Tuesday, 27 March 2001
Dáil Eireann Debate
Two weeks ago, the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, was on an official visit to Japan. One of her speeches, which was widely reported in the media, carried a very significant comment coming  as it did from a Minister, particularly the Minister for Enterprise, Trade and Employment. She stated that Ireland has a first world economy but a Third World infrastructure. How right she is. The country has a ramshackle rail system, an inadequate public transport system and a road system that is becoming even more strangled day by day through gridlock. The Tánaiste as Minister for Enterprise, Trade and Employment with responsibility for the industrial jobs sector must also have been very mindful of our current perilously critical electricity power situation.
Last January, California suffered a major power collapse. The State of California has the most advanced industrial park in the world, the very heart of America's technology boom, yet, because of lack of planning and the failure to manage privatisation and de-regulation properly, the lights went out in Silicon Valley. Right across San Francisco Bay, because of the electricity blackout, traffic lights failed to function, petrol stations closed, bank-telling machines were paralysed, lifts stalled and television and PC screens went blank. The hub of the American technology miracle had to resort to generators, flashlights and candles.
Last week, California experienced an even worse power collapse. The message from the power hungry companies based in Silicon Valley was blunt and forthright: “If we cannot anticipate a reliable supply of power to run our computers, then we will move elsewhere.” If they decide to move, they certainly will think twice about moving to Ireland because of the very real prospect that a California type power collapse could well be on the cards here. All one has to do is look at the growing number of amber and red alerts to see that we are in an extremely fragile situation as regards electrical power supply.
Three weeks ago, RTE's 6.01 and 9 o'clock news bulletins on TV ran a sobering series on the critical state of electricity supply. On three successive nights the RTE news team visited Dublin, Ballina and Cork. In all three locations the story was the same – power supply problems were causing major headaches for existing companies. In the case of Dublin, data hosting companies complained they were being contacted by the ESB at peak demand times and asked to switch off their plant. In Ballina, the manager of Hollister, Mr. Pat O'Malley, confirmed that because of the frailty of the electrical system, the company had no option but to bring in its own one megawatt generator. The whole industrial and commercial fabric of Cork city is under threat because of threatened power shortages.
The IDA was interviewed on the same programme and had no hesitation in confirming that because it could not guarantee power supply to prospective industries, foreign investment prospects will be badly affected. The ESB was asked  on the same programme for its observations on the situation. The reply was extremely significant on two fronts: first, as the monopoly power supplier who knows exactly what the situation is and, second, because time and time again when Opposition Members raised concerns about the electricity supply, the Minister has repeatedly told the House that she has been assured that there would be “adequate electricity supplies provided by the ESB up to and including winter 2000”. Yet, on the same RTE programme, the ESB said the network is – in the company's own words –“creaking” and that the problem is getting worse. According to the ESB, it has problems both with transmission and generation. Mr. Seán Dorgan was quoted as confirming that from the point of view of generation, in order to keep pace with demand, the system would need 480 megawatts additional generation every two years.
Is it any wonder that we have a critical power position when political and departmental management is so lacking? Today we had oral questions to the Minister for Public Enterprise. One of the questions I had tabled was to ask the Minister if a report had been presented to the Government warning of an imminent electricity and gas crisis. On Thursday last I received a telephone call from the Minister's Department asking me to what report I was referring. The Department of Public Enterprise seems to be totally oblivious to the existence of any such report being presented to the Government. I had to refer the Department to The Irish Times of 22 February 2001, Business and Finance section, page 19, which contained an article entitled “Energy Crisis in the Republic could mean capital funds loss”. It is incredible that neither the Minister nor the Department would appear to have seen the report.
The newspaper article confirmed that the Department had commissioned DKM Economic Consultants to carry out the study. The report is extremely ominous. It confirms that many areas of the State face high risks of unplanned electricity outages due to transmission system weaknesses. In addition, depleted gas supplies and inadequate generating capacity for electricity are increasing the risk of outages this winter and next. The report stated
Clearly, a lack of action in relation to the serious energy situation in which the economy now finds itself, will result in a flight of digital capital to economies where reliable and secure  telecommunications and energy supplies are guaranteed.
What is particularly significant is the time lag, lack of vision and lack of planning because EirGrid, the national electricity grid company, admits that the upgrading of the transmission system has a lead in time of seven years due to planning, legal and construction processes.
Here we have a key report, commissioned by the Department of Public Enterprise, identifying a critical power supply situation which would totally undermine the well being of the Celtic tiger. It is a report one would imagine should have sent shock tremors right through economic Departments, which should have gone straight to the top of the Government agenda and should have triggered a major review of energy policy. The impression I got from the telephone call last Thursday was that the Department was blissfully unaware of its existence or, at best, might have been mildly aware that there was a report somewhere.
The report highlights the various areas at risk and, like the RTE programme, there is a particular emphasis on the Cork region. The power supply requirements of the data hosting industry is a central theme of the DKM report. Data hosting has become massive business and millions of dollars of investment have been poured into Dublin in the past few months. As we speak, several warehouses full of servers are being built in Dublin to host and manage data that makes us part of the world wide web. At least 23 further centres of this kind are planned for the Republic, which will bring in more than $1 billion dollars to the State. To date, only two of these are planned for outside Dublin.
Here we have a huge growth area with major revenue earning potential and, without any new centres coming on stream, existing centres are being telephoned by the country's monopoly power supplier, the ESB, and asked to switch off their systems because of inadequate power in the grid. In fairness, the surge in popularity of data hosting centres was not expected by those involved in the e-business arena, not to mention those in the utility sector. However, the reality is that e-business companies depend for their survival on facilities being provided immediately and the ESB is simply unable to facilitate them. Data centres only began springing up in such huge numbers last year and each needs the same amount of power as a medium sized town. As a result of the speed of the sector's development, they need the power to be made available almost immediately.
This sudden growth and surge has caught the ESB unawares and the infrastructure to deliver the power is simply not available. The ESB has grossly under estimated the requirements of the digital economy and the e-commerce sector. While it would steadfastly maintain that there is  a safe margin between supply and demand, one has to ask why it was necessary for the company to lease five massive generators from General Electric in the United States in order to sustain supply over the winter months. The ESB located three of the generators at Aghada, County Cork, and two in Killala, County Mayo. Each generator had a 22.9 megawatt capacity output.
