Electricity (Supply) (Amendment) Bill, 1987: Second Stage.

Tuesday, 14 June 1988

Seanad Eireann Debate
Vol. 120 No. 3

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Questions proposed: “That the Bill be now read a Second Time.”

Minister of State at the Department of Energy (Mr. Smith): Information on Michael Smith  Zoom on Michael Smith  This wide-ranging Bill will bring about a number of fairly major changes to the operations of the ESB. The main effect will be to statutorily empower the ESB to promote, form, take part in, or acquire companies, to engage in coal trading from Moneypoint and to regularise matters in relation to rates.

Arising mainly from the ESB's experience in the areas of their consultancy and fisheries activities the proposal that they be allowed to set up subsidiary companies was put forward by the ESB themselves a few years ago. ESB consultancy activities have proven to be quite successful since they were first started in 1979. This has been aided by the high level of self-sufficiency that the board have developed over the past 60 years and their continuing investment and training of young qualified and enthusiastic personnel. Most recent published results show a turnover on the board's consultancy activities for the nine months ending 31 December 1986 of £7.5 million. This resulted in a slightly better than breakeven outcome for the period. Some 200 ESB staff are currently involved in consultancy activities.

The board's success in the area of foreign consultancy in recent years is clearly evident from the number and the diversity of the countries in which contracts have been secured. However, with the fall in oil prices and the completion of major developments, such activities are currently undergoing a shift in emphasis away from the declining markets of the Middle East such as Egypt, Saudi Arabia and Bahrain towards new markets such as Africa and the Far East. I know also [435] that the ESB are attempting to expand upon their services in Europe and the United States. Indeed, the potential for operations in the United States is enormous and I am very pleased to see increased emphasis being laid by the ESB on this particular market with the opening up of an office there to promote their consultancy and management training work.

At home, ESB consultancy operations are also very active. This has mainly been brought about by the experience gained by ESB management of the Moneypoint project which has left the ESB in the happy position of being ideally suited for the management of other projects in Ireland. The board have also amassed considerable expertise in the management of their own treasury function and debt portfolio. To avail of these strong skills which have been developed, the ESB are planning to set up a financial services subsidiary which will try to get work in treasury management and merchant banking, initially from home-based businesses, but also from foreign utilities and Governments. This company will be located in Dublin's new Financial Services Centre. Also, ESB staff are now actively involved in the project management of the construction of the centre itself.

Over the years of their involvement in consultancy activities the ESB have found themselves on more than one occasion to be constrained by the lack of a provision in the Electricity (Supply) Acts allowing them to set up and participate in subsidiary companies. This has happened because many of the countries in which ESB consultancy operations are active require the link between the foreign contractor or consultant and local interests to be in the form of a company with a specified share of local participation. In such a situation the ESB are forced to negotiate a complex consortium agreement with other parties concerning their respective rights, duties, obligations and methods. What this Bill proposes is to loosen this burdening constraint on the ESB by allowing them to participate directly in limited companies. Complex [436] consortium agreements will be replaced by far simpler arrangements which should, as a consequence, significantly improve the ESB's prospects of securing assignments in certain foreign countries, or of following up and participating in appropriate projects or developments at home.

This Bill will not only create greater flexibility for the ESB in their operations, but very important, it will also protect and limit the liability of electricity customers. This will be achieved by ensuring that all subsidiary companies will be set up under the Companies Act with limited liability. Fisheries is one external activity in which the ESB have a long tradition of both creative and successful involvement. The ESB, through their operation of hydro-electric schemes, have maintained a long association with fisheries on rivers. However, a more recent interest in the field of aquaculture has helped the ESB even further to develop their high level of expertise in these areas. From time to time the ESB have been requested to take equity participation in companies arising particularly from their fisheries activities.

This Bill, through allowing such participation, will extend the contribution which the ESB can make to the small fish operator by enabling them to provide both financial and technical investment. Once again it must be ensured that electricity consumers do not have to carry any of the losses which might be incurred through ESB participation with other parties in fisheries ventures. For this reason it would be best to permit the ESB to take equity in a limited company established solely for the purpose of the project.

Remaining with ESB external activities but turning more specifically to the matter of the Programme for National Recovery, I would like to emphasise the considerable contribution the ESB will be making to this through diversification and development of their economic employment-creating activities. The sale of coal from Moneypoint has been identified as a way of contributing to the programme. I will have more to say about [437] that later. The ESB also plan to set up a subsidiary company in the foreign consultancy and associated services areas with targets to provide employment for about 500 people and a turnover of £50 million by 1992. In the field of commercial fisheries another subsidiary company is planned. Particular interest is being shown by ESB in sea-farming of salmon, where it is aimed to reach production of 2,000 tonnes a year employing 100 people with an annual turnover of £8 million.

As part of the EC funded Valoren programme ten small-scale hydro-electric facilities in Counties Kerry, Cork, Leitrim and Donegal will be developed by the ESB over the next five years. Employment potential from this £7 million scheme will be as high as 20 people per site during the construction stage. The ESB continue to lay emphasis on supporting other Irish manufacturing firms through purchase of Irish goods and materials. In this respect a development research unit has been set up by the ESB, the first aim of which is to identify areas from which new electrical products and services might emerge for exploitation by Irish industries.

The few examples I have just given of the ESB's response to the Programme for National Recovery are clearly consistent with and dependent upon the provisions in this Bill. The removal of all of the obstacles which may have up to now stood in the way of further development of the board's ancillary activities is vital if the ESB are to achieve effectively the targets which they have set themselves.

Enabling ESB participation in limited companies will, I believe, prove to be a beneficial move not only in terms of the ESB's performance but also to the economy as a whole. However, in order that the ESB are not given a free rein to involve themselves in any and every company in which they have an interest, I am proposing a number of controls to ensure that a constant check is kept on such participation. ESB participation shall at all times be subject to my approval and that of the Minister for Finance, given after consultation with any other Minister [438] with responsibility in the areas concerned, for example, the Minister for the Marine in relation to fisheries projects. Any such approval will further be subject to any conditions which I may determine to be warranted or desirable.

The ESB along with the country's other major utilities were identified in the Programme for National Recovery, as one of the areas which could make a significant contribution towards alleviating the high costs of services in the Irish economy. As such, the lowering of electricity prices is clearly a major factor for improving the competitiveness of Irish industry.

When the report of the inquiry into electricity prices was published in 1984, it fully justified the level of public complaint about the high cost of electricity which had helped bring about the inquiry. It found that, while domestic electricity prices in Ireland were close to the average in Europe, those for industry were 20 per cent to 30 per cent above the average, with heavy consumers faced with an even more severe differential. However, since the report's publication and in accordance with its recommendations, there have been a number of quite significant price reductions to each of the sectors. Over the past three years industrial prices have fallen by almost 19 per cent, commercial prices by 15 per cent and domestic prices by 12 per cent.

Latest material on electricity prices published by the International Union of Producers and Distributors of Electrical Energy reveals that on average, Irish prices compare quite favourably with those in other EC countries. The most recent 5 per cent cut in prices has been made possible because of favourable exchange rate movements which have a significant effect on ESB fuel costs, falling oil prices, lower interest rates and also as a result of internal savings. It is my intention to continue monitoring ESB costs and any further opportunities that may arise for a price reduction will be availed of.

The area of electricity in Ireland has been one of great change and numerous developments since the ESB were first set up 60 years ago. Over the past 25 years [439] alone the ESB have seen their customer numbers double and their unit sales increase by seven fold. This high level of growth means that the ESB must ensure that careful planning for future demand is maintained at all times. The ESB have now reached a very important phase in their development with the completion of the 900 megawatt generating station at Moneypoint. This has made a huge contribution towards reducing Ireland's oil dependency and consequently improving the security of the nation's electricity supply.

The contribution of oil to electricity generation has fallen from a high of 73 per cent in 1978-79 to approximately 22 per cent in 1987. Coal, on the other hand, contributed 38 per cent of all fuels used in 1987 and almost a quarter of the ESB's generating capacity is now coal based. While the ESB's achievement in fuel diversification has been considerable, I know that they will continue at all times to ensure that they are as well prepared as possible to deal with future developments in this area in terms of both fuel prices and their availability.

The commissioning of Moneypoint has put the ESB in the position of being the largest single coal importer in the country. The jetty and harbour facilities at Moneypoint are excellent and capable of handling ships of up to 150,000 tonnes weight. This means that coal can be imported from anywhere in the world and already the ESB have bought supplies from Colombia, the United States and Australia. The opportunities for use of the Moneypoint facility are enormous and it would be a great loss if the potential of the site was let go to waste. In order to prevent this I have included a provision in this Bill which will allow the ESB to engage in the coal trading business.

I would like to emphasise that the ESB will only act as suppliers of domestic coal to wholesalers and merchants and as retailers of industrial coal. Ultimately the consumer will benefit from the availability of cheaper coal. Studies which I have had carried out into the benefits accruing from the ESB's involvement in [440] coal distribution have identified potential, in the long term, for a cost reduction to the consumer of up to 20 per cent.

I am well aware of the widespread disquiet that has been expressed about the ESB's involvement in coal trading and the adverse effect it might have on other Irish ports. To allay the fears and concerns which have been expressed, I have included in the Bill a provision to prohibit the distribution of coal by rail or road from Moneypoint. The ESB will only be permitted to distribute coal from Moneypoint by sea. This will lead to an increase in traffic in other Irish ports and a consequent increase in jobs.

