy Desmond O'Malley, who was then Minister for Energy and the man responsible for this area, when speaking at a meeting of his then party, Fianna Fáil, described nuclear energy in The Irish Press of 30 January 1978 as:
It is interesting to note that when members of the Fine Gael and Labour Parties at that time doubted this proposition, when they raised questions about the safety of nuclear energy, about the accident-prone nature of nuclear power stations and about problems of wastage and when they proposed a public inquiry prior to the siting of any nuclear power station or the adoption of nuclear power, the then Government brusquely and firmly refused this inquiry. They said that the facts were clear and that there was no need for one. This is stated in the Official Report, volume 303, column 1722. I am sorry that the person on the opposite benches is Deputy Gerry Brady  who has been consistently and wholeheartedly sincere on matters of the environment. The policy of the then Government brings into question the sincerity of the new-found concern for the problems caused by nuclear fuels so evident on the upper reaches of the Opposition Front Benches at present.
Mr. Manning: It is interesting to note in hindsight that it was the events which followed the fall of the Shah of Iran and the rocketing oil prices and world recession which were responsible for the deferment of the nuclear programme and not the wisdom of the party opposite who were then in Government and who were enthusiastically supporting the introduction of a nuclear plant.
The present mix of coal, oil, gas, hydro and peat will happily ensure that the nuclear option is one which we will never have to face. For that we owe more to the Ayatollah of Iran than to the ayotallahs on the Front Bench of the Government at that time. The case made by the Minister for Energy last night is one of common sense and one which shows up the weakness of the case put by the Opposition, the failure to research the question properly and to realise that we are talking about 20 per cent of the overall supply of energy. Those are the figures within which we can operate. Nobody will doubt that within the constraints of keeping the  ESB financially viable priorities must be given to the industrial consumer. If there is scope for the domestic user, as there will be in September, progress will follow from there. The Minister has his priorities right and I support his amendment with enthusiasm.
Mr. Prendergast: The opposition motion suggests that benefits from reduced oil prices have not been passed on to the electricity consumer. This is patently not the case. The Minister for Energy in his statement of 11 March and in his speech last night made it clear that not only the benefits from low oil prices but those accruing to the ESB from improvements in interest and exchange rates as well as from the commencement of coal fire generation have been passed to the electricity consumer. The Jakobson report has been mentioned during the course of this debate and in particular the findings that industrial electricity prices were higher than the average European prices. The recent reductions announced by the Minister, taking into account the earlier reductions of January 1985, have of course contributed to bringing industrial prices down and bringing them closer to the European average. In this context I would like to remind the House that many of the European electricity utilities which are very heavily or wholly dependent on nuclear energy or coal do not have the diverse fuel mix of the ESB and have not been in a position to maximise potential benefits from reduced oil prices. Irish electricity prices have been reduced at a time when electricity prices in, for example, the UK and France, have had to be maintained. It may well be that we have come even closer to average European prices than might appear from the actual percentage reductions.
I would like to point to the enormous benefits which the ESB have contributed to the economy over the years and to the need to maintain them in a healthy and viable position as our oldest semi-State body. I do so as chairman of the Oireachtas Joint Committee on Commercial Semi-State Bodies. We had a very interesting exchange of views with the chief  executive of the board of the ESB two weeks ago and therefore some of the things which I am speaking about are particularly fresh in my mind. Mention has been made of the level of fuel used by the ESB and to the fact that the level of oil used is now down to some 20 per cent of all fuel used. We have been able to deduce from this that the effect of oil price changes are not now so significant for the ESB as they might have been in the past when oil accounted for 70 per cent of all fuel used by them. The diversity of their fuel use profile is both strategically and economically sound, strategically because of the isolation of the system and the need to ensure the security of the supply of fuel and economically because of the considerable spin-off effects they have had throughout the economy.
To take one example, one has only to consider the substantial contribution which the ESB have made to the development of Bord na Móna. Construction and development of the turf burning stations by the ESB enabled Bord na Móna to bring vast areas of bogland into productive and profitable use, thus giving employment in areas of the country where few other opportunities for gainful employment existed. The ESB, in using over 35 per cent of the machine turf and almost 70 per cent of the milled peat sold by Bord na Móna, are providing over half of that board's sales revenue from peat products. There are many other diverse ways which the ESB are contributing to the nation as a whole through their use of goods and services. As a large purchaser of indigenous fuels they support large sectors of the economy. In this area alone they expended £200 million in 1984-85. On various other goods and services, including their capital works they expended £120 million in the same year. More than 50 per cent of the materials used in their capital works are purchased within this country. Their payroll costs in 1984-85 alone amounted to £203 million. They earn foreign currency through their foreign consultancy assignments. Through apprenticeship training they have contributed to raising the nation's  stock of skilled personnel. It requires little imagination to realise that substantial areas of this nation's economy are dependent on and benefiting from ESB activities. All of this points to the need to ensure the continued financial integrity and viability of the ESB rather than risk dissipating them in ill-conceived and precipitous price cutting which would be in nobody's interest in the long term. All of us are anxious to ensure that the optimum benefits from oil prices will go to the ordinary housewife in the kitchen, as I said to the Chairman of the ESB and his colleagues two weeks ago.