In total, it cost £10 million just to lease these generators for the six months and a further £10 million to fuel and maintain them. Each generator is now wending its way back to the United States in what must be the sweetest of sweet deals for the American leasing company. Such expensive ad hoc measures are the clearest possible illustration of the Government's failure to plan properly for the energy needs of the country. What is even more evident is the grossly inadequate level of infrastructure. I refer here to lines cables and the sub-stations which simply cannot carry the power from the generating facilities across the country to their destinations. That is an appalling indictment. On one hand we have the IDA and Ministers, who are absent from the country on a regular basis, aggressively marketing Ireland as the place to locate, while those who locate here are being asked to close down their operations at peak demand time. What more need I say?
Mr. Naughten: The announcement that seven international companies due to build data centres in Ireland have either deferred their plans or dropped them altogether highlights the concerns expressed in a recent Government report regarding an impending energy crisis in Ireland. Data hosting centres are crucial to the Government's plans to make Ireland the e-hub of Europe. However, data hosting centres in Dublin are regularly asked by the ESB to suspend their operations during periods of peak demand. The ESB has acknowledged that its network is creaking under modern day power demands.
On her recent visit to Japan, the Tánaiste stated that Ireland has a first rate economy but a third rate infrastructure in many areas. The report compiled for the Department of Public Enterprise by DKM predicted that delays in major electricity projects mean it would be very difficult for the ESB to accept large new loads such as data centres. EirGrid, the national grid company, has warned that the electricity network will operate without a safe margin of reserve capacity next winter. This will mean that the situation vis-à-vis electricity generation will be tight, with the threat of power cuts.
Demand for power broke the 4,000 megawatt threshold for the first time in January. While the national system can produce up to 4,800 megawatts, some of the reserve capacity is available for only five or six hours. Such reserves would not be sufficient to replace the output of two major generation stations in the event of their breaking  down, particularly given that Ireland's demand for electricity is increasing by 250 megawatts annually. That is the equivalent of approximately 50% of the output of a power station.
Industry analysts estimate technology companies can lose from £800,000 per hour to £800,000 a minute, due to lost sales and lost productivity, when the power goes down. For a chip manufacturer such as Intel, lost power can mean a glitch in the sensitive chip fabrication process. The technology industry is hugely dependent on a guaranteed and stable power supply. Given the major growth of that industry in Ireland, this highlights the need to make such power supplies secure.
In recent months, Ireland has seen a great influx of data warehouse companies, which manage and control Internet bandwidth for other companies and look after their websites. These companies each use the power of a small town and a primary consideration for them, in terms of where to locate their operations, is access to the power grid. Does anybody in Government track the companies that are establishing operations here and what are their electricity needs? We are advertising this nation as a prime location for technology companies, e-commerce and related industries. If there is not careful planning we will be faced next winter with a situation similar to that which obtains in California. Ireland could then face a crisis in its technology industry that will eclipse any current fears of a US recession.
The lack of action on this issue by the Government will result in a flight of e-commerce and technology companies to countries with reliable energy resources. The recent loss of the seven data centres is estimated to have cost the economy £120 million and may herald a number of similar announcements unless urgent action is taken to increase energy generation capacity in Ireland. The Government must speed up liberalisation of the energy sector to provide extra generating capacity. It is vitally important to the development of the economy not only that we have sufficient energy but that we have data storage facilities in the country to ensure a sufficient capacity for e-commerce activities here.
Significant reinforcement of the electricity and gas networks is needed to bring any new significant generating capacity into commercial operation. Such upgrading work is required on the electricity transmission system in Dublin and in the BMW region, and to the gas transportation network outside the capital. In its absence, power stations will not be able to send electricity into the transmission network at full capacity. While we can discuss attracting additional investment in relation to generating capacity, our efforts will prove futile unless we have a transmission network capable of relaying power to various locations throughout the country. Serious questions will continue to be asked for as long as  responsibility for this remains under the ESB's control.
The system must be designed to encourage new firms to enter with a reasonable chance of making a return on their investment. In this respect, the ownership of transmission and distribution assets is crucial. EirGrid will formally separate from the ESB next June, but will function as a grid operator with the ESB retaining ownership of the transmission assets and responsibility to maintain the network. The Competition Authority has stated that it is the wrong route to take and that the ESB should not be allowed to retain these assets. When a new operator desires to enter the generation market, the transmission system must be upgraded to accommodate it. If EirGrid, the national transmission system operator, owned and controlled the transmission assets, it would have an incentive to facilitate access to the grid. International experience indicates that the appropriate policy response must be rapid and meaningful deregulation, which is not happening here at present.
A £500 million programme has been put in place for the next five years to upgrade the electricity transmission network, which is crucial to modernise the current system. However, the level of public opposition to this programme is growing. While everyone accepts that this must take place, the mechanisms used to upgrade the network must be flexible enough to allay public concerns. It is an outdated attitude on the part of the Government that cost must be the primary consideration. This attitude must take a back seat to the need to ensure that such work is delivered on schedule.
The £500 million investment to which I refer is required to meet the standards set down by the electricity regulator. However, further work, much of it in the BMW region, is also required to allow for future development. Such investment could cost an additional £50 million to £100 million, but it is time we considered meeting this objective. The pending electricity shortage will also have fundamental implications for the Government's plan to secure half of all inward investment for the Border, midlands and western region. No industrialist will tolerate the length of time required to upgrade the network in these regions. If we wish to locate a large industry in Mayo or north Roscommon, for example, that is out of the question due to the lack of capacity. It is important for us to look again at how we can reincentivise investors to enter the market. We must also look at the development of the gas network in the region.
To decide on the development of such vital infrastructure solely on economic grounds will severely hamper the development of the regions. We need such infrastructure if we are to promote the development of combined heat and power plants in the smaller towns, which are ideally  suited to such plants, thus reducing the demand for network upgrades. Such an expansion would not only facilitate the stated Government objective of bringing 50% of all new industry to the BMW region but would also help to reduce the growing demand for electricity.
The IDA's anxiety about the negative impact on attracting foreign investment is backed up by the confidential report carried by DKM Consultants. The report warns that a failure to invest in generation and transmission facilities over the next few years will lead to social and economic dislocation especially in the BMW region. It is now time for the Government to take a new approach to infrastructural investment by ensuring that it is not only delivered on time but that the major gaps which remain in the regions are removed.