I am confident that Moneypoint can play a major role in the development of the potential of the Shannon estuary and its marine related activities. The main jetty at Moneypoint is the second deepest in Europe and of similar size to those at Le Havre and Amsterdam. In order to exploit fully the potential of the Moneypoint facility, I have included a provision in the Bill which will allow the ESB to tranship other products and substances, apart from coal, from Moneypoint.

A provision has also been included in the Bill to allow the ESB to sell any byproduct produced in the generation of electricity. The Moneypoint generating station produces approximately 200,000 tonnes of fly ash each year. This substance has been identified as having potential for use in cement manufacture.

The ESB have on a number of occasions disputed the amount of the sums levied on them in lieu of rates and they have claimed that the levies were not in accordance with section 7 of the 1982 Act. At a meeting with the board last year, I gave an assurance that if it was found that the interpretation of section 7 needed to be supported by some “removal of doubts” clause, I would seek its early enactment. Clarification in respect of future and past payments is incorporated in this Bill in sections 9 and 10.

The ESB are exempted from rates on the bulk of their property. The recently enacted Valuation Act, 1988, provides for a global valuation of utilities like the [441] ESB. When ESB property has been valued in accordance with the provisions of that Act, the rates exemption on ESB property will be abolished. When rates are payable on property which was previously exempted, the levy will no longer apply. I have included the necessary enabling provisions in this Bill.

This Bill provides for some other amendments to the ESB Acts, namely, the amendment of section 2 (6) of the Electricity (Supply) Act, 1927, which provides that the position of chairman of the board of the ESB shall be a full time post. The proposal here is to allow for this post to be either a full time or part time one at the discretion of the Government. In relation to other semi-State bodies the terms and conditions of appointment are at the discretion of the Government or the Minister when appointment is made, thus allowing for the appointment of a part time or a full time chairman.

Another amendment to the ESB Acts relates to the power of the Minister for Finance to guarantee certain borrowings by the ESB. While in practice, the guarantee of the Minister for Finance covers the payment of promissory notes made by the board and bills of exchange drawn or accepted by the board, these particular transactions are not, I am advised, legally comprehended by the term “borrowing”. The purpose of the amendment is to statutorily provide for their inclusion under the guarantee of the Minister for Finance.

Finally, another amendment dealt with in this Bill is of a minor technical nature, the purpose of which is to clarify the wording of section 3 (b) of the Electricity (Supply) (Amendment) Act, 1982. I commend the Bill to the House.

Mr. Bradford: Information on Paul Bradford  Zoom on Paul Bradford  On Committee Stage we will get down to the nitty-gritty and discuss in detail the more contentious aspects of this Bill, and I believe there are quite a few of them. However, Second Stage allows us to deal broadly with the Bill and make general comments on the Electricity Supply Board.

I am not ideologically opposed to this [442] Bill. I am a great believer in fair play and free trade and certainly hope that, by allowing an expansion of activities within a semi-State body, the Electricity Supply Board, we will be helping to promote efficiency within that body and to promote free trade. However, we have to be careful — and we will be discussing this on Committee Stage — that, by granting these extra powers to the ESB, we will not allow them to take advantage of the new provisions to the detriment of other people at present trading in the areas the ESB will now be allowed to trade in.

Allowing the Electricity Supply Board to expand their activities is indeed a positive idea but, when we decide to allow a semi-State body such as the ESB to branch out in their activities, we have to see how efficiently they are undertaking those activities at present. The ESB are probably our most successful semi-State body and, in fact, they performed a miracle, if you wish to put it that way, in the rural electrification scheme over 20 or 30 years, which gives them a very proud place in Irish history. However, we cannot allow a company to live on their history and, when you take a closer look at the activities and performance of the ESB at present, there are certainly many areas which could be questioned and criticised.

The Minister in referring to the whole pricing structure within the Electricity Supply Board at present noted with some favour the price reductions within the ESB over the past number of years. He said a report indicated that ESB prices are quite favourable now when compared with other similar groupings in the European Communities. However, you can read these reports in many different fashions and no two reports seem to agree. The balance of opinion at present would suggest that electricity prices within this country are not very favourable in comparison with our European counterparts. This, of course, has a major bearing on Irish industry, on investment levels and on employment creation. It should be a central feature of the activities and future plans of the Electricity [443] Supply Board to try to increase the rate at which we can reduce our energy prices.

I do not think we have made enough progress and major play was made of this in the Dáil when Members suggested that it should be mandatory on the Electricity Supply Board to set a certain target for price reductions each year. It was not, unfortunately, accepted by the Government but I felt it was a good idea. It would be a tangible target against which we could measure the results at the end of the year. The focus of the Electricity Supply Board should be more clearly set on price reduction in the cost of their core business rather than branching out into new activities.

The figures at present indicate that Irish prices are approximately 14 per cent above average — perhaps this can be argued as no two sets of figures will ever agree — but they certainly indicate that there is a problem with Irish energy prices. This should be addressed immediately and I hope the ESB will concentrate more fully on it.

The Jakobsen report issued in 1983-84 made some important statements on the overall structure of the ESB and some of these, unfortunately, have not been addressed. They should certainly be addressed now, as the ESB consider entering another field. This report obviously was based on the core activity or what you might call the real job of the Electricity Supply Board. It is important that we should discuss the recommendations and that the Minister should give his view on them. A recommendation which I have mentioned already was the target price reduction, or the year by year reduction, so I would be glad if the Minister would comment on that. He said he was quite pleased with the price reductions, but I disagree with him.

Another point made in that report was the need for independent scrutiny of the price structuring within the Electricity Supply Board. This, indeed, is a very valid point and we need an outside body to look at price structuring within the [444] Electricity Supply Board. We hear continuous debate on it and most certainly the ESB are not the best people to judge themselves on a matter like this. The Jakobsen report also referred to the excess capacity within the ESB and indicated that they felt this was the result of an improper investment approach. They mentioned that at times the ESB had an excess capacity of between 60 per cent and 70 per cent. This certainly is an unnecessarily high figure and, while you could not argue with having an excess capacity of perhaps 10 per cent to 20 per cent, 60 per cent to 70 per cent is something which we can wonder about. Perhaps the Minister would comment on that.

I will deal now with specific points on the Bill. The two major provisions of the Bill are, first, that it allows the ESB into the field of coal trading and, second, that it allows the Electricity Supply Board into the more general trading area. When I got a copy of this Bill some months ago, I received much correspondence from people in the coal business and people involved in the different harbour and port authorities throughout the country. There certainly seems to be a lot of evidence to suggest that this provision would do a grave disservice to the industry and cause many problems downstream. I am glad to note that the Minister gave an assurance in his speech that coal would be transported from Moneypoint by sea only and he ruled out entirely the option of its being transported by road or rail. This should help to ease the difficulties which we have envisaged will arise within the different harbour and port areas.

This question of allowing the ESB to trade in coal relates to the question I raised earlier of allowing the ESB to branch out into other activities. While I stated that I would have no ideological objections to their doing so, it is most important that we should insist on their coal trading activities being kept totally separate from their core business, that separate accounts should be kept and that the core business of the Electricity Supply Board will in no way subsidise their coal [445] trade. If this were done, be it through loan subsidies or through any other favourable openings which the ESB's monopoly makes available, not only would it prove to be extremely damaging for those involved in the coal trade but it would also amount to a wrong way of using taxpayers' money. Basically they would be subsidising their coal trading activities with taxpayers' money. That is something which we certainly could not condone. It is important, therefore, that the Electricity Supply Board should have, in respect of their coal trading activities what was called in the other House an arm's length arrangement with their other activities. The fact that the Electricity Supply Board will probably branch out into many other fields, and not just simply the coal business, makes it mandatory that we scrutinise in great detail the provisions which would allow them to do this.

I read with interest the report of the debate in the other House and noted the comment that basically we were going to allow the Electricity Supply Board to become a bank, as a result of the Electricity Supply Board being allowed to loan out money to their subsidiary companies at whatever rate they themselves, in conjunction with the Minister, decided. At first glance you may not see anything wrong with that but when you examine it in more detail you will see the many pitfalls which could arise as a result. Any subsidiary companies set up by the Electricity Supply Board would obviously be in direct competition with other companies and allowing the ESB to make secured loans, at a low rate of interest, available to their subsidiary companies is very unfair. I would like to hear the Minister's comments on this and to receive an assurance from him that this provision will not bear down too heavily on those companies who will be in direct competition with the Electricity Supply Board and their subsidiaries.

I referred earlier to the pricing structure of the Electricity Supply Board and the attempt at a target price reduction. I would like to see the Minister establishing an energy tariff commission to review the [446] board's tariff policy which has been the source of much discussion over the past number of years. It would help if an outside body carried out this work because I believe the ESB should not act as their own judge in matters of this kind.

Some of the correspondence we received from the different interest groups in relation to this Bill dealt specifically with the proposed trading arrangements of the ESB in regard to their coal business. In particular I received one most interesting document which does not deal specifically with the Bill I must admit but it is of interest when dealing with the supply of electricity. It is a document from the Association of Electrical Contractors of Ireland in which they expressed disquiet at the fact that at present there is no authority responsible for ensuring that safety standards are observed by electrical contracts operating throughout the country and pointed out that they are seeking the establishment of a registration authority for electrical contractors. Seemingly, this request has been made continually down through the years but it has not been received very favourably by the Government. I would like the Minister to outline what his views are on this proposal and to tell us if he is favourably disposed towards their request. They also point out that the Electricity Supply Board at present disclaim all responsibility for consumer safety. It would appear therefore, that no grouping is taking any responsibility for consumer safety and this is a matter which the Minister should try to sort out in conjunction with the Electricity Supply Board.