As the Minister for Energy and the leader of our party indicated here last night, the ESB are fully aware of their responsibility to maintain electricity prices at the lowest level possible. In this regard the board have been engaged, since they published their strategic plan in 1984, in a sustained effort to slim down the organisation and to reduce costs in all areas of operation. For several years past the ESB have consistently achieved their objective of containing price rises below the level of inflation. However, it became clear that, if any significant realignment of their industrial electricity prices with those of other European countries was to be achieved, more radical action was required.
Again, I emphasise that the ESB, in common with any other enterprise, must at least recover their costs: otherwise they will go into debt. Furthermore, they are statutorily required to set their prices at a level sufficient to enable them to break even. Clearly the price rises granted in recent years did not enable them to do that despite what was said earlier in the debate about consumers having borne the full cost of fuel price increases in the past. As the Minister for Energy and the leader of my party indicated yesterday, the ESB are fully aware of their responsibility to maintain electricity prices at the lowest level possible.
The move by the ESB into the generation of electricity from coal is another example of the board's attempt to ensure that costs are kept as low as possible for  the benefit of consumers. As the Minister mentioned yesterday, coal is a cheap fuel that is widely available and the decision of the board to build a coal-fired generation station makes more sense than ever. No doubt Deputies will remember that some part of the price reduction announced by the Minister on 11 March was attributable to savings arising from the use of coal at Moneypoint so that electricity consumers at this early stage have benefited from this development. In connection with the Moneypoint project, I should like to refer to the apprehension expressed by several people in the midwest region about the possibility of the ESB extending beyond their original mandate which could seriously damage the employment prospects and the business potential of people involved in coal distribution. However, that is a matter for another debate and we will take it up at a later stage.
I welcome the indication of the Minister that he is examining the question of the price of gas in consultation with the ESB and BGE. I have no doubt that any benefits arising from these discussions will be passed on to give further benefit to electricity consumers. I am Chairman of the Joint Committee on Commercial State-Sponsored Bodies and that committee are concerned about the absence of an overall energy plan. We now have four indigenous fuel agencies, some of whom are taking expensive advertisements in newspapers at a cost of about £11,500 per day, with BGE competing with the ESB. It would be sensible to have harmonisation of our national energy policy to ensure that there is no wasteful duplication by way of competitive efforts. When we challenged BGE and the ESB recently the answer given was that competition is good for business. While that is axiomatic — like telling us that today is 23 April — from the point of view of the taxpayer it is not a good thing to have semi-State bodies competing against each other. Competition is all right if they bear the cost themselves but ultimately it is the taxpayers who have to pay and that is not good.
 That is why I emphasise again the philosophy of the Labour Party, that there should be an overall national energy policy to ensure that the optimum benefits go to the ordinary woman with a young family. We are not talking about industry, supremely important though that may be as a means of providing jobs. I accept completely the assurance given last night by the Minister and leader of my party with regard to passing on the benefit to the consumers. When we took evidence from the ESB some two weeks ago, they told the committee to which I have referred that they were prepared at all times to pass on any benefits to the consumers.
There can be no doubt that all electricity consumers have benefited significantly from the announcement by the Minister of price reductions and they will continue to benefit. Two weeks ago I asked Mr. Moriarty, Chief Executive of the ESB, what they hoped to do in this regard. I am absolutely satisfied that it is the policy of the ESB and the Government to give as much benefit as possible to the ordinary young housewife.
Some people were critical of Fianna Fáil for putting down this motion but that was rather naive to say the least. Fianna Fáil know just as we do that if the present situation continues the benefit will have to be passed on to the ordinary housewife. I would not criticise Fianna Fáil or any responsible Opposition for putting down such a motion. A cynic might dismiss it as an exercise in political expediency, that they want to get their foot in the door before the Government get full credit so that afterwards they can claim they were responsible for the price reduction. It would be disingenuous and very naive of us to criticise any responsible Opposition in that connection. Good luck to Fianna Fáil for putting down the motion. However, there is a time and a place for everything. I wish I were as sure of my salvation as I am that there will be further reductions in costs to ESB consumers and it will be done as soon as it is possible for the Government to do it.