The Government should reassess the NDP and its objectives. There is no way the current timescale and objectives will be met by the mechanism used by the Government. It is fundamentally important that those targets are met if we are to ensure the development of the regions. I commend the motion to the House.
Mr. G. Reynolds: I welcome the opportunity to speak on the motion. The crisis we face due to the lack of a proper electricity supply needs urgent action by the Minister for Public Enterprise and the Government. The Government should undertake a programme for the immediate upgrading of the electricity transmission system within a two year period and ensure that the required additional annual 200 megawatt generation capacity is brought on stream immediately to meet increased demand. The basis of the electricity system is the reliable operation of interconnected high voltage grids which are the main arteries of the system.
Growth in national electricity consumption at peak times has doubled from 200MW in 1983 to 3,500MW in 2000. There is little spare capacity for power generation in the system. Four new independent power stations have been announced by the Government but there is great difficulty in getting these much needed stations completed. Why has there been such an inordinate delay in having these power stations put in place?
The transmission and distribution of the electricity system is outdated. Most of it is 30 years old. If more electricity was produced, the current transmission and distribution system would not be capable of carrying it. There is no high voltage 400-200 KV transmission line north of a line from Flagford in County Roscommon to Galway. The IDA and Enterprise Ireland have stated publicly that they will be unable to attract large industries to the west and north-west if a proper power supply is not provided urgently.
At present, the ESBI has a planning application lodged with Sligo County Council for a 220  KV line from Flagford to Sligo. There are approximately 4,000 objections by those living along that route against taking this supply by pylon. The ESB, which is a monopoly, states that, depending on the topography of the area, the cost of undergrounding the cable could be ten times more expensive than pylons. I call on the Minister to request another company to cost the undergrounding of the line from Flagford to Sligo. This will be fair and transparent to the large number of objectors. There is a fear of bringing this line by pylon but the cable is to carry a much needed electricity supply for the north-west.
Last year the IDA report stated that there were over 150 job losses in the north-west. We need an electricity supply to bring much needed jobs to Sligo, Leitrim and Donegal. If the Government is not in a position to improve that supply there is no way a large company such as Intel can locate in the north-west. Masonite Ireland Limited, which is located in my own county, Leitrim, could not locate any further north-west because of the lack of electricity supply. The problem has been ongoing for a number of years and it is essential that the supply is upgraded. The way to bring people on board, given the large number of objections, is to establish an independent body or company to cost an underground cable. This body should be separate from the ESB or the ESBI.
There have been many complaints about outages in the electricity system in the west and north-west and this is a great concern to industry. It is happening on a regular basis and the complaints to the ESB, the IDA and Enterprise Ireland about this from business have been growing in number. If this is allowed to continue, not alone will we not attract new industry to the area but existing industry will find it hard to sustain a proper industrial base. Rather than increasing jobs, we could see further job losses.
The infrastructural development of electricity is urgently needed for the economic and social development of the west and north-west. I ask that the Government tell the House their policy to rectify the situation.
This week's Sligo Champion reports that Ireland's biggest wind farm project is planned for Sligo. The report states that a £100 million development is earmarked for 3,000 acres of commonage in Sligo. The scheme would supply up to 90,000 homes with electricity. That is welcome as wind farming is one of the ways in which we could bring about supply—
Mr. G. Reynolds: They have just applied for planning permission. The Sligo County Council planning authority is concerned that the electricity grid is not strong enough to take a wind farm of this magnitude. There will be extreme dif ficulties and the matter needs to be dealt with urgently.
Mr. G. Reynolds: That is my information. Due to the fact that the grid is not strong enough it is not able to proceed with any large planning application, although the wind is always strong in north Mayo.
Mr. G. Reynolds: That is a concern. We are all aware that wind energy is one of Ireland's largest natural resources. It has security of supply. It is economically friendly and it should be encouraged as much as possible but due to the fact that there is not a proper infrastructural electrical system in the area, it is difficult to set up these wind farms. There is an urgent need to jointly plan our economic and energy development requirements. Otherwise Ireland's future as an e-commerce hub is under threat and regional development cannot be planned. That is the serious situation in which we find ourselves.
The poor state of energy supply and distribution is also a deterrent to inward investment in the regions. It is difficult to plan long term for investment if faced with an uncertain and unreliable energy supply. For instance, it will be difficult to plan in the long term for database centres in the north-west or west regions.
I compliment my colleague, Deputy Higgins, for bringing this serious matter before the House. I hope the Government will act in an urgent way to make sure that a proper electricity supply is brought into the west and north-west regions.
Mr. Crawford: I thank my colleagues for bringing this important issue before the House. It is vital that we have a proper and adequate supply of electricity. Following on from what Deputy Reynolds said about wind power, it is interesting to note that Denmark produces 2,500MW of electricity using wind power. By 2010, it expects to produce half its required energy from wind power or other natural resources. Our record for the same period is a mere 55MW, so we have used very little wind power and the other energies for which we so strongly strive. The European Union wants us to use more natural resources and it made that clear again in recent times.
I am glad Deputy Stagg is in the House tonight because he was involved with me and others in trying to get a power station up and running in the north Monaghan area to cope with all the waste or biomass from mushrooms, poultry, etc. Despite the fact that we lost three competitions  at national level, the group now has a licence and some support from the fifth programme by going directly to Brussels.
In its amendment the Government congratulates itself, and rightly so, on bringing in gas from Scotland through an additional pipeline and states that it will extend the gas pipeline network to the north-west. I want to advise the Minister that we still do not have gas in the north of Monaghan so I hope when she is looking after the north-west she will also look after north Monaghan as far as gas is concerned.
Mr. Crawford: We should try to produce as much power in areas without having to put up high powered pylons. We can work towards that in north Monaghan if we are given the support to get the power station up and running and fuelled by the natural resources in the area. I look forward to the Minister giving us all the support she can. That, in turn, could help to attract one of the database centres mentioned by previous speakers. We would certainly welcome such a database centre in north Monaghan.
When one considers that the State has paid £10 million to the US to hire the means of producing electricity over a six months period, there is a strong case to be made for making grant aid available for biomass production so that these stations could be set up as quickly as possible. We are talking about tourism and waste and that is one way we can solve both problems.
Mr. Boylan: I welcome the opportunity to contribute to this debate. I do not mean to be personal but I hope the Minister is listening to what is being said by those on this side of the House because I am alarmed by the Government amendment which notes that the amount of generating capacity continues to exceed the level of peak demand. That is simply not true. We must face reality and live in the real world. We are back to candlelight in rural Ireland.