Let me now deal with what we see as the future consequences of this Bill. It is difficult to assess what new activities, other than coal trading, the Electricity Supply Board will enter into. I have mentioned many times that I have no objection to their entering into any new activities, provided that the competition that they enter into with other companies is entirely fair and based on the same set of ground rules. We must again try to focus them onto their core activity, the supply of electricity to domestic and [447] industrial consumers, and try to ensure that they do so as cost efficiently as possible.

It is good that one of the consequences of the ESB getting into the coal business will be that there will be greater use made of the Moneypoint jetty. The Minister made that point and I agree with him. Considering that this new provision will prove to be so helpful for the Moneypoint jetty one has to ask, without this provision, what would the future have held for Moneypoint. This reminds me of the great debate that took place before the decision was made to undertake the huge investment in Moneypoint. However, that is all in the past, and it is a debate which took place before I became a Member of the Oireachtas, but I hope that all future investments, certainly not of that scale but of a much lesser scale, will be discussed and debated in public and that the Oireachtas will be made fully aware of them. It is very important that we should discuss not only the investment policies of the ESB but also their annual accounts and, more important, the accounts of their subsidiary companies.

What some people fear may happen as a result of the ESB entering into new activities, because of the monopoly they hold and their huge size, is that the Electricity Supply Board will be able to cover up the inefficiencies in their subsidiary companies, some of which may be making losses. This is something which not alone should be discouraged but should be ruled out entirely. To ensure that this does not happen, it is important that the accounts of their subsidiary companies should be made available for public scrutiny and, indeed, for scrutiny by the Houses of the Oireachtas within a relatively short time of the end of the trading year. What is happening with many State companies at the moment is that we have to wait two to two and a half years before their accounts become available and this is not acceptable. This certainly leads to bad management and to late and, perhaps, even wrong decisions being made at Government level. I would certainly see it as being very important, [448] as the ESB branch into new activities, that the accounts of these subsidiary companies are made available to us as quickly as possible.

I mentioned earlier that we will have to go into these points in greater detail on Committee Stage when I will be putting down some amendments. While this is a short Bill it certainly is an important Bill in that it would allow the ESB to branch out into new activities and set up subsidiary companies. I certainly would like to see some of these subsidiary companies entering into joint ventures with other companies. In that respect I think this is a most important Bill. I have no major ideological objections to it but on Committee Stage I will be seeking many assurances that people in direct competition with the ESB will be allowed to compete on a fair and equitable basis.

We must ensure that the taxpayers' money which is being invested in the Electicity Supply Board is spent as effectively as possible, that it is being spent on supplying electricity to industrial and domestic consumers at the cheapest cost and is not being spent to down the competitors of the board. I will conclude my comments on that point. As I have said, I have no problems with this Bill on Second Stage but I think on Committee Stage we will have a lengthy debate on some of the sections.

Mr. D. Kiely: Information on Daniel Kiely  Zoom on Daniel Kiely  I welcome this Bill which is long overdue. Even though some people might have some complaints to make about the Bill it definitely does have a number of positive aspects. One of the most positive aspects of this Bill is that the ESB will be able to acquire companies in order to be able to trade in coal or the by-products of coal from Moneypoint. Other companies now have an ideal opportunity to amalgamate their expertise with that of the ESB to get this country back on a sound economic footing.

As I have said, this move is long overdue. This Bill proposes to ease the constraints on the ESB to enable them to participate directly in limited companies. This is long overdue as I stated. The [449] present subsidiaries of the ESB are to be complimented on being so successful, in particular the fishery boards. I can assure the House that the salmon stocks in the River Shannon would be depleted, as would, for that matter, the salmon stocks all around the Irish coast, but for the work done by the ESB and their expertise in that field.

I am delighted that the ESB plan to set up a subsidiary company in the consultancy field, in the process providing employment for 500 people. This will prove to be a great challenge for our young people. Using EC funds, the ESB will develop ten small scale hydro-electric stations in Counties Kerry, Cork, Leitrim and Donegal over the next five years and this is a very positive step. The ESB should look at my side of the river, in particular the oil powered station at Tarbert, where I live, approximately 30 per cent of which has been mothballed. From reports I have received in the recent past it seems that, due to the improvement in the economy, there is an upsurge in the demand for electricity. If this trend continues I hope the ESB will take a hard look at Tarbert and bring it back to full production to meet the demand for extra power.

This Bill, as the Minister has stated, will help the consumer in the long run. However, I am particularly worried about those in industry, from the point of view of competition. At present our costs are running 20 per cent to 30 per cent higher than those of our counterparts in Europe and the rest of the world and these costs will have to be brought into line if we hope to be competitive by this famous year of 1992 within the EC.

The Minister also referred to the Moneypoint project in great detail. This was a huge undertaking paid for by the taxpayers to the tune of over £100 million. As the Minister stated, the harbour at Moneypoint is one of the largest in Europe and there are only two ports larger than Moneypoint — Amsterdam and Le Havre. The massive jetty at Moneypoint which cost an enormous amount of money to build will have to be utilised to the full. We have one of the [450] best waterways in Europe in the Shannon Estuary but it is underdeveloped. This provides us with our first opportunity to develop the Shannon Estuary. Ships of up to 275,000 tonnes can sail up the Shannon Estuary at high water, with no dredging at the mouth of the Shannon being required. We now have an opportunity to get involved in trans-shipment. With a little bit more investment on that jetty, which is now equipped for the importation of coal, we could create massive movement on that river and create not hundreds but thousands of jobs for those living in the counties of Clare, Limerick and Kerry.

Small traders will be protected in that the coal or other by-products will not be transported by rail or road but rather by sea. This will provide a great opportunity to develop other ports around the country. As I have already said, it provides an ideal opportunity for anyone who wants to get into trans-shipment. As well as that, the by-products of coal can prove to be of enormous benefit, particularly to the construction industry and local authorities who can use these by-products in the construction of embankments, roads and bridges.

Let me give one example. It has been pointed out that one of the by-products of the coal imported at Moneypoint would be very suitable in the construction of a by-pass in Athlone. Pulverised fuel ash is a very valuable product and can be used in the production of ready-mix concrete. This product is being used at present all over the world, and it is being used by all of the larger construction companies in this and other countries.

The ESB and other companies have for the first time an ideal opportunity to get involved in the development of the Shannon Estuary which has been neglected for so long. Through Moneypoint, the ESB together with those coming into this country with ideas can promote what has been an underdeveloped estuary for the past century or two. I am delighted that this opportunity is being presented to the ESB. In no way will it interfere with or jeopardise the business of smaller coal traders. They can [451] work in conjunction with the ESB to safeguard their business. I do not think the ESB will get involved in a small commercial operation but rather in a far larger one. The fly ash can be used in the production of cement to be used in the construction of bridges, embankments and roads. There are many possibilities, and that is just one. I see an ideal opportunity for people to get involved in the trans-shipment of other products and become very competitive, which this Bill enables the ESB to do. This Bill provides an opportunity for other companies to enter into serious negotiations immediately with the ESB which could result in badly needed movement on the Shannon Estuary and jobs being created for our people. I welcome the Bill.

Mr. J. O'Toole: Information on Joe John O'Toole  Zoom on Joe John O'Toole  I find this Bill a bit like the curate's egg — it is good in parts. In fact, it is very good in parts but there is one matter which I take grave exception to and I will deal with that in a moment. In discussing the ESB and their contribution to Irish society it is very important that we put on the record the role they have played in Irish society. They have been one of the more successful of our State enterprises which can be seen from their setting up of the Shannon scheme. At this stage I certainly feel that the rural electrification scheme which was so well described in the book called The Quiet Revolution signifies the commitment of the ESB to Irish social life and the development, both economic and social, of this country.

I have always maintained that the legislation, in this case I am talking about the 1927 legislation, which was put together in order to facilitate the setting up of the ESB, and similarly the legislation used to set up other semi-State or State enterprises, was very much the victim of the sort of gombeen mentality of the day which put constraints and parameters on their development which were totally unnecessary and unfair. The exception to that rule are Aer Lingus. Aer Lingus were not constrained under the legislation by which they were established in [452] terms of the companies or the activities they could become involved in.

I want to say straight away that what I welcome most about this legislation is that it will allow the ESB to set up subsidiary companies. Why was this not done 12 years ago? I just do not understand it. I am not blaming any particular Government as there have been three or four different Governments in the meantime. The board of the ESB have been asking for such legislation to be enacted for the past 12 years. I do not know how they have managed to go out to countries in Africa, to the Philippines, Saudi Arabia, the UK and many other places and engage in satellite activities as I cannot call them companies. I do not know how they managed to do this under the legislation which existed. The only way they could take on a contract before now in the Philippines was by becoming or offering to become the general partner in a company to be set up. Anybody with the slightest knowledge of company law and limited liability knows that it is the general partner who picks up all the liability. For example let us assume that the ESB were involved in setting up a power station or a national grid in a Third World country. If there were to be one explosion in that power station in some far away country the ESB would be held liable and this could cost the ESB millions of pounds. This is totally wrong.