Mr. G. Brady: It is necessary to look at the mix of sources of electricity generation within the country. Previous speakers referred to the 20 per cent oil limit as being a small margin for latitude. As I develop my contribution to this debate it will become quite clear that it is anything but a small area in which to effect the deserved price reduction — 53 per cent for natural gas, 21 per cent from peat and the remaining approximately 5 per cent from hydro power. Obviously it is sensible to keep an admixture of this kind and not to depend upon a single source. I suppose in the European context Ireland is in the upper end of the range of pricing for industrial usage. Indeed closer to home, comparing with England, we find ourselves out of kilter on the domestic rate of charges for electricity.
No one could have envisaged the price of oil plummeting over the past six months back to the seventies level. The public would regard it as quite derisory if they came into this Chamber and listened to the contributions made by the Government about not getting this due reduction in price. It is quite outlandish. It is sad to hear speakers almost defending what is an obvious sleight of hand or rearrangement of finances. There must be some type of ulterior motive on the part of the Government to engage in withholding a price reduction which is the right of the consumer.
As this reduction of close to 75 per cent since last December brings us back to mid-seventies prices, how on earth can the Government, unless there is a reason that has not been disclosed to this House, justify holding back that reduction? Let me try to explain what I feel is the reason for it. There is 53 per cent from natural gas for which the ESB are charged a nominal 25p per therm which I would allege is pegged artificially and deliberately high at the old oil price level and this rate of difference in price is then transferred back to the Exchequer. Last year An Bord Gáis returned £80 million to the Exchequer. That is quite a sizeable sum of money. Last night the Minister said that the ESB had reported a loss of some £27 million for the year ending  March 1985 bringing their cumulative deficit to £64 million and that that figure could not be ignored either by the Government or the company in considering appropriate pricing policy; that the Government had a responsibility to ensure that the ESB maintained their financial viability as otherwise the Exchequer and, in the final analysis, the taxpayer would have to carry the burden.
Some £80 million goes back to the Exchequer. If the Government were to refund even half of that, quite substantial reductions in cost to the consumer would ensure and that is from the natural gas option and not taking into account the reduction in the cost of oil. So we are not just talking in terms of a latitude of 20 per cent of the national output in generation of power, but more like 73 per cent. So I do not know what the obsession is with the 20 per cent oil limit. That is just inaccurate. I would contend that this gas price is being kept artificially high deliberately and, of course, it is quite obvious that this will have adverse effects on the balance of payments.
It is derisory to delay implementing the reduction. The Minister says the Government would be foolhardy in the extreme to embark on a programme of reductions. Obviously, unless the southern part of the country is enjoying relative prosperity or basking in an affluence which is unknown in the part of Ireland where I live, these reductions are needed. A week hardly goes by in which constituency clinics are not full of people complaining about their inability to pay ESB charges, telephone charges, or whatever. That is a fact that cannot be evaded by talking in grandiose figures of reductions of millions of pounds.
This is an opportunity. Fianna Fáil are being sensible in putting forward a motion calling for a relief. If members of the Government say this is a small measure, they are not in touch with reality because any small measure is huge in the financial budgets of many families in Dublin at the moment. Unless the Minister is designing some sort of shock treatment for the country at present he is going about it the wrong way. The  public just cannot afford to meet these huge costs. This is something that we have to keep in perspective. It is not a question of there being a small margin to play about with. There is a very much greater margin and the cost involved, even on the oil option, is about 75 per cent.
In Dublin, and I am sure this applies in many parts of the country, we have an emergence of the new poor in our society. Large families who are ill-prepared for redundancy or massive layoffs and unemployment, who enjoyed a moderate standard of living, find themselves now in a situation where the wage earner is very hard-pressed to pay a never ending spiral of bills that come in week after week. I would go so far as to say that in extreme cases where the pressure has become so unbearable, either through overdrafts or bills of this kind, people who are susceptible to stress and strain become suicidal. The Opposition, in putting down a motion like this; are offering some hope that people can clutch at and say that at least there is a reduction in some type of energy usage.
Certainly, at Christmas the reduction in petrol charges was gobbled up. It was almost an absurdity at the time. The reasons were couched in bureaucratic jargon that this was necessary to offset this and that. Having undergone a savage onslaught and trying to maintain their heads above water, the public are at least entitled to some reduction. I am not so sure about the feelings of members of Fine Gael but certainly members of Labour are being totally inconsistent with their very principles if they do not at least uphold that view of the hard-pressed sector of our society.