Mr. Boylan: It may lead to romance but it is not the way forward for a modern economy. At least the Tánaiste has admitted that this is a first world economy and a Third World infrastructure. That is an alarming statement from the second most senior person in the Government to make in a country from which she is seeking investment, but at least she is speaking the truth. If the Minister for Public Enterprise, the person who is in charge of this area, is not aware of the facts we will not make progress. The ESB, a major semi- State body, has not kept pace with the demand. It is as simple as that.
The country has progressed. Many of us will recall rural electrification and the advances that brought to the country in terms of agriculture and small industry. Demand has continued to grow yet the ESB has said that has taken them by surprise. The people who admit that should lose their jobs because they have not been keeping their eye on the ball. The IDA is beavering away attracting industry.
I am particularly concerned about the Objective One region, rural Ireland. A recent statement that the ESB cannot guarantee power supply to another major industry in that region is not acceptable. Why should the Objective One region be denied what appears to be available to the east or the south-east? If the rest of the country, including the Minister's area, is not aware of that, obviously everything is hunky-dory in that part of the country. I want to see an even distribution in that regard.
When I listened to what Deputy Reynolds said about a proposal from a private investor to set up a wind farm, I was concerned that the national grid would not be in a position to take on that project. That is not progress. This is a serious problem and it must be examined.
I have had representations from constituents who have businesses which need refrigeration and it is a regular occurrence for the refrigerators to be burned out because of the surge in power. The power can diminish but then suddenly surge which causes numerous problems, including motors burning out. It is now a cost to people to have an electricity supply. Where are we going if that is the case?
Prior to rural electrification, those who were mechanically minded and had the means to work with electricity developed generators but we are now told to provide our own alternative supply. That is a backward step and it is not acceptable. Generators should be located in areas as a standby. Either the ESB can do the job or it cannot and if it cannot it should let private enterprise step in and do it because this is too serious a subject.
The reference in the amendment that the amount of generating capacity available continues to exceed the level of peak demand alarms me. The Minister should have the courage to say that is not true and that she will deal with it. We would like her to outline the positive steps she will take to alleviate the problems people are experiencing, as well as the IDA and other agencies which are trying to attract industry and jobs, to rural Ireland and create wealth in that region. We must have the wherewithal to do that and that lies in the Minister's hands. We are looking for a positive response and not for camouflage. We do not want to be in the dark.
“(I) commends the Government for its continuing commitment to meeting the country's energy requirements through the ongoing provision of a secure and reliable electricity and gas supply at competitive prices;
(VI) notes that all demands for power supply have been met and that neither the general public nor industry has suffered any interruptions or shortages, apart from normal maintenance and repair work, localised storm damage and builders digging up cables;
(X) notes that record levels of investment by ESB, including £2.1 billion in the transmission and distribution networks over the next five years will provide the country with a robust electricity infrastructure to international standard;
 (XII) notes that Bord Gáis Éireann has been given approval to proceed with the construction of a second gas interconnector from Scotland as well as completion of the ring main and for extension of the gas pipeline network to the north-west;
(XIII) recalls the publication of the Green Paper on Sustainable Energy which sets a target of 500Mw of renewable sourced electricity generation plant between 2000 and 2005 and notes the imminent announcement of an alternative energy requirement competition aimed at providing a market mechanism for, in excess of, 240MW of such electricity generating plant over the next two years.”
I will try to be positive as I can towards the Deputy. I thank the Opposition for putting down the motion. It is timely and proper that the Minister of State and myself should be here to deal with the matter.
The Government, the Minister of State and I fully recognise the importance of energy, including infrastructure and supply, to the country's economic growth and development. The Government remains strongly committed to the ongoing provision of a reliable and secure supply of energy at competitive prices.
There has been a record level of growth in demand for energy in the past five years. This growth is firm evidence of the underlying record performance of the economy, which is an indication of the success of the Government's economic policies. Our energy supply has been the subject of considerable media coverage in recent times and there is a certain amount of confusion in the public mind about it. While I do not want to appear complacent, I want to make clear that we are not short of generating capacity. The amount of power at our disposal continues to exceed the level of peak demand. I did not make that up – the ESB said it.
Mrs. O'Rourke: The Deputy knows I know what it means. I acknowledge that margins have been contracting, but this is a by-product of the exceptional growth we have experienced. The situation has been competently managed by the electricity regulator, CER, the ESB and ESB National Grid this winter and neither the general public nor industry has suffered any interruptions or shortages, apart from interruptions which arose from normal maintenance and repair, localised storm damage or builders digging up cables. On the basis of an initiative by my Department, the ESB installed a number of mobile generators last year. That proved successful in giving the company additional flexibility in managing peak demand. I am pleased to be able to tell Members  that my Department has already taken a further initiative for next winter with Mr. Tom Reeves and the Commission for Electricity Regulation and asked it to take the necessary steps to ensure that all demands for power are met during the coming winter. The CER's plans in this regard are well advanced.
It is important to point out that ESB national grid has met and continues to meet all demands for power supply. There is, however, a clear acceptance that additional generating capacity needs to come on stream as soon as possible. The House will be aware that the new ESB-Statoil plant at Ringsend and the new Viridian plant are expected to come on stream in 2002.
Mrs. O'Rourke: I can only tell the Deputy what Viridian and the ESB told me. If I am told tomorrow that these plants will not come on stream next year, I will correct the record. However, both firms told me this evening that would be the case. These plants will offer a significant additional tranche of generating capacity and will help to restore the operating capacity margins to normal levels.
The country's energy infrastructure has served us well but there is no doubt that the unprecedented growth of recent years has imposed a significant additional load upon the system. The country's electricity networks were designed essentially for another age. The distribution network dates largely from the era of rural electrification, while the high voltage transmission network has remained largely unchanged since the early 1980s. There is no doubt that the unprecedented growth of recent years has brought us to a point where a massive programme of investment is now clearly required. The programme proposed by EirGrid for the next five years will involve an investment of £0.5 billion and, when completed, will provide the country with a robust transmission system to international standards. This does not take account of any additional investments that may be required in the light of regional development requirements and the national spatial strategy currently being developed. In the case of the distribution system, the ESB investment programme for the next five  years will be £1.5 billion. That investment will also bring about significant improvements in the network and the process will be ongoing with further investment during the second half of the decade.