What I welcome about this legislation is that it will allow the ESB, if they so wish, to get involved in the setting up of some enterprise, in the development of a national grid, in the setting up of power stations, in offering consultancy services in any country in the world. They could do so by simply setting up a limited liability company. They would then be able to tender for work and provide a service. They would be able to do whatever is necessary on the same basis and with the same competitiveness as any other company in the world. I welcome that move and I can certainly say without fear of contradiction that that movement alone will have a significant effect on our balance of payments. The amount of foreign capital that will be generated, in [453] other words the export value, by exporting the expertise of people attached to the ESB will be very significant indeed. I welcome that move and I regret that it has not been made before now.

I have to compliment the Government on bringing forward this legislation. Other Governments sat on it and did not do anything about it. I know efforts were made towards the end of the term of the last Government to do something about it but it is disgraceful that such reasonably simple legislation, two or three pages long, could not have been brought forward before now. I want to say why I think it was not brought forward before now. I do not think it was because of tardiness on the part of civil servants, but rather because of the influence of the business sector who kicked up such a stink against allowing any de-regulation to enable the ESB to do the things that they were best able to do. I am glad that the Government have been prepared to throw off the shackles and constraints placed on them over the years. This is a welcome development in that area.

The only way that semi-State and State companies can develop is by allowing them to become as competitive as anybody else in the market place. The attitude up to now has been on the one hand to criticise State companies for not being productive, not being profitable and not delivering the goods and on the other hand to make sure that we have legislation in place which constrains and stops them from developing. This is a very positive development. Section 2 of the Bill allows the ESB to set up companies etc. and I welcome it unreservedly. It is well past time and it is a development which will in many ways be as significant as the setting up of the Ardnacrusha station or the rural electrification scheme. It is a major advance in the development of the Electricity Supply Board. I have complete confidence in that board, run as it is by a Dingle man.

Two sections of which I must be critical — I find them difficult even to read — are sections 7 and 8 which deal with the payment of rates. I am determined to hear an explanation for this and I am [454] determined to have a fairly lengthy discussion on an amendment to the Bill at this point. Under the Principal Act of 1927 and under succeeding Acts many of which are referred to in section 8, the ESB were exempted from the payment of rates. I have no doubt that was done with the best of reasons at the time as it offered a protection to the company. It was a welcome development at the time. This was a fledgling company, needing every break. In those simple times the idea was that you did not give money with one hand and take it away with the other. We have become more sophisticated in the meantime.

Let me say as somebody who is a champion of State and semi-State enterprises that the idea of exempting any company we expect to be competitive from the payment of rates is outdated. I have said they should be competitive but there is no justification for exempting them from the payment of rates. Of course, that is not the thinking behind this legislation because section 8 says that in lieu of rates the Minister may, for each year beginning with the year 1988, insist that the board pay such sum as the Government may determine. That is disgraceful and it is loose legislation. I do not know how the draftspersons let it go through or on what basis it was made up. I do not know on what basis these sums will be calculated but I have a gut feeling that it will be utterly wrong.

At some stage last year, when this issue was being discussed in the other House, I went to the trouble of trying to establish the rateable valuation of the ESB's property in terms of their power stations etc., and, if they had to pay rates, what they should be paying. I got two estimates of between £10 million and £12 million. As I understand it, the Government intend to levy double that amount on the board, and have been doing so over the past number of years. I find it difficult to understand the retrospective legislation which, for the avoidance of doubt, makes it law that the amounts levied on the ESB since 1983 were properly due and payable by virtue of the power given to the Minister somewhere else.

[455] I am glad the Cathaoirleach has joined us at this point because I am about to launch into a case for Clare County Council. It is disgraceful that Moneypoint is a charge on Clare County Council who have to provide the roads, the water and the services. Senators from all sides have made the case for money for local authorities and it is disgraceful that this local authority have by law, to provide the services, the roads and the back-up needed in Moneypoint while at the same time, instead of being paid the rates every other county council are entitled to, the money is given to the Government and does not come back to Clare County Council. That is unjust and unfair and I cannot subscribe to it. I defend the right of Clare County Council to get their pound of flesh. The legislation is flawed in this respect.

An Cathaoirleach: Information on Tras Honan  Zoom on Tras Honan  I would like to be on the floor now.

Mr. J. O'Toole: Information on Joe John O'Toole  Zoom on Joe John O'Toole  I have no doubt the Cathaoirleach will support me. The ESB should pay their rates like everybody else. Their property should be valued and their rateable valuation assessed and determined so that they can pay their rates.

My second point is that the Government should not be allowed to decide on a magical figure to levy the board each year, in lieu of rates, which will then be paid into central funds. My third point is that the ESB should pay their rates on Moneypoint to Clare County Council. I have no doubt that the ESB would be willing to do that and the information I have is that they wish to do that. I knew that area of Clare before Moneypoint was built and anybody who has driven there in the past number of years will have seen the large new roads built by the county council. That has been a drain on the finances of Clare County Council and in all fairness, they should be entitled to the rates being paid by the ESB. It should not be a case of the Government saying: “We are going to charge you guys in the ESB £25 million a year”. That would be [456] wrong for two reasons: first, the figure should be the same as for any other industry — it should be a rateable valuation and they should pay rates — and, second, what is being paid in lieu of rates is not being paid to the local authority who have to deliver for them on the ground. I want to stress those three points again: first, the ESB should pay their rates; second, the sum being levied by the Government in lieu of rates is wrong because it will not be based on the same criteria as those for other companies and industries and it will not be determined by any criteria we are aware of; and third, they should pay their rates to Clare County Council.

I am pretty sure that at some stage during the past number of years the ESB, because they felt they had imposed many problems on Clare County Council of their own volition paid a sum of money to Clare County Council in order to upgrade the roads in the area. The ESB, in order to buy local goodwill and so as not to be regarded as being totally parasitic on Clare County Council, paid a large amount of money to the council in order to upgrade the roads in the area. That should not have to happen. It is wrong and I cannot subscribe to it. Moneypoint is a charge on Clare County Council and they have a right to be compensated for that charge. I am sure that my colleague, Senator McGowan, who has always made the case for extra money for local authorities and the need for good roads, etc., will support me when he rises to speak later.

An Cathaoirleach: Information on Tras Honan  Zoom on Tras Honan  If you were not a University Senator I would wonder why you are making a long speech on the Clare vote. You seem to be concerned about colleagues in Clare.

Mr. J. O'Toole: Information on Joe John O'Toole  Zoom on Joe John O'Toole  Because of the Cathaoirleach's background and her party, she fails to see things for what they are.

An Cathaoirleach: Information on Tras Honan  Zoom on Tras Honan  It is because of my background that I can see things so clearly.

[457]Mr. J. O'Toole: Information on Joe John O'Toole  Zoom on Joe John O'Toole  The Cathaoirleach knows that Clare County Council are close to all of our hearts. Indeed, a number of the members of my union have been very prominent on that county council for the past number of years. They have always kept me briefed on these areas.

Mr. Hogan: Information on Philip Hogan  Zoom on Philip Hogan  What parties are they from?

Mr. J. O'Toole: Information on Joe John O'Toole  Zoom on Joe John O'Toole  They are from both parties. I want to refer to the facilities at Moneypoint and the provisions within the Bill which will allow the ESB to diversify and no move into other areas outside the supply of electrical energy. I welcome that provision because it is important and progressive legislation. I am not sure whether the reason I welcome it is the reason it is there. I thought that Moneypoint could take ships of up to 250,000 tonnes but, according to the Minister's speech, it can only take ships of up to 150,000 tonnes. Either way, it is a major port and the fact that it will be utilised even more is to be welcomed. The fact that Moneypoint is a port as well as a power station is a fact that has not found its way into the Irish psyche. People are not aware of that fact but they should be made aware of it. The ESB and Moneypoint should make that issue clear so that people will be aware that the port can be used, developed and utilised far more than it is at present.

With regard to redistribution I dislike seeing it written into in the legislation that the ESB are to be prevented from becoming involved in the retail trade. Because of my suspicious mind I think it was put in there for all the wrong reasons. I think it was put in there to protect those people who objected to the setting up of the ESB in the twenties, the people who at that stage were selling electricity in small towns around Ireland at exorbitant prices and who nowadays are selling coal. I do not think these people need protection in this legislation, for the simple reason that nobody ever sets out to protect a semi-State body if somebody else [458] sets up beside them and tries to take them on.

It was put in there for all the wrong reasons. It was put in for the restrictive reasons that did not allow them to expand into other companies 50 years ago. Nevertheless, I am not worried about it because I would not like the ESB to become involved in retail distribution. They have been a disaster in retail distribution. Their history in it has left so much to be desired that it would make one cry. The ESB outlet in any town in Ireland is generally in a back street, the farthest possible point away from the High Street or the business sector of the town. In town after town the ESB have set up their showrooms so far away from the centres of business that they have never managed to establish themselves. That is one side view of the attitude they have adopted towards retail distribution. They have been so slow to enter into development in that area that, so far as I know, they have been selling brown goods for the past number of years only — before that they dealt only with white goods. This company which had an entree to every home in the country every two months and which could sell and advertise their products better than any other company, could not operate competitively with small outlets in different cities which sell televisions, washing machines, dishwashers or any electrical product at two thirds of the price offered by the ESB, I have never understood the reason for that. That is scandalous but it has been proven — and I do not like being critical of State industry but we must call a spade a spade and look at something, warts and all — that they have been a disaster as a retail distribution outlet and have not succeeded in this area. Because they have been inefficient and ineffective in that area, I certainly do not regret the fact that they are not moving into the retail coal business. There are enough people with trucks who can do this and the ESB do not need to do it.