We have extolled the virtues of the ESB and the great work they have done. No one denies that. But they do not engage in what I feel should be a mandatory part of their development, that is, an education programme to endeavour to economise on electricity usage. Obviously, there is a vested interest in the usage of electricity. They are advertising all the time clean, efficient, cheap  power when a lot of their energy — and I do not say that facetiously — should be put into educating people, showing them ways and means to economise and not leaving it to parents to continuously badger and harp at their children to turn off lights, to turn off fires and so on. Why do we not hear more of that from the ESB? Why do they not educate people on how to cut back on usage? I say that as a criticism of the ESB.
Alternative sources of energy are not developed by the ESB such as wind power, wave power and those areas of electrical generation that are ecologically acceptable to a planet which is already well polluted. There is no pollution from natural gas, even though it might have a 41 per cent efficiency burning rate compared with bituminous coal. The examples at the North Wall and the Marina in Cork show a world wide reputation in efficiency. There has to be comment made about the change from natural gas to the wretched polluting bituminous coal at the Moneypoint station which is nearing completion.
I want to put a challenge to the Minister. Eighteen months ago I raised the question of fitting sulphur recovering scrubbers to that plant and I was told the cost would be close to £300 million, which would be unacceptable, and therefore EC regulations had to be breached. Now Ireland is a producer of acid rain in the order of 67,000 tonnes when it gets to full capacity of 900 MW in about 18 months' time. That is simply not good enough. In reply to a question I tabled about acid rain from the Moneypoint power plant, I was told the ESB are carrying out a cost appraisal at the direction of the Government for installing flue gas desulphurisation systems at Moneypoint and other generating stations. He said the study was almost complete and that a report was expected shortly. That is a total contradiction of what I asked about earlier. I suggest that it is demanded now that these sulphur recovery——
Mr. G. Brady: It is not because it affects the cost of electricity. However, I was making just a brief reference that in the context of the ESB wrong figures were given to me. I was told the figure could be about £250 million and now I am told it could be a quarter that figure.
It is downright cruel to delay bringing in this reduction. It is not unreasonable to assume that some other motive prevails. Given the track record of news being delivered in a differing context within a few months by this Government, I regard this as an example of bureaucratic arrogance of which, regrettably, the consumer is the butt. I call on all sensible Members in this House, particularly members of the Labour Party, to row in with this constructive proposal.
That Dáil Éireann calls on the Minister for Energy to make the necessary arrangements with the ESB to pass on, forthwith, to all their domestic consumers the full benefit of the recent reductions in the price of oil.
We are not asking to close down the ESB, nor are we criticising the ESB for the contribution they have made to this State over the years. We are simply asking them to pass on the benefits they received, particularly over the last six months, to the consumer. The failure of the Government to instruct the ESB to reduce immediately the price of electricity to consumers means that all households are paying what amounts to a Government tax on the electricity they use. That cannot be disputed. Concessions were made and there were reductions in prices, but electricity prices did not come down. This is yet another burden on the already hard-pressed families who had to suffer the removal of food subsidies and the imposition of VAT on  clothes and footwear under the present Coalition Government.
I am making these points because I want to spell out very clearly this Government's lack of concern about the issues affecting the community. The most vulnerable sections of our community are suffering because of high electricity costs. When there was an opportunity to give relief it was not given. Deputy Prendergast can talk all night about the good days, but we know how many good days we had in the last three years. We were promised many good things when this Government came into office. They had the brains of Europe. They had all the answers. Yet, three years later the people know what to expect from them.
The Government were very quick to introduce taxation measures, but no concessions were made. The people had to pay up immediately, but any relief was given begrudgingly and only as a result of pressure from this side of the house and constant criticism by Fianna Fáil Deputies on behalf of the people for the way they were being treated by the Government. For example, the miserly 4 per cent increase in social welfare payments will not be given for another three months, but most taxes introduced in the budget were implemented immediately. This is the so-called Government of concern. This is the Government which Deputy Prendergast said was giving good news and that we should tell the people the good times would be here shortly.
In line with the fall in oil prices the Government should pass the benefit to all consumers of electricity immediately. The Minister for Industry and Commerce publicly stated that he would take strong action against any manufacturer or wholesaler who did not pass on the benefit of the reduced cost of products to the consumer. Would somebody explain what is the difference between what the Minister for Energy said last night and what the Minister for Industry and Commerce said? There is a direct contradiction in the way the Departments are running their affairs. If the Minister for Industry and Commerce follows through on that pledge, he must ensure that the  ESB reduce the cost of electricity to all consumers.