As regards the gas infrastructure, Deputies will have noted from the recent press release that the Government has decided that Bord Gáis should proceed with the construction of a second interconnector from Scotland. The Government has also approved the extension of the gas network to the north-west. We will have to move on to the areas represented by Deputies Crawford and Boylan.
Mrs. O'Rourke: These projects, coupled with BGE's projects to complete the Ringmain and a pipeline from Mayo to Galway, represent a massive investment in our gas infrastructure. This investment, taken together with the investment already mentioned in relation to electricity, will provide the country with an energy infrastructure well into the early decades of this century which is capable, with ongoing maintenance and upgrading, of meeting all demands from users and underpinning continuing economic growth.
Deputies will be aware that the Government last year appointed a Cabinet sub-committee to look at the question of infrastructure development and planning in the context of the national development plan. The establishment of that sub-committee is a clear indication of the overriding importance the Government attaches to the issue of infrastructure provision. Senior officials in the Department made a detailed presentation on energy infrastructure to a meeting of this sub-committee, chaired by the Taoiseach, on Wednesday, 7 March. The recent rejection by ESB network technicians of new work practices, including the use of outside contractors, was discussed at the meeting and the ESB gave a commitment that the company was working intensively to ensure a positive turnaround in the situation to allow the unlimited use of contractors in order to deliver in full on the company's infrastructure investment programme. It is of critical importance that it succeeds in its efforts. The outcome of the meeting was a decision by the Taoiseach and other Ministers, including myself, that energy infrastructure provision is to be monitored and tracked from here on, with the State companies concerned being required to account to the Cabinet sub-committee through my Department on a quarterly basis.
There is public opposition in parts of the country on planning and environmental grounds to putting in place the infrastructure needed to underpin our energy supply. Previous speakers mentioned this topic. Elected representatives can  play a useful role in creating a greater public awareness and acceptance of the need for infrastructure provision to allow economic growth and inward investment to be maintained.
There has been a reference to the demand for electricity from data hosting or web farms, as they are sometimes called. These plants can consume as much electricity as a small town. These web farms are a relatively recent development and are capable of fairly rapid start-up. Other countries in Europe have difficulty in meeting such large increases in demand at short notice. However, I am happy to be able to tell the House that the ESB has already made arrangements to put in five large new substations at an early date to cater for a number of these data centres in the Dublin area. This is the area where applications have arisen to date for power supply for web farms. None have been turned away and the ESB, in conjunction with my Department and the development agencies, including IDA Ireland and Forfás, has responded rapidly to the requests for power.
I am fully committed to the liberalisation of energy markets. I have demonstrated this in the electricity industry by the actions I have taken to promote competition. In July 1999 I sponsored the Electricity Regulation Act as the first urgent step in the process of liberalisation. This legislation repealed regulatory powers that had been vested in the ESB and established the independent Commission for Electricity Regulation to oversee market opening and to regulate access to the grid. In December 2000 I signed the European Communities (Internal Market in Electricity) Regulations 2000 which implemented the remainder of the electricity directive and which, in the main, provided for the establishment of an independent transmission system operator to be known as Eirgrid. I have also decided upon accelerated liberalisation of the electricity market, moving to 40% in 2002, with full market opening in February 2005.
The 5% shareholding allocated to the ESB workers is the only item of business from the tripartite arrangement of 1996 left undone. This has greatly exercised ESB employees and rightly so. We had hoped that the last remaining ESB legislation would have embraced that. The legislation to allow the ESB to give the shares to the employees was passed by the Cabinet today so it should be in the pigeonholes by tomorrow afternoon. It is a very short Bill and I thank the Attorney General and the draftspeople in his office for the way they have attended to it. It will be available to the public and the Deputies tomorrow. I hope that we will be able, through the good offices of the Whips of the Fine Gael, Labour, Green and Progressive Democrats parties, to fix a date next week to deal with the legislation as there are only two weeks left of the Dáil term. I did not realise that we could not take it  next week in the Séanad because it must be printed first on the other sheet of paper.
The Bill is very simple and gives workers their due. That tripartite agreement has been succeeded by a second agreement concluded in the winter of 1999-2000, which gave the go-ahead for the liberalisation of the market. I am glad we have been able to get this Bill ready and hope that goodwill will be shown towards the measure, which essentially gives force to the last remaining provision of the 1996 agreement.
In summary, demands for energy are being met, but there is no room for complacency. The steps being taken, particularly the accelerated investment and the new monitoring and reporting requirement to the Cabinet, are designed to ensure that all demands for energy will continue to be met.
My next comments are not directed towards the Deputy in a hostile fashion. I did, however, undertake to clear the record on the matter. Today's Irish Independent carried claims by an Opposition spokesman that, “data hosting centres are being asked regularly by the ESB to switch off during peak electricity demand hours”. As a matter of normal operating practice, energy utilities the world over, including the ESB for many decades, operate a system of interruptible tariffs to help at times of peak demand. There is nothing unusual or abnormal about this. Customers who use large amounts of electricity can agree in advance to have their power supply interrupted for very short periods of usually no more than an hour. There is a commercial advantage for participating companies, who benefit from a lower electricity tariff. It is an entirely voluntary matter for companies, who participate freely and for commercial reasons. Companies which do not wish to participate are not obliged to do so and are provided with whatever power they require. I have checked with the ESB, which this evening advised me that no web farms currently avail of this facility and none has ever been asked to accept power interruptions.
I was in Opposition too and I know that spokespersons need to say their piece because their job depends on getting it into newspapers, getting it listened to and getting it read. That is all part of the cut and thrust of politics and I genuinely understand it. The piece in today's Irish Independent stated:
Data hosting centres are crucial to the government's plans to make Ireland the e-hub of Europe. Yet in Dublin data hosting centres are being asked regularly by the ESB to switch off during peak electricity demand hours.
I have checked the matter and no web farms currently avail of that facility and none has been asked to accept power interruptions. In the light of this assurance by the ESB, it is important to  set the record straight before we all receive letters saying we got our facts wrong.
Mrs. O'Rourke: I have no reason to doubt the veracity of the ESB in this matter. Why should I? I asked the ESB after that. The Deputy can contact the ESB if he disbelieves me. I am advised by the ESB that no web farms currently avail of this facility and none has been asked to accept power interruptions. If the Deputy has information to the contrary, I will certainly take it up with the ESB. For now, I will accept that information as correct.