It is good that the ESB are diversifying, expanding and developing and that Moneypoint is being used as a point of [459] importation. The Minister said that the ESB are now the largest importers of coal in the country and, therefore, they should be absolutely competitive in the supply of coal to retail outlets. I also welcome the redistribution by sea. I am not sure why it is confined to sea distribution, but I welcome it at this time. I worry about it being enshrined in legislation because cost factors can change over the years. However, for two very strong reasons I like the idea of requiring the redistribution of coal to the wholesale outlets to be done by sea. First, it is an environmentally friendly thing to do and it will not cause chaos on the roads through damaging the roads and creating extra traffic and more pollution that we do not need and, second, it is an extremely cost-effective way of moving coal at present. It would be cheaper to move coal from Moneypoint to Dublin by ship, even though it would mean a run right around the coast, than it would be to bring it by truck. Therefore, this provision does not in any sense restrict the competitiveness of the ESB in this area and for that reason I welcome it. In welcoming it I am, however, worried that it is enshrined in legislation. I am not worried about its effects now but in the long term some other form of transport could be developed in the next century or the next decade, which, on my reading of the legislation, could be restricted from utilising it. Perhaps the Minister will develop that point further in his concluding speech.

Moneypoint is being developed very successfully. Senator Bradford referred to the debate that took place around the time it was set up. Some people were totally opposed to it and a man who now leads a party in this country, and who does not recognise this House, was all for closing down Moneypoint and opening up a nuclear power station on the other side of the country. This man is now able to talk about the environment and the need for a clean environment. That man, Deputy O'Malley, was opposed to the development of Moneypoint at that time and did not want the third phase, and I [460] think one of the earlier stages also, to be developed. He wanted to develop a nuclear power station at the other side of the country, despite the fact that the trade unions and many other groups had clearly identified Moneypoint as being an area that could be developed quite profitably. It has proven to be so and has been a marvellous development.

I have covered three substantial areas of the Bill, two of which I welcome and one of which I am opposed to. I should like the Minister to develop the area concerning the by-products of coal mentioned in the Bill. I missed the debate in the other House and I would like to know what exactly that means. So far as I know gas is a by-product of coal. Would that allow the ESB to get involved in the production and sale of gas, which is another energy form? I welcome the section which allows the ESB to set up companies and to get involved through satellite companies or other companies in consultancy and other development work. While I welcome the fact that they are now being allowed to sell and redistribute coal around the country, I am totally opposed to the section on rates. Clare County Council are entitled to be compensated — and this is a point which I made long before I ever came into this House — for the charge Moneypoint imposes on them. Clare County Council look after the roads leading up to Moneypoint, the water supply in the area and many other aspects also and, therefore, they should be compensated. The ESB should pay their rates like any other industry. The rates should be paid to Clare County Council who are entitled to that money and to the use of it. I welcome the introduction of the Bill. Despite my reservations on the point about rates, the other two points outweigh my opposition to that point.

An Cathaoirleach: Information on Tras Honan  Zoom on Tras Honan  For the record of the House we cannot criticise at length Members of the other House, on whether they were right or wrong at a particular time, because they are not here to defend themselves.

[461]Mr. J. O'Toole: Information on Joe John O'Toole  Zoom on Joe John O'Toole  I accept that. I look forward to the time after the next election when they will have Members in this House to defend themselves.

Mr. O'Callaghan: Information on Vivian OCallaghan  Zoom on Vivian OCallaghan  This is important legislation. It is short but important and very serious in content. It can be described as a watershed in the activities of public utility companies like the Electricity Supply Board. I agree with Senator O'Toole that it is long overdue. We are looking at the ESB at a time when they are undergoing great change and have a great need to change. The emphasis on the provision of facilities from within the State has now been more than well subscribed to in the shape of Moneypoint, Aghada and all the other magnificent facilities the ESB have developed all over the country. The time is ripe for this change of emphasis that is very definitely envisaged in the Bill. As other speakers have said we have absolute confidence in the capacity and expertise of the ESB to fulfil the onerous responsibilities they will be allowed to discharge when this Bill passes through the two Houses. I have no doubt that over the past few years they have developed the expertise that will allow them to diversify, in particular, into the consultancy area that has been referred to by many speakers here today.

The successes of other semi-State bodies such as Aer Lingus in their hotel development, the PARC hospital development and the success of Aer Rianta in recent months with the Russian Government, are very definite examples of what is good about semi-State companies and they can achieve with the proper motivation and protection this Bill will afford them. I have no doubt that the ESB will meet the challenges which have been sought by the board over a number of years. It is very welcome that, as part of the Government's concept of national recovery, the ESB are seen as a very definite pump primer in this area. The fact that they have now been given the go-ahead is welcome and very satisfactory. It is important also that the Minister has retained the right to place some constraints on them because there was a [462] tendency in the past for the ESB to do a little bit of empire building in some facets of their work. I hope the ESB will confine themselves to doing what they can do best, which is the provision of the public utility of electricity. I hope that, in their efforts to develop other areas of activity, they will not lose sight of the primary function which they have, and Senator Bradford referred to this, in relation to co-responsibility. This is important and they must continue to look at alternative sources of energy other than coal, gas or oil. We have to be conscious of the environmental impact of the upsurge in the utilisation of coal in Moneypoint. I am sure the people of Clare are aware of this.

Demands have been made on the ESB to ensure that the phenomenon of acid rain is not visited on Irish people as it has been on European countries by virtue of the constant upping of the ante in relation to the burning of coal. We should, as the ESB were charged to do in the early eighties, look seriously at the possibility of using wind and wave energy. It is an area of responsibility that the ESB seem to have forgotten about in recent years. Some very sizeable technological advances have been made in Europe in relation to windmill farming and so on and this should be looked at. It is an area in which the ESB already have expertise. We want to avoid the danger of becoming over-dependent on coal, not because it will be in short supply, but because of its environmental impact of which we have to be conscious. I should like to remind the Department responsible for the management and ultimate running of the ESB that there are other areas now on offer to the Government as a result of the possible provision of cheaper oil to the State. This should not be lost sight of because of the ESB's romance with coal burning stations at present. There are other areas which they should continue to look at.

It is important that we are now giving the ESB the opportunity to become involved in other ventures and it is pleasing to be able to refer to the ESB's success in the area of fish farming. It has been [463] tragic for the ESB to see other international companies, in particular from Scandinavia coming in here and getting in on the coat-tails of the ESB who have kept the salmon industry alive over the years. Even at this late stage, and it is certainly not too late, it is important that the ESB should get involved in this business immediately. They have developed such expertise in this area and it would be unfortunate if the primary profits from salmon ranching and salmon farming which should accrue to the State and ultimately to the taxpayers left the State in the shape of multi-national profits. I welcome the fact that the ESB have been given the go-ahead in this area.

It is important that we welcome the constraint that has been placed on the ESB that another coal distributing company will not be put on the ground here. The Government see the ESB's role as primarily in the business of wholesale coal importation. This is important especially because of the provision of long-haul facilities and the VLCC tankers which can bring huge volumes of coal from Australia and the east coast of the United States. Their role is very definitely seen to be in the business of supplying other wholesalers rather than — as Senator O'Toole very rightly said — in the business of having a network of trucks to supply coal around the country. This is not envisaged in this legislation and it is important that that constraint has been put in as an indication of the Government's anxiety that companies who are already involved in the coal distribution business should not be submerged if a “Big Brother” like the ESB came into the marketplace. It has been provided for in the Bill that the ESB may only ship and trans-ship coal in this case.

In relation to the vexed question of the rateable valuation of the ESB property, I should say that I also have serious problem with this. I cannot understand the rationale of the Department of Finance clutching to their bosom all the funds forthcoming from the rateable valuation of companies such as the ESB or any other semi-State body for that matter. I [464] cannot understand why because of the demands that are being made on the services of specific county councils, the benefits of this rateable valuation should not accrue to the specific county council in question. I am aware — and obviously Senator O'Toole is not aware of this — that it is within the ambit of the planning authorities to levy sizeable development charges, which they did in the case of the ESB in County Clare, for the provision of road networks and so on but that there is also an ongoing demand for road maintenance and the provision of quality water suppies which cannot be anticipated in a development charge. The Moneypoint facility will be in County Clare for a long time and I have no doubt that the benefits of the development charge have come and gone by now.

This problem is probably more relevant to a debate on local government reform than to this debate. I am aware that the Minister for the Environment is at present addressing the question of the funding of local authorities. I hope recognition will be given to the specific problems of various county councils rather than the block granting system we have at present. I can live with this section as it stands at present but I hope the Minister will have more news for us when we debate the Bill on a section by section basis.

I welcome the suggestion that the chief executive should not be appointed on a full time basis. The successes of part time chairpersons of State and semi-State companies cannot be ignored. The expertise of the chief executive of the board of the ESB is, to a degree, being wasted. We are acutely aware of the outstanding contribution this man has made to the well being of the ESB and if his expertise was forthcoming to other companies, particularly in the semi-State sector, that would be a very welcome development. It is imporant that that constraint should be put aside and I welcome the move in ths direction. I welcome this Bill which is long overdue.