This must not be a token reduction but a true reflection of the dramatic fall in oil prices, which have fallen by almost 20 per cent in the last six months. The unnecessarily high price of electricity is also unacceptable in view of the fact that natural gas is used to generate part of our electricity requirements. With the advent of natural gas many people hoped we would have cheaper electricity. However, the only one to benefit from this natural resource has been the Government creaming off the profits, a complete misdirection of the finances of the State. High prices for gas and electricity, with industry, commerce and everybody else unable to complete or meet costs, amount to a complete misdirection of the State's resources. If Bord Gáis are to be consistent in their policy of selling gas at an oil related price, the users of natural gas, mainly householders in Cork and Dublin, should be entitled to a reduction in price immediately. I was glad to hear the chief executive of Cork Gas Company this week stating that there would be a reduction in the price of gas in the near future. I am interested to know what the reduction will be.
In the report of the inquiry into electricity prices last year by the Department of Energy a number of relevant points were raised and I want to refer to two of them. Government levies on fuels have increased the price of electricity unnecessarily. Second, the Government should sanction electricity price adjustments promptly and not have the matter drag on, causing further problems for the ESB and everybody else concerned. These points were made not alone by representatives of Irish industry but by ESB representatives. These recommendations were not implemented by the Department of Energy. Let us be clear that recommendations made by the Minister's Department regarding issues affecting the ESB were not acted on. The Government by refusing to ensure that electricity prices are adjusted in line with  the cost of oil are putting a levy on the cost of oil, thereby increasing unnecessarily the price of electricity. The imposition of a levy in lieu of a rate on ESB property means that an additional £19 million is being imposed on the ESB and that is being passed on to the customer in the form of higher electricity costs. This tax should be withdrawn immediately.
The Minister for Energy last night said, as reported in The Cork Examiner today, that he rejected the Fianna Fáil motion to reduce ESB prices to private consumers now, but he promised to review the situation to see if further reductions could be achieved. He said that the Government had the responsibility to ensure that the ESB maintained their financial viability as failure to do so would inevitably result in the Exchequer, and in the final analysis the taxpayer, being called on to carry the burden. What does the Minister mean by that? Surely there is a contradiction when the Government are taking £19 million from the ESB by a back door method. It is an easy way to get money. If the ESB had that money they could get on with their job and give a proper service at a proper price; but no, the Government must cream off in the easy way £19 million which would have a significant effect on the accounts of ESB consumers.
The Minister and the Government appear not to realise the effects their policies are having on the community. When we have raised matters in this House affecting the community we have heard so often what I will give an example of now. The then Minister for Industry, Trade, Commerce and Tourism, Deputy Bruton, replying to me said that it was not the responsibility of Government to create jobs; it was their responsibility to create the environment to create jobs. He outlined the difference for me. I say here tonight that it is the responsibility of the Government to create that environment by bringing down prices throughout the community. That will help to create jobs. We hear from Ministers repeatedly that industry must become competitive. In order to achieve  that, the Government have a responsibility to ensure that price reductions are passed on; and they should not make big noises about 5 per cent when it should be 20 per cent. The Government have an opportunity and a responsibility to make a positive response in this area to the community.
Are the Minister and the Government aware of the number of people who are in dire straits because of arrears with their ESB bills? We have gone through a long, hard winter when people had to use more electricity than for many years past. In my constituency in Cork there is a huge unemployment problem, as is well known in this House because we have referred to it often. Consider the problems and the difficulties of the people there whose incomes are insufficient to keep them living in a normal way and to feed and clothe their children. Some of those people cannot meet those bills. Some homes in my constituency have no electricity. It has been cut off because the people there could not pay their bills. The Government are failing in their duty in not recognising this. We have heard pleasant talk from across the House tonight about the good times that are to come. It is a pity that Members opposite have forgotten that bad times are here at the moment for many people and will be here for a long time to come if they are depending on the Coalition and their policies to tackle those issues. The Minister has a duty to the public at large. The reduction in the oil prices should be passed on. It is no reflection on the ESB, but it is a reflection on the policies of this Government that they extract money in any way possible as long as they get enough and the public do not benefit from it.
Over the years when increases occurred and the ESB put levies on the meter or whatever in order to get money, that money was given by the public and that was very difficult for many people. Now here is an opportunity to do something positive and relieve people, and I refer especially to the poorer section of the community. It is widely known and recognised that this Government have  forgotten totally the plight of the less well off and the almost quarter of a million unemployed, and the Government have contributed to that situation very substantially. These people are totally disillusioned with the Government's approach. Will the Minister here tonight and his colleagues accept this motion in the interest of the community? It was put down in good faith.