Mr. Power: I thought it important that we have a contribution from a Power considering the matter we are discussing here tonight. We had protests outside this House on Friday last, during which one of the ushers received a little blow. It would do no harm for this House to send him its best wishes and wish him a speedy recovery so that he can return to his business around the Houses as soon as possible.
The Fine Gael motion acknowledges the importance of power in securing the future. I have been trying to tell the same thing to the electorate in south Kildare, but unfortunately Deputies Dukes and Wall have a different story to tell. We are all familiar with the great growth in our economy in recent years. This success has brought with it some problems, one of which is meeting the ever increasing energy demands.
Part of the Fine Gael motion states: “Noting the slow progress in the implementation of the deregulation of the energy generation market . . . condemns the Government for its failure to plan adequately for the energy needs of the economy”. Fine Gael has a cheek to be so critical of the Government. A comparison of the records of this Government and the previous one will show that this Government wins handsomely. The previous Government agreed with the EU directive on market liberalisation, which provided for a supply market opening of 30% in February 2000, increasing to 33% in 2003, and to review the situation in 2006. This Government has accelerated the opening of the supply market ahead of EU directive requirements to 40% in 2002 and intends to fully open the market by 2005. The necessary legislation has been introduced and the ESB has provided 600 megawatts of power for auction to enable new entrants to develop a cus tomer base prior to the construction of their plant. Following deregulation, responsibility for security of supply is no longer in the hands of the ESB. However, as a leading supplier, the company is acutely aware of the critical importance of adequate and reliable electricity to the continued growth of the economy and the large energy requirements of key technological sectors, particularly in the major growth area of data hosting.
The Minister referred earlier to planning and environmental difficulties, of which we have had experience in County Kildare. A consortium comprising a Finnish-based energy company, Elf Aquitaine Gas – part of the French Elf Group – and Bord na Móna, applied to construct a gas-fired power station in Dunstown, a few miles outside Naas. These well known companies have substantial experience in the area of energy provision. The Finnish company, which is very active in the supply of oil and gas, employs more than 18,000 people world wide and is involved in more than 50 power stations. It was also involved in the construction of the new peat-fired station in Offaly. The French company is recognised as a world leader in hydro-carbon exploration and production and is a big player in the French and British gas markets. Bord na Móna is a key player in Ireland's energy industry, supplying peat to power stations and manufacturing briquettes. One would expect that a proposal from a consortium with that type of experience would be well researched. The brochure circulated to residents in the Dunstown area included a section entitled “Fitting in With the Environment”. It stated:
An important part of our plan is the landscaping of the entire area surrounding the proposed new power station. We will be maintaining the beautiful tree line which surrounds the site. This will be carried out not only to minimise the visual impact but also to make this facility something our neighbours can be proud of.
This site is located in a very rural part of County Kildare and the residents rejected the proposal out of hand. The proposed plant would cover almost 250,000 square feet and stand 100 feet high – the same height as Croke Park – with a smoke stack height of more than 160 feet. The plant would be visible for miles around, irrespective of any plantation. I am convinced the site, purchased in what appears to have been a sweetheart deal, was chosen because it was cheap as it does not have any other apparent benefits. Many local residents are concerned that the plant would have a negative impact on their lives and that its presence would adversely affect property prices. Kildare County Council unsuccessfully sought a material contravention and the matter is currently with An Bord Pleanála which will adjudicate on it in the near future. While I recognise the necessity for additional generating capacity,  attempting to enforce monstrosities such as this on rural Ireland will meet considerable resistance. Similar difficulties have been experienced in Cork and we must consider alternative options.
Deputy Jim Higgins's contribution was very negative. Together with other Opposition spokespersons, he cited comments made by the Tánaiste and Minister for Enterprise, Trade and Employment on her recent trip abroad. The level of economic growth in recent years was unexpected. Web farms and data centres have huge energy requirements and it is important these are met. The Minister indicated that neither the general public nor industry suffered interruptions or shortages other than those which would normally occur in the course of maintenance or repair work. Opposition Members always see the barrel as being half empty but they should adopt a more realistic approach to this matter.
Jobs will not be threatened due to inadequate electricity supplies. If we continue to increase our generating capacity, we will not face any immediate difficulties. The ESB is engaged in a major investment programme which will see it spending £2 billion over the next five years, one quarter of which will be spent on the grid, with the remaining £1.5 billion being spent on the distribution network which conducts electricity to our homes, farms and businesses. This investment will significantly improve our energy infrastructure.
The Minister referred to the establishment of the ESB to deal with the needs of a different era. We should not let this occasion pass without acknowledging the huge task the company faced in 1927 when it was requested to develop an electricity industry in Ireland. The company subsequently worked with Bord na Móna in the establishment of a number of peat-fired stations which provided much needed employment and used native fuel to provide guaranteed electricity supply.
Deputy Stagg will be familiar with the power station in Allenwood, County Kildare, which was due to close on a number of occasions but was resuscitated by successive Ministers. The station finally closed in the mid-1990s at which stage the area's future looked very bleak. To give it credit, the ESB did not simply walk away. It provided funding to ensure that alternative industry was found for the area. In December 1999, the Allenwood Community Development Association Limited took possession of the ESB site and more than 60 people are currently employed in small local industries. There is also an information office on site which is regularly used by local people who have a sense of ownership of the association. The association has submitted an application to the county council for a community-based child care facility which, if successful, will be the first of its kind in the area. I wish it well with its application as we can all appreciate the need for child care facilities.
 I commend Bord Gáis on the extension of the gas network throughout the country, from which a number of towns in County Kildare have benefited. The second gas interconnector from Scotland will ensure the network can be extended to an increasing number of homes and businesses throughout the country.
Mr. Stagg: I welcome the opportunity to speak on this timely motion which raises questions of extreme national importance. The motion provides the House with an opportunity to examine systematically the record of the Government and that of the Minister, Deputy O'Rourke, especially, on the ESB and energy provision in general. It will not be an enjoyable exercise for the Minister whose failings and prevarication on critical issues have been a major contributory factor to the imminent crisis facing the country. The Minister cannot deny that the energy generation supply network has been running on a wing and a prayer for the past three years. The fact that major electricity blackouts have not occurred is due in the main to good luck. However, the possibility of blackouts for domestic and industrial customers is still very real and, due to ministerial neglect, will remain with us for the next two years at least.