Mr. Hogan: Information on Philip Hogan  Zoom on Philip Hogan  We are seeking to use taxpayers' money so that a semi-State [465] company can get involved in an operation which was hitherto left to the private sector, namely, coal distribution. This will have far-reaching consequences for the private and public sector and it goes against the direction in which the Government have been leading off in recent times. More often than not they sought to privatise operations rather than having the semi-State or State sector become involved in the type of operation we are talking about here. I welcome the Bill in so far as our dependency on oil will be further reduced. Over ten years our dependency on oil has been reduced from 73 per cent to 27 per cent. Oil has been largely supplanted by coal. The oil crisis of the seventies brought home to us very forcibly that, because of our dependence on oil, in particular on the Middle-East, and the historical and present day troubles in relation to uncertainty of supply, we had to look very seriously at alternative fuel sources to feed into the national electricity grid. We have done that successfully and I welcome any diversification away from our sole reliance on a particular fuel in order to fulfil our energy needs.

For a long number of years the ESB sought to get involved in the distribution of coal and various attempts were made to have this legislation introduced before now. I am glad that this Bill, which is necessary to enable the ESB to get involved in this sector is now being introduced. It is useful for the semi-State sector to get involved in other areas of activity which will enlarge their portfolio so that they can become more profitable. Many semi-State companies have run up tremendous deficits over the past seven or eight years. The Exchequer borrowing requirement in the semi-State sector has largely contributed to the amount of over-borrowing and deficit financing we have had for a long number of years. Any attempt we make in any semi-State body to improve that position is welcome. Allowing the ESB to become involved in more activities, and giving them power to become involved in more subsidiary activities, certainly will help to increase their financial strength and make them [466] less reliant on the State and the taxpayer for their funding.

I would certainly caution that the ESB, in setting up subsidiaries, should not exercise a dominant position over others in the same business. With subsidisation from the taxpayer the ESB could seek the decimation of many areas of business that are presently there and, because of the fact that the ESB have at their disposal large amounts of money from the State and the taxpayer, the private sector would be unable to compete fairly against these subsidiary companies. I am also glad that they are being set up on a limited liability status under the Companies Acts. The Companies (No. 2) Bill which is going through this House at the moment will protect the consumer and the taxpayer fairly well against these companies.

In relation to many subsidiaries of the semi-State sector, the accounts furnished to the Minister and the Department are often too late to reverse any trend that might be developing in the deterioration of the finances of a company over a period of time. The latest example we have is the Kilkenny Design Workshops. The 1986 annual report did not come to the Minister's desk or come to his attention until 5 February 1988. In relation to any subsidiary company established by the ESB, the financial accounting procedures laid down by the Minister should ensure — and it is reasonable to suggest — that six months after the end of each financial year we have the accounts laid before the Houses of the Oireachtas so that we can peruse them and see if a company is going in the wrong direction, or is likely to lose a substantial amount of money in the future. A close check is essential to protect the taxpayer from the indiscriminate use of finance that could happen in many subsidiary companies.

The Minister will be aware that private firms who are competing against the ESB, who are a monopoly, could go to the wall because it takes so long for financial figures to become available and enable the Minister to do something [467] about them. Unfortunately, for the private firms it is too late but the State sector always has another option in that it can be shored up by more money. In recent times that trend has diminished, I am glad to say, and the idea of a State body or a semi-State body being shored up by more taxpayers' money in the hope that it will become financially solvent is now becoming a rarity rather than a simple fact of life, as it was for far too long. I hope the fact that those accounts can be brought to the Minister's attention more quickly will protect private firms who might have to face unfair competition and unfair pricing in relation to many of their products when they have to compete against the State and that they will not be faced with having to go to the wall unnecessarily. It is no consolation to them when the closure has taken place in a private firm while the State had the unfortunate taxpayer to restore to, to bail it out of its troubles at the end of the day.

The ESB's case for entry into the coal market centres mainly on their contention that they can import coal more cheaply than any other trader. By economy of scale, by importing large amounts of coal or any other product, they are of the opinion that they can do so more cheaply. I would certainly question the economies of scale that could be brought about by the ESB. They have not shown that in relation to the supply of electricity over the years. In fact, the ESB have been showing substantial losses up to recently. It is very difficult for any Minister to exert control over the board of the ESB to get the financial structure of the ESB back into profit. I seriously question the ESB's argument for getting involved in coal trading and in the importation of coal on a massive scale because its economy of scale argument does not stand up in relation to other activities in the company. That is a very false argument for them to put up.

Perhaps when other aspects of international trading are taken into account there will be some economies of scale from becoming involved in freighting coal [468] in Moneypoint, given the size of the vessels which Moneypoint can accommodate. The Minister will have to admit that Moneypoint, as the focal centre of coal distribution in the country, is very remote from many sectors and the dominant sector of the coal market namely, the capital city and Cork city. Other ports, and their involvement in the importation of coal over 16 or 17 centres around our coast at the moment, will be seriously affected in particular in the south and in the south-west. I question the huge investment that has been made in ports like Ringaskiddy to bring large vessels into that port and to accommodate coal distribution to the south of the country. These ports will be affected in their trading position by the situation we are creating in this legislation. It is a point that I will refer to later. It is something that cannot be ignored. Other ports like Arklow and New Ross in my own area, have been to the forefront regionally in supplying coal and other materials. Their economic and financial dependancy has largely been enjoyed by reason of the fact that they have such an uptake in coal distribution in the regions.

There are a number of areas that are not tackled in the Bill. I am disappointed about this in view of the fact that we do not often have an opportunity to bring legislation in this area before the House regularly. I was disappointed that the Minister was talking about the ESB setting up subsidiary companies, going in for the distribution network and compounding the difficult road conditions and infrastructural conditions that we have in the country at the moment by generating extra traffic in relation to lorries. I was disappointed that we did not hear of more extensive road improvements to provide economies of scale in that regard.

I am disappointed that the ESB will not be getting involved in coal excavation. I know the Minister is more aware than most that the developments that have taken place in Ballingarry over the years have been far from satisfactory. I hope he will use his influence and his position as Minister of State to enable the ESB to [469] become involved in exploring ways in which we can extract more coal from the ground and from pits that are lying idle because of lack of finance. Perhaps the ESB in Ballingarry and in the Leinster coalfields in north Kilkenny and Laois, could become involved in a joint venture with private investment, and we then could see a way in which we could get more coal available at home rather than having to rely extensively and almost exclusively on importation. It would be a tremendous benefit to our balance of payments if that consideration could be investigated. I look forward to the Minister's detailed consideration of this matter when replying to the debate.

Another area that has not been addressed is the standards that we have at the moment in relation to electric wiring. We are aware of an enormous number of accidents that are taking place, particularly in older buildings and many of them in rural Ireland, where fires have taken place in cases of old people living alone. There is no compulsion on the ESB to carry out regular checks for the consumer where they have installed a supply of electricity. This will have to be addressed. Whether it should be done by sub-contracting to electrical contractors in the area or directly by the ESB is open to debate. Checking on old installations is essential if we are going to prevent the type of accidents that have taken place over the years with the loss of life in some cases because of faulty installations and lack of supervision. Once the ESB have installed a supply, they appear to forget about it. They leave it to the discretion of the consumer to see if faults are there. The consumer is not in a position to know whether electric faults are there or not. Many recent installations can develop faults and cause accidents.

It has been argued on the ESB's behalf that their entry into the coal trade would guarantee a better and more secure supply in the energy market. Perhaps that is so. The evidence of industrial relations and the evidence in relation to domestic energy supplies in disputes would certainly provide a poor record. Unlike oil, where reserves are concentrated in the [470] Middle East, coal resources are much more widely dispersed geographically and our dependency on a particular area of the world for our raw material and our openness to producer cartels infringing on our marketplace are not called into question in this regard. Again, proven coal resources are much more extensive than oil resources as dependable fuels from our point of view. It is estimated that there are 230 years of coal reserves at current consumption rates available as against 33 years of oil reserves. We are heading in the right direction in terms of coal and fuel resources and their availability in the marketplace.

Proponents of the ESB's case to supply coal from Moneypoint by road suggest that this will represent new business as industries switch from other energy sources to coal. Perhaps it will but where new sales are represented, the substitution of coal for domestic sources of energy would have a negative effect on the balance of payments. There is a substantial over-capacity at the moment in relation to electricity generation by the ESB. In March 1987, nominal capacity over peak demand was 77 per cent. When faced with such over-capacity a business would normally be seeking to increase sales of its core products rather than diversifying into others. In what we would call a relatively static economy, greater market penetration of our core products is required. It can only be achieved if we are to get core penetration at the expense of other fuels. We are in a catch 22 situation from the point of view of the ESB if we are going to get involved in more coal distribution and into greater sales of coal. There will be losses on the other end of the scale in relation to other products and other fuels.

If the ESB succeed in raising the market share in the Irish coal market this will have to be at the expense of electricity sales and that would offset any gains to be made there. We will be promoting a fuel at the expense of another fuel being generated and operated by the same company. These points should be borne in mind when we are talking about the penetration of a market and how the [471] ESB's case is being put forward as the be-all and end-all, as it were, of coal distribution.

In fact, it is remarkable that the Joint Oireachtas Committee on Commercial and State-Sponsored Bodies made clear in their report in 1986 that they would not agree with the involvement of the ESB in commercial coal trading activities because of the likely impact on employment, on the coal distribution companies that are already there, on the employment possibilities and on the unemployment it would create in many of the companies already active in coal distribution. I have mentioned one already and I will mention it again.