Mr. Bell: I would like to take up my colleague on one point. He referred to social welfare people being unable to pay. I agree with that, but let me point out that Ireland has the greatest number per head of population of free electricity recipients of any European country and his party made a major contribution to that, rightly so. We are committed to that policy.
I am in a quandry in seeking to speak on this motion and amendment which are before the House. The Minister for Energy is called upon to pass on in electricity prices the benefit of recent reductions in the price of oil, and particular reference is made to domestic consumers. I must agree, as I have said here many times, that the price of electricity for many reasons is very high to both industry and the domestic consumer. However, there is no evidence before the House that the full benefits of the oil price reduction to the ESB have not been passed on to the consumer. On the contrary, in the robust case which he put before us the Minister pointed out that not alone were these benefits being passed on in full but additional benefits arising from the weaker dollar, interest rates and the commencement of generation from coal were also being passed on. He made it clear that the reduction in electricity prices which he announced in this House on 11 March is costing £30 million this year and would cost at least £36 million in a full year. Furthermore, he held out the prospect of further reductions at a later stage and was able to confirm a stable outlook for electricity  prices for the next two to three years. At the same time he said that the oil price reduction to the ESB was worth less than £20 million per annum. Nobody has sought to challenge these figures.
The Minister put all the facts regarding oil prices on the table and has not been contradicted in the House. Members who have already spoken sought to make play of the slight deferment of reductions to domestic consumers but a brief study of the Minister's statement shows that this was a carefully balanced and deliberate decision in the best long term interests of the domestic consumer. Two rounds of reductions have been given to industrial consumers in a period of 15 months in the interests of competitiveness and job creation and this is not in dispute.
Given the findings of an independent inquiry that industrial electricity prices were out of line with European averages, the policy of the Minister and the ESB of tilting the balance in favour of the industrial tariff is fully justified. It is further justified by the fact that electricity tariffs have for some years now stayed well below the rate of inflation and the clock has been turned back a full two years in regard to the domestic tariff. However, this has not been recognised and at times one had to check the monitor to see what was being debated in the House. At times, it could have been a discussion on an Estimate for the Department of Energy as Deputies ranged far and wide on energy, touching on such things as FEOGA, the western electricity package, the policy in relation to peat development and so on. It could also have been a debate on social welfare policy as the free electricity scheme was also discussed or, indeed, a discussion on industrial policy as there were references to Clondalkin Paper Mills. It could also have been a discussion on competition policy as references were made to the price of petrol, diesel, heating oil, fertilisers and pesticides. I submit that these are issues for another day as the motion is about reductions in electricity prices. The case put before the House by the Minister shows that the position of the  ESB in relation to passing on reduced costs was fully explained. When account is taken of the fact that the starting position of the ESB meant that they incurred a loss of £27 million and have an accumulated deficit, I would not expect the Minister or his Department to have the detailed information necessary to determine whether other sectors of the economy have been as conscientious as the ESB in passing on benefits, for example, the food sector.
The underlying downward trend in inflation suggests that reductions have been passed on to some extent at least but, in relation to the motion and the amendment before the House, the Minister has demonstrated that the ESB have been assiduous to a fault in this context. The ESB are rightly proud to set the trend now as they have done on many occasions over the past 60 years.
One Deputy spoke about intermediaries confiscating price reductions which could have been passed on to the consumer. The Minister amply demonstrated that the ESB are not in that category and the motion, after all, is about electricity prices. Some Members seemed to want to send a message to other sectors of the economy about reducing prices. If there is such a message, the example of the ESB is a good one to copy. As I said, the Minister clarified his intentions in regard to domestic consumers and I share and support his view that the individual consumer will be well satisfied in the short term. The 5 per cent reduction will be in force for some time as against a transitional benefit of 2.5 per cent a few months earlier. I commend the amendment to the House as I am satisfied that, as in relation to Dublin Gas, the Minister will produce the goods.
Mr. Reynolds: I support this motion which calls for the passing on immediately of the 5 per cent reduction which the Minister announced will go to domestic consumers next September. Perhaps Deputy Bell might be interested in listening to facts. We welcome any reductions in relation to ESB costs for industrial,  business and domestic consumers. However, I wish to remind the House that the report of the committee of inquiry — I was proud to be a member of the Government which initiated this inquiry — found that Irish industrial electricity costs are on average 20 per cent above those of our EC competitors. When one looks at some of the heavier users of electricity one finds that the cost differential is as much as 40 per cent and more.