The crisis in the electricity industry not only affects existing customers but has a devastating effect on the ability of the Government to plan a rational and balanced regional policy for the country. The failings of the Government have contributed directly to the chronic overcrowding of the east coast and of the Dublin region especially. Major obstacles towards the social and economic development of the western seaboard and the Border and midlands regions are being erected. Towns throughout these regions cannot attract investment or industry because the basic power requirements of industrial development cannot be met. The aims of the national development plan and the forthcoming national spatial plan will remain little more than pious gestures due to the energy crisis of which we are in the middle. This is disastrous for the country.
Energy supply is critical to balance social and economic development. The technical parlance is spatial planning. My party recently produced a blueprint for the future development of the country. Energy infrastructure is an integral part of that plan. Without developing our energy infrastructure, the untenable expansion of Dublin will continue unabated as will all the resulting social  disasters, such as traffic chaos, the inexorable rise in house prices and rents and increasing environmental pollution. Meanwhile, the continued economic depression and emigration which have linked many towns in the west will carry on apace. The regional apartheid which exists will deepen and will condemn the western seaboard to being little more than a holiday retreat for Europe's wealthiest because it will have been denuded of the industrial development necessary to provide families and young people with a viable future in their local communities. Since taking office, the Minister has failed utterly to grasp this reality. In her tenure she has actively encouraged the process I have just described, and it can be justly described as regional apartheid.
There is an energy crisis in the country and the extent of that crisis cannot be denied by the Minister. I will place the basic facts on record. It is unlikely we will be able to meet the demand from existing customers and they will be obliged to restrict the use of electricity before new generating plants are commissioned. We will not be able to meet the 10% growth in demand from new customers and the increased demand from existing customers. One third of the country cannot be supplied with the electricity required for high energy commercial users. With the growth in demand and given the planned additional generating capacity, in five years' time, two thirds of the country will be unable to supply new large scale energy users. If an Intel wants to locate in the constituency of the Minister of State, Deputy Moffatt, it cannot do so because the energy it requires is not available to it. Many other such projects which could go to the west, thereby reducing the pressure on Dublin, cannot locate there because their energy requirements cannot be supplied. Even if the generating capacity were available, the creaking transmission network would be incapable of transporting the electricity needed. These are facts.
This is the disastrous situation for which the Minister must be held to account. The seriousness of it cannot be understated. The shortage of electricity supply more than any other factor, such as labour supply or a slowdown in the economy in the United States, has the potential to stop the Celtic tiger in its tracks. Despite this, in the past four years, the Minister has done nothing to deal with this problem. The chronic problems in electricity supply have been raised repeatedly by me and Deputy Jim Higgins during Question Time. At all times the Minister has been anxious to adopt a hands off approach to the issue. For a Minister who is almost indecently anxious to be seen as the mother goddess of electronic commerce, she demonstrates a severe aversion to taking a hands on responsibility for anything as unattractive or traditional as electricity supply. There lies part of the answer to the crisis we face.
 The Minister's handling of relations with the ESB, her failure to sanction actively generation projects urgently needed by the ESB and her refusal to honour her part of the cost and competitiveness review are major contributory factors. Neglect, lethargy and prevarication have been the hallmarks of the Minister's tenure where electricity supply is concerned. I am anxious the House is not fooled by suggestions that the ESB did not do its job well. It was not allowed to do it well because the Minister was on her knees adoring at the altar of competition and refusing to allow the ESB to build the stations and install the transmission systems it said were necessary.
I wish to deal with the Minister's failure to promote quickly generation projects urgently needed and proposed by the ESB. Three years ago, anticipating the pressure on supply during the winter of 2000-01 and beyond, the ESB advised the Minister and her Department of the need for a new 400MW station. The proposed station in Ringsend would be a joint venture between the ESB and Statoil. However, the Minister refused to give the go ahead for the station until 26 May last year, three years later. She argued repeatedly and stridently in the House that she could not give permission for this power station. Suddenly on 26 May last year when a crisis was upon us, she could give permission. Had she given it at the time it was requested, the power station would now be built and supplying electricity. This decision means not only will the station not be ready for this winter, it will not be ready for the following one. The Minister's statement that it will be ready before the following winter is wrong on the basis of the information I have from the ESB.
The Minister's fumbling on this issue was astounding. Rather than taking action to ensure continuity of supply, she ran for cover and used the technical details of the EU electricity directive to avoid taking action; this was before legislation establishing the new Commission for Electricity Regulation was introduced in the House. Her interpretation of the EU directive was conservative and self-serving and I said so at the time. There is no way the terms of the EU directive opening up only part of the electricity market to competition was intended to stymie essential infrastructural developments for three years, something which has contributed directly to the crisis we face now and into the future. Not one of our EU partners placed a moratorium on infrastructural development until a competitive market was introduced. The Minister's unique decision was viewed in many circles as a deliberate measure targeted at the ESB and designed to frustrate its development plans. Thousands of ESB customers were used as pawns in the Minister's battle of wills with the ESB, and these customers may well have to pay the price for her foolishness.
 Already this winter the ESB was forced to hire five emergency generators of 100MW capacity to prevent blackouts. That is crisis management. This arrangement, which would not have been necessary if the Minister had given the go ahead for the Ringsend station in 1998, cost the company £20 million. ESB customers will have to foot this unnecessary and costly bill. A further £21 million will be spent next winter on the leasing of seven gas turbines of 160 MW capacity to meet generating shortfall. Even with this costly investment, we cannot be assured that blackouts will not take place. We are into crisis management, and it is a crisis created by the Minister.
The Minister's prevarication over the Ringsend project is one example, albeit a costly one, of her antagonism towards the ESB and her failure to support essential projects, an extraordinary stance for the shareholder of a company to take. The same prevarication was abundantly evident in the approval of the gas interconnector with Scotland. A decision on this key infrastructural development was needed two years ago at the latest.
The development and bringing on stream of this critical energy supply source is now seriously behind schedule and the contribution the connector could make to our current crisis is seriously diminished. I pay tribute to the Minister of State, Deputy Jacob, who took this project by the scruff of the neck and fought tooth and nail with his senior Cabinet colleagues to ensure a Government decision was taken. He eventually got the decision and I pay tribute to him because he fought the issue alone for a long time.