Not only is Cork geographically proximate to Moneypoint but it lies 18 miles up river from the sea and thus requires a high maintenance expenditure in relation to keeping its channels open. Its port is dependent on a high throughput. It is worth noting that total bulk imports through Cork amounted to some 900,000 tonnes in 1986, of which coal imports amounted to 264,000 tonnes. You can see the dependency that port has on coal imports. Total annual revenue from all sources at Cork Harbour amounts to between £4.5 million and £5 million. Revenues accruing on foot of coal imports in 1986 amounted to £300,000. If the importation of coal through Moneypoint is to have an adverse effect on Cork Harbour, immediately its present break-even situation will run into a £300,000 deficit. We will have increased harbour dues in Cork Harbour which will make it less competitive. As the Minister is probably aware, there is dock rationalisation going on there at the moment. This could have a serious effect on its competitiveness also in relation to the loss of business that it could mean. We could have a considerable loss of employment.

Finally, I want to reiterate my concern about the fact that we are going to put greater pressure on our road network, in my opinion, by operating out of Moneypoint to the exclusion of all other ports. I understand the Minister's position in that he is responsible mainly for trying [472] to get the semi-State sector under his responsibility and the body we are speaking about today, the ESB, into a better financial position. He has put so much money into Moneypoint and there is such excess capacity there at the moment that he has to try to achieve some returns to the taxpayer for the huge investment made there. I would warn him that he will create devastation on many of our roads. Our experience to date is that, with the lorries and the large amount of trucks on the roads now, our roads are not made for that volume of traffic.

Our roads are not made for that type of transport at all. A huge investment, which the Minister for the Environment speaks about frequently, is essential to bring the roads up to a proper standard to meet the demand the Minister is hoping for through County Clare and through the regions in coal distribution. He already has a network there through the private sector which I hope will be more utilised than ever before by Moneypoint. Fears have been expressed that the thin end of the wedge is put into this Bill in the section dealing with transportation of coal by the ESB only by sea. There are fears that that could be circumvented in some way by setting up a subsidiary company or by sub-contracting to other people to get distribution from the ESB to other parts of the country. I hope that those fears will not come to fruition. The circumventing of a piece of legislation like this to create a dominant position and an unfair trading practice to the exclusion of the existing private coal distribution operators would not be in the best interests of the country or the consumer. In a dominant position such as the ESB have had over the years they have been long out of line in their consumer prices. That is now only coming into line and I hope the same will not happen in relation to coal in the future as has happened with electricity in the past.

Mr. McGowan: Information on Paddy McGowan  Zoom on Paddy McGowan  First, I want to join with other Members of the House in welcoming the new Bill which will enable the ESB to be involved in the importation and distribution of coal. I also want to [473] join with other Senators in complimenting the ESB on their expansion and development programme. Not too long ago, I was very proud and pleased to write to the chairman of the ESB complimenting the board on their tremendous success abroad. It was nice to find a semi-State organisation called outside the State to lend support and technical advice when power lines in other countries broke down. It gave a sense of achievement and pride that we do not always easily find here at home. I compliment the ESB on their expansion and on their capacity to advise on development and technology when required to do so. On this very point, it is right and appropriate that the ESB should be involved in the importation and the distribution of coal, especially when they are actually very, very substantial coal consumers themselves. Other Senators may have different reasons for expressing support for and welcoming the introduction of this new, enabling legislation but coming from the corner of the country I come from, I have a very selfish motive, if I may state it here. It is that, in fact, coal is available across the Border, even allowing for the difference between the punt and the pound, at about one-third cheaper. So, I am enthusiastic about expressing a welcome into this industry for a body like the ESB that will help to break down the cartel and the closed shop and ring of traders who have been taking excess profit from the Irish users of coal.

May I ask the Minister a question? Why not also include oil? I claim the ESB are an organisation who are energy-oriented? They have a major role to play in the whole area of energy and the development of energy and they should have the same powers in regard to oil. I would encourage the Minister and the Government to think seriously about providing the same type of legislation to enable the ESB to go into the importation and the distribution of oil. I believe the desired effect would be brought about. We could no longer be held up to ransom by OPEC or those who represent OPEC. The distribution of every kind of merchandise requires to be looked at. This [474] country has suffered at the hands of those who have held it up to ransom down the years. Any reasonable person would be enthusiastic about welcoming this new measure as introduced. At the same time, I would be most anxious — and I hope the Minister will look at the possibility of providing the necessary legislation — that the ESB should consider the distribution of oil.

I have one or two reservations. I would like to see the ESB expanding in the area where their expertise is best, that is, the development of and support for industry. A small company starting in industry tomorrow will not find it easy and the ESB could do more and could co-operate more in that regard. If a small company is starting a business tomorrow anywhere in the country, the ESB will state their conditions and if there is any risk factor involved, the ESB will say they require a guarantee and, in some cases, even money up front. That is not the helpful approach the ESB are expected to provide. Here we should look at what constructive support they could give to industries setting up and, if there are risk elements for the company setting up the industry and the directors of the company are prepared to take the risks involved, the ESB should examine closely the possibility of giving supporting technical assistance, without putting a premium on the supply of electricity to those who are prepared to take risks to provide jobs. That aspect could and should be developed by the ESB.

I would like to see the ESB phasing out their involvement in retail shops, in the selling of refrigerators, kettles and electrical goods at retail level, for a number of reasons. One, it is unfair to small business people in small towns in rural Ireland. The ESB have a major advantage in that they have State capital and resources to stock and purchase in a way that small business people in electrical goods cannot compete with people who have to give a service perhaps give credit and compete with the ESB in giving credit. In fact their resources might not be as strong as the ESB's. Whatever street they are in — somebody said they [475] are not well placed to give a good service and compete; I do not care if they are in the main street or the back street — the ESB have an involvement there and that involvement should be examined to see if that aspect of their industry could not be phased out and left to those people who actually are giving a service. I am thinking about a small town in which you have an electrician who also sells electrical goods. If the ESB are there and they are competing in the provision of credit, the small businessman is at a major disadvantage. I have seen this for a long time. The ESB might look at that aspect of their involvement now that they are expanding and diversifying into coal distribution.

It is a pity that the ESB cannot support the development of native fuels. In my own county the ESB are involved in a generating station at Gweedore burning a native fuel. That industry, the provision of fuel based on home-produced turf, actually has run into difficulties and I am disappointed that the ESB did not see fit to support the retention of the power station at Gweedore on the basis that its contribution to the economy of the area was vital. In my opinion, equally as important as the energy it produced was the assistance to the economy because of the fuel that was purchased in that area. I would like to see the ESB having an expansion programme, being concerned with native fuels as well as imported fuels, and I would like to see a major research programme undertaken by the ESB to investigate how best to harness our wave power or our water power. Much more can be done.

It is a long time now since the ESB developed one of our best power stations at Ballyshannon and that was a tremendous success. Not enough research is now being carried out by the ESB into the possibility of using water to produce electricity, or using water we can store and use in a hydro-electric scheme or investigating the harnessing of the waves around some of our estuaries. I would urge that as far as possible the ESB should get totally involved in the whole [476] energy field and this should include coal, oil, electricity, native fuels, turf, water and wave power. Their involvement in the retail area should be looked at to see if there is a possibility of that being phased out.

I support the introduction of the Bill. I look forward to the Minister's response to the part of my speech where I said I sincerely believe that the Electricity Supply Board should be involved in the oil industry. The country would benefit generally if the ESB became major importers of oil. They could follow the European market and buy on the spot in Holland or from other areas. That would be entirely a matter for the ESB.

A representative of a Polish company visited this House a short time ago. He said he had a boat load of oil out in the bay and a deck cargo of Polish shoes. He hoped to meet somebody who would buy the oil and he would take fish in return. I mention this because I believe the ESB have now got a golden opportunity, with Government support, to become involved in this international trade. They should think of the benefits of this. They could purchase coal and hopefully oil. There is a balance of trade that might be looked at by the ESB. I welcome the Bill. I look forward to the Minister's reply on the possibility of the ESB becoming involved in the oil industry.

Mr. Harte: Information on John Jack Harte  Zoom on John Jack Harte  I welcome the Bill. The ESB are a success story. In 1927, when the then Minister for Industry and Commerce, Mr. McGilligan introduced the idea, it had its opponents. Despite that the ESB have been looked at favourably by most Governments down through the years. It is a pity that some Members of both Houses have started to talk about the privatisation of the ESB. They do not mean the privatisation of the ESB; they mean the privatisation of the profitable part of the ESB until it becomes nonprofitable. This would be a terrible error because the evidence is that, when people start hiving off a bit of an industry and somebody else takes it over, it goes well for a while. Then suddenly the market starts to collapse and the very structure [477] of experience and expertise is destroyed because people want the profitable parts of State enterprises to be hived off.

Some people who take this line are probably afraid of the fact that it might be some sort of monster ready to impose a threat on the private sector. Time and again people in the private sector, those with the entreprenurial qualities, tell us that in the first instance you have to get tough with yourself before getting tough with anyone else. They set themselves up as very tough minded people. The fear seems to be that the ESB are a very well run semi-State organisation who proved to be a success story and an example to less energetic entrepreneurs many of whom want to take the easy way and look at the little profitable bits.

When Mr. McGilligan introduced the idea, although he knew the potential — obviously he had done his homework and sought advice — I doubt very much that he realised that 12,500 people would be employed on a whole time basis. He may not have realised at that time that the ESB would be paying interest on bank charges to the tune of about £126 million a year. Where in the world would bankers get the State to guarantee interest from this body of £126 million a year?