We welcome any reduction in the price of electricity but we will not pat the Government on the back for doing so because the Minister chose to ignore the reality in relation to the input cost of the ESB. The Government came to power in December 1982 and in the middle of 1983 they increased gas prices to the ESB by approximately 46 per cent which, in effect, took £38 million in additional ESB revenue out of the pockets of ESB consumers. They also doubled the figure of £10 million which had been imposed on the ESB in lieu of rates to £20 million so, in effect, they added a sum of £48 million to the cost of the ESB.
It is nice to know that oil costs only 20 per cent of the input of fuel for the generation of electricity at present. I also note that the Minister said they will use every opportunity to use oil because it is cheaper. How does the Minister reconcile that statement with the closure of the Great Island generating station, Wexford? What determines the cost of oil? We all know what it costs now and what it cost six and 12 months ago. I am being generous to the Government when I say that it is less than half what it was. Is any Member seriously suggesting that does not have a significant effect on the cost of fuel to the ESB? It certainly does. Even greater still is the depreciation in the value of the US dollar. In round terms it is 30 per cent less than it was this time last year. In itself that represents a huge cost reduction for the ESB in purchasing oil and servicing their very extensive foreign borrowings. We all know they have an abundance of such borrowings.
There may be a minus in relation to the decision of the Minister for Finance  to agree to a re-alignment of EMS currencies. At that time the Deutsche Mark was revalued by 3 per cent. I do not deny that factor must be taken into consideration but the other part of that equation is that sterling has reduced significantly in value. I have no doubt that the ESB have substantial borrowings in that currency also. I put it to the House fairly and squarely that the reductions offered recently do not measure up to the benefits that have flowed to the ESB. I am not here to denigrate the ESB but to salute them as a successful semi-State organisation. I am here to ask that the ESB, as Deputy Prendergast seemed to suggest, be clapped on the back for ensuring the development of Bord na Móna. I must put it on record that the ESB are part of our great national development and the Bord na Móna are another significant contributor to that. One does not depend on the other. The ESB should never have been allowed to make money on the back of Bord na Móna.
The ESB put out propaganda last year to the effect that because of the huge prices they had to pay to Bord na Móna to increase their profits they had suffered. That was a myth. Mr. Lang, of the ESB purchasing section, at a meeting of the Joint Committee on Commercial State-Sponsored Bodies agreed with me that the unit cost of milled peat, the mixture of sod milled peat and peat was very competitive with oil or gas. It is no harm to stress that the reductions announced do not reflect the benefits that have flowed to the ESB.
The Minister for Energy, like the ESB, told us that the ESB have a very big deficit to look after. Any time anybody looks for anything from the ESB we are told they have a big deficit to look after, but let us analyse where that deficit comes from. It is not a deficit in the true sense of the word because double depreciation still exists in the accounting practices of the company. I am amazed that Deputy Manning, who time and again when I was Minister for Energy put the case that it was time to remove the double depreciation accounting practices of the ESB, totally ignored those arguments tonight. It  is amazing the way all the twists and turns can be done by Government Members who will not face up to the facts of life. Deputy Bell may smile but he must bear in mind that the main reason why we tabled this motion was to seek aid for the people who are suffering the greatest hardship. I am glad that the Minister of State who was responsible for social welfare is present.
Mr. Reynolds: So many Ministers were moved around in the musical chairs shift some time ago that it is hard to know where any of them is now. I am glad the Minister is still involved with the Department of Social Welfare. If he looks at any of the files going through his Department he will learn of the real hardship experienced by many people. At our clinics people with small businesses and builders approach us for help. They are told time and again by officials of the Department of Social Welfare that the income they had a couple of years ago should be sufficient to enable them to cope with their difficulties. Those people, and the unemployed, should be assisted by the Government. We are trying to get the Government to give relief to such people now and not at the end of the year. I wonder how housewives will feel when they discover in their bills this week that the increase announced last December has been added on. I cannot understand how Deputy Bell has come to the conclusion that this is only a temporary postponement of a reduction.
Mr. Reynolds: The increase announced last December applies from this month but the reduction announced recently will not apply until next September. If the Labour Party are not prepared to give some relief to those who are suffering great hardship the reduction in ESB charges announced recently will not be passed on to consumers until next September. That does not represent a temporary postponement of a reduction.