The recent ownership change debate in the ESB has highlighted the frustration throughout the organisation with the lethargy demonstrated by the Minister. The management document submitted to that process was more a vote of no confidence in the Minister, Deputy O'Rourke, than a vote of confidence in the public flotation process. In summary, the management proposal highlighted the need for either a radical change in the role played by the Government as shareholder, involving a willingness to provide equity capital to support a significant internationalisation plan and to provide real commercial freedom, or to pursue a change of ownership. Damningly, the document concluded that, in the light of experience to date, the scale of change required in the current shareholder relationship is unlikely and this supported a change of ownership under certain conditions.
The Minister, Deputy O'Rourke, must have been delighted when she saw the proposal as her long-running campaign of inaction appeared to have eventually forced the ESB management to  conclude that only by selling off the company could the ESB get the dead hand of the Minister off its back. I am delighted the management conclusion was not accepted by the board and that wiser counsel from the group of unions held sway on this occasion. However, the long-term agenda of the Minister and her reasons for frustrating the development of the ESB have become clear as a result of this internal debate regarding future ownership of the company.
The frustration and annoyance of the management of the ESB is only surpassed by the workers of the company. The groundbreaking tripartite CCR agreement was reached in May 1996. The full benefits of that agreement have not been reaped and responsibility for this failing lies solely with the Minister. The CCR agreement provided the staff of the ESB with a 5% shareholding in the company. If nothing else, Deputy Higgins' motion flushed out the Minister earlier when she announced that she would introduce a short Bill to give the workers the rights secured under that agreement in 1996.
It appears the Minister and the Government are too willing to rush legislation through the House that changes the status of semi-State companies when the prospect of privatisation beckons. An example is the legislation regarding the ICC Bank that was rammed through the House before Christmas. However, when it comes to the Government introducing promised legislation to honour its commitments to ESB workers in 1996, no such determination exists. The Minister has purposefully let down the workers in the ESB and it may be her intention to promote dissent within the company. The plans of the ESB to take emergency action to meet the needs of web farms in the Dublin area in particular are being delayed specifically because the Minister has not honoured her part of the CCR. The ESB wants to outsource the building of six 110 kV stations within a year in the Dublin region to service this intensive and growing sector of the economy. However, the unions have yet to agree to this outsourcing and the failure to date to give the workers the 5% of the company to which the Minister signed up is a major obstacle to progress.
Through a deliberate policy of inaction, indecision and neglect, the Minister for Public Enterprise has directly contributed to the energy crisis facing the country. This crisis places our future economic and social progress in grave jeopardy. The Government should take a number of urgent steps and if the Minister will not take them, the Taoiseach should find someone who is capable of the task.
Mr. Sargent: I welcome the opportunity to contribute to the debate as I worked on the Electricity Regulation Bill with Deputy Stagg and the  Fine Gael Party and because I have frequently called in the House for energy conservation measures, including the Bill relating to the energy centre. I represent the Dublin North constituency where rural electrification began in Oldtown, but it has experienced many black outs in recent times.
The motion is too narrowly focused. There is no mention of the cost of the Kyoto protocol or the possibility of energy savings. The energy centre said household efficiency alone would yield £75 million a year if the country got its act together. Other EU countries look at Ireland with envy because it is a wind abundant island and has a long wave and tide abundant coastline. However, while Denmark generates 2,300MW from wind, Ireland only generates 93MW from this source. Ireland's best target is another 500 MW in the next five years. While Ireland gets 1% of its electricity from wind, Denmark gets 7%, with an aim of 50% by 2030, from this source. At times, it is difficult to imagine that it intermittently gets 100% of its energy from wind during winter periods.
There is a need for a national spatial plan with energy conservation as a key ingredient. Building regulations and building construction must be energy efficient. For example, the use of hollow blocks in construction is inefficient, but they are used in more than 90% of the new houses built every year. They must give way to energy efficient materials. Regulations should be introduced urgently to maximise solar design in new buildings in their planning and lay out and much higher standards of insulation need to be implemented, particularly in the context of the current building boom. Otherwise, people will live for decades to come in inefficient, heat wasting homes. Grants and subsidies are needed to promote energy efficiency and rating for all premises.
Our increasing reliance on fossil fuels is a dead end policy. At present, more than 75% of our energy is generated from imported fossil fuels. By 2010, current policy will lead to 90% of our energy being generated from imported fuel. What will happen if there is another Gulf war or the price increases? What will happen when that fuel eventually runs out? We will be left with the legacy of inefficiency and short-term thinking.
The companies that will be competitive in the future are those that are low energy users and energy efficient. This should be the focus of the debate. Ultimately, the greenhouse gas burden we are building up for this and future generations will cost us dearly. The story in The Irish Times on 24 November which stated that, according to an insurance expert, global warming may bankrupt the world is not a false warning. It is the reality and if we are to jump out of the pan, we should at least jump clear and not into the fire.
Mr. Higgins: (Dublin West): In the ridiculously short time available to me – I am getting used to trying to cram much into a short time – I will make one point. A supply of electricity that is consistent and regular is critical for homes, public services and industrial development. However, the Fine Gael Party's motion and the Government amendment slavishly repeat the mantra of the big business driven marketplace that deregulation and privatisation of the electricity generating capacity is somehow crucial to the supply of adequate electricity. Both conservative parties, as evidenced in the motion and the amendment, are trying to outdo each other in their worship of this myth. For the Fine Gael Party, deregulation is not happening fast enough, while the Government says there will be full deregulation by 2005.
Deputy Jim Higgins and other Fine Gael Party speakers pointed to the electricity generating crisis in California a few weeks ago. Unfortunately, they did not draw the lesson that deregulation has proved a disaster for the residents of California and businesses there. Consumers in California pay the highest rates in the US and the private conglomerates which dominate electricity generation are abusing and manipulating the market to the detriment of consumers. In contrast, Sacramento and Los Angeles still have publicly owned generating capacity and their rates have not increased to anything like the same extent. In the home of world capitalism in the US, there is now a demand for public ownership of the biggest electricity generator in California.
Electricity generation in Ireland should continue in public ownership in a developed way. It should be opened to democratic control with more workers and consumer representatives on the board. The board should be dominated by the future needs of society and in investing in environmentally compatible generation. That is the alternative to the gallop for privatisation and deregulation which will prove equally disastrous in the long-term.
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