I marvel at the argument put up by Government speakers tonight. I was surprised that I did not hear the child benefit scheme being trotted out tonight because we have been told often that it is the answer to everything. When one refers to hardship in the House one is told that the child benefit scheme is the answer. That myth was blown long ago despite the efforts of the new Minister for Social Welfare to spread a false impression throughout the country. That Minister even resorted to writing letters to the newspapers. Deputy Bell may smile but he is aware that any person on the 35 per cent tax rate who is receiving benefit under the child benefit scheme receives £3.02 per week. Out of that amount that person must pay the increased electricity charges and more for bread, butter and milk. Anybody who can pay those increases out of that amount is a magician. The Government expect the people to be magicians.
I am gravely concerned that the Government do not realise the hardship that is rampant throughout the country. If Members on the Government side were holding clinics they would be aware of it, but I am afraid they are hiding. They must remember that they cannot hide from the people all the time. They will have to face the people soon.
I should now like to refer to another change of position by the Minister for Energy. We are all aware of the rows that take place from time to time between himself and the Minister for Finance. We are all aware that they were at it in 1983 and 1984. On 25 June 1984 a newspaper carried a story under the heading, “Spring hits Bruton in ESB price clash”.  At that time Deputy Bruton, who was Minister for Industry, Trade, Commerce and Tourism, was proposing that there should be a two tier system for electricity prices, higher for household consumers and lower for industries and business. However, Deputy Spring, in simple terms, told Deputy Bruton to mind his own business. He does not stand for that sort of thing. In the end he said that the view expressed by Deputy Bruton was one man's opinion.
According to the Irish Independent 25 June 1984 the Minister, Deputy Spring, made it clear that energy prices were decided by the Minister for Energy. He said that policy on ESB charges could not be decided in advance of any special Government inquiry into prices, that the Department of Energy was his responsibility and that the Minister, Deputy Bruton, in other words could mind his own business. Deputy Spring did not accept a two-tier system then but when it suits him in 1986 in order to hold the Government together he is prepared to accept it. That represents another U-turn by the Minister for Energy. Does he remember what he did last year, or the year before?
How does the Minister explain not being able to pass on benefits to hardship cases when there was so much money around to deal with the many crises that arose during the term of office of the Government? Hundreds of millions of pounds were available for the PMPA and to bail out ICI. There was no problem about getting that money and today in the House I got confirmation from the Minister that Dublin Gas are to be nationalised, warts and all. The receiver will be given a blank cheque and nobody knows what the price will be. It is incredible that the Government should make that decision without having a clue as to what the cost will be. This was supposed to be a Government of financial rectitude. Throughout the country they preached what we should and should not do. They have it within their remit to bring out what should have been brought out long ago. Indeed, had it been done eight  months ago Dublin Gas might not be in their present position. The Government should recognise that they can no longer continue to reap high yields from high gas prices when the price of oil has been reduced by half. That is the reality of the world energy market and it is time they recognised that fact.
Our fundamental plea is to pass on the reduction at the same time as everybody else. The key to national recovery is in the passing on of the benefits throughout the economy. The Government should not make the hard-pressed housewives suffer, suffer at the expense of a Government hiding behind smokescreens, running away from their responsibilities. It is the responsibility of the Minister to raise prices; equally it is his responsibility to ensure that they are reduced. We maintain there is a very good case for doing so. I will be amazed if the Minister is not, within the next six months, announcing another price reduction because circumstances will force him to do so——
Mr. Reynolds: I would ask the Minister to wake up before it is too late, relieving some of the hardship on consumers. Indeed, I hope that Deputy Bell, having heard the other side of the argument, will entice some of his colleagues to bring some relief to the hard-pressed housewives. I was not being insulting in so describing them, though the Deputy seemed to so imply in his remarks, because in view of all the facts and circumstances, it is an insult to offer them a derisory reduction from which they will not benefit until December next when, hopefully, Santa Claus will have better news for them with a new Government in power. The Dáil divided: Tá, 64; Níl, 59.
Conlon, John F.
Cooney, Patrick Mark.
Cosgrave, Liam T.
Cosgrave, Michael Joe.
Durkan, Bernard J.
Enright, Thomas W.
Farrelly, John V.
Harte, Patrick D.
Noonan, Michael. (Limerick East)
Sheehan, Patrick Joseph.
Burke, Raphael P.
Coughlan, Cathal Seán.
De Rossa, Proinsias.
Fitzgerald, Liam Joseph.
Gallagher, Pat Cope.
Geoghegan-Quinn, Máire. O'Malley, Desmond J.
Haughey, Charles J.
Mac Giolla, Tomás.
Noonan, Michael J. (Limerick West)
O'Leary, John. Wallace, Dan.
Wilson, John P.
Question declared carried.
Motion, as amended, put and agreed to.
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