People do not look at the employment content of the company. They do not consider the fact that there might not be a light bulb in the country but for this State investment. People do not have regard for the fact that there are about 80,000 people employed by these so-called lame ducks. It is extraordinary that people say this State enterprise is being shored up with taxpayers' money. There is not a word about the £1.2 billion private enterprise received from the State in 1986, and in 1987 £960 million. There were no jobs available but they got the money. Why is there so much worry about privatisation? The Government are realistic enough to know that it has more potential. In the Programme for National Recovery the areas with potential have been identified and they can now be given into the hands of the ESB to do an even better job than they have been doing up to now.

[478] We are all talking about things being shored up by State money. What do we call giving an industry £1.2 billion and getting no results? At least we are getting results from the ESB. Any moneys the ESB received from the State have been paid back. There may be a problem about rates on property, but that is a different argument. No money comes back from grants or tax incentives. It may come back in the spin-offs but not to the same degree of intensity as when a lot of employment is created in the State and semi-State sectors. I cannot understand what all the panic is about.

I do not mind the banks benefiting by £541 million a year in interest from the semi-State bodies. Here again is somebody who does not produce anything. People come in off the street and put money on the counter for them. They then end up getting this State guaranteed interest. They get a very substantial amount back. If that interest went to the State we would not have needed the cuts in education. Even 2 per cent of it would have avoided all the cuts in education or health.

We want to know exactly what we are talking about when we talk about who is benefiting from these things. Quite frankly I do not want to be interpreted as somebody who is knocking private enterprise. I am an advocate of the mixed economy. I am trying to get at the people who see something good in privatisation when in fact down through the years plenty of opportunity was given to the other side of the economy without great results.

I hate repeating this. I have told the story in the Seanad so often that people are bored to death with it, but it is worth saying it once more. I do not know of any major input the private sector has made into the economy since I was born in 1920. I remember people standing around the corners of Dublin and actually going to their graves without ever having had a permanent job. I remember people picking up two or three days work a week. That went on over the years. I do not ever remember private enterprise helping. You could make the excuse that the [479] State was young. The State is no longer young and we are subsidising private enterprise through grants, tax incentives etc. but they just have not been delivering. Here we have got the State side of it delivering. It is time the squeeze was put on the private side to start doing something for us.

I understand the difficulty about competition. Unfortunately, competition is the name of the game we are in and, as an advocate of a mixed economy, I accept that competition is necessary. The only difference between competition in the mixed economy and competition in private enterprise is that with private enterprise the chances are that there would be war. There are checks and balances in a mixed economy.

The Minister has done a good job in bringing in this enabling legislation. We should try to get away from the ideological prejudices we had in the past and organisations should be geared to be of service as well as profit-making. We cannot have profit making in every respect. You have to look at the social aspects of something provided other good things come out of it.

I remember reading the Irish Congress of Trade Unions document on the jobs crisis in September 1984. They criticised the Government and said they seemed to be refusing to give a role to public enterprise in developing manufacturing industry because they did not want the public sector to compete with the private sector and because some State companies had been experiencing major financial problems Congress recognised that the problems of the existing enterprises must be rectified but these problems must be put in perspective. As Seán Lemass put it, State financed industries were set up only where considerations of national policy were involved or where projects were beyond the scope of or were unlikely to be undertaken by private enterprise. State companies have not been allowed to become involved in areas where they might compete with the private sector.

That is quite clear cut. He certainly [480] had his mind made up about it at the time. We all remember and respect him. We know the work he did in moving from a major agricultural to a mixed agricultural industrial economy. On the other hand some people did not want anyone to compete with the private sector. The private sector wanted to get in on the public sector. Each of them has a place. We should keep reminding the private sector that they are getting as big a handout having regard to the returns they give in employment etc.

When you take account of the 80,000 people employed in all the state and semi-State agency services and look at the PRSI, tax, etc., that comes out of that, you are talking about more than half of the workforce; yet a lot of the money goes to the private sector. We should stop screaming for privatisation. When we get a Bill like this we should appreciate it. Let us hope that the enabling provisions the Minister has put in position here through the ESB reporting to him will give a greater role to our State enterprises.

Mr. McDonald: Information on Charles B. McDonald  Zoom on Charles B. McDonald  I am very glad to have the opportunity to speak on the Electricity (Supply) (Amendment) Bill, 1987 mainly because in the constituency of Laois-Offaly, from which I hail, the ESB and Bord na Móna have been the greatest source of industrial employment in those two counties for years. There were over 5,000 energy-related jobs in the constituency. Unhappily, this Bill does not even mention the word “peat” or the contribution peat development in the midlands has made to the development of our country and our industries.

I suppose you could almost take it as a yardstick that, if you find difficulty in remembering the name of a chief executive officer of a semi-State organisation, or the name of the chairman of a State organisation, that particular outfit is successful and is not in trouble. The media specialise in all the bad news and people who hit the headlines in the main are fighting in some corner.

I would like to pay tribute to the board of the ESB and their chief executive, [481] Mr. Moriarty, who has given tremendous service to the country. The service the ordinary consumer enjoys from the ESB in the Republic of Ireland is second to none right across the world. A great contributory factor to that is the dedication of the skilled and semi-skilled people who man that service. I know we do not have great extremes of weather but, even when we have a power failure due to the occasional storm we get in the winter, the people in the ESB can always be relied on to have power restored with the very minimum of delay. Even last year it is worthy of note that they performed a similar type of function in an area in the UK. I read in some of the UK papers that they were highly appreciated for doing that. I am very glad that the ESB are diversifying to some extent. It is always encouraging if our successful semi-State companies see an opportunity to provide additional services.

In Lesotho I met ESB personnel who were on agency service there bringing a rural electrification scheme to that small kingdom with which we and our development aid policy are closely aligned. The ease with which the ESB can work with the citizens of those developing countries is remarkable and it contributes to their success.

I very much regret the loss of jobs especially in Laois-Offaly which, I suppose, we are getting accustomed to with the transfer of administration and transmission staff from Portlaoise and the closure of so many of our peat power stations in Offaly. The high rate of redundancy payments has concealed those job losses, job transfers, and lack of job opportunities for our young people. Those stop-gap measures are very short-sighted policy indeed. It is regrettable that an area which so many people looked to for secure high technology employment is now slowly being closed to school-leavers and young people.

Deputies and Senators had an opportunity a couple of years ago to visit the development in Moneypoint. The people in the ESB were very open and kind in affording us that opportunity. We saw the facilities there in the marina for the [482] importation of coal. It is a logical step and I compliment the board on seeing an opportunity to extend the scale of their operations which I am sure will benefit general consumers.

When we visited Moneypoint Members of the Oireachtas were interested in the danger of acid rain wafting across towards the south-east. I am glad to report that there are no drastic signs of any damage from acid rain even though the power station has been in operation for some time now. That development is a great engineering feat and I presume it is proving quite successful. I am glad the ESB opted for that development even though there was a small danger of acid rain in the midlands. It is a welcome alternative to the original proposal for a nuclear development in Wexford. We can rely on the board and management of the ESB to continue, with the co-operation of the workforce, professional, skilled and semi-skilled, to give us a top rate service. It is a useful trend, and one that we should welcome, that the cost of a unit of electricity has been reduced over the past few years.

I would like to pay a special compliment to the people in the ESB who volunteered to work for the development aid programmes which successive Governments have supported. The input of our people in the countries where they have undertaken those agency services is very much appreciated. It makes a tremendous contribution to the quality of life and to the living standards of the people in the countries where they work. I would like to compliment the Minister and his Department on this initiative.

Even though it is not mentioned in the Bill, I would like the Minister to give us some indication of what proposals the board, the Government and the Department of Energy have for the continuation of energy-related jobs and the generation of electricity in the midlands from the few remaining peat power stations. The industry started there very shortly after the Peat Development Act, 1936. The big problem with Bord na Móna was that the Act was too restrictive and they were only allowed to stay in the very narrow [483] role of peat energy. Their close co-operation and work with the ESB over the years contributed in no small way to building up the ESB as a very efficient organisation.

I would like to welcome this Bill and to avail of the opportunity to compliment the ESB. Perhaps the first of our semi-State organisations, as Senator Harte said, the late Paddy McGilligan displayed great foresight by providing that service at an early stage when development costs were quite low. This semi-State body have been very lucky in always being able to attract people of very high calibre to work for them. Because of their expertise the service they supply is efficient right across the country. Their maintenance service is so efficient that the ordinary consumers do not get any great hassle, or notice a loss of service. I would like again to compliment the Minister and the board of the ESB to wish this Bill success.

Minster of State at the Department of Energy (Mr. Smith): Information on Michael Smith  Zoom on Michael Smith  I would like to begin by thanking all Senators who contributed during the afternoon to the debate on this Bill for the general welcome which was extended to the provisions contained in it and for the very complimentary remarks made about the board of the ESB the management and the staff we all appreciate and acknowledge.

The Bill, as we said earlier, is all about empowering the ESB to form, take part in, or acquire companies and to engage in coal trading from Moneypoint. Building on the experience already gained by the ESB in consultancy services both at home and abroad, and also judging the difficulties the board have experienced in obtaining contacts in other countries because of the inflexibility of the existing legislation, the Government are satisfied that the legislative freedom contained in this Bill is absolutely essential and will enable the ESB to exploit, in a much better and more speedy way, the commercial opportunities which are available to them, particularly on the foreign front.

I want to stress that we have a major [484] asset in Moneypoint which is totally under-utilised. Not only are we providing that these facilities can be better utilised but they will have a direct impact on the consumer. Let us face it, the drop in international coal prices which has come about in recent years has not always been reflected in the price at home. Obviously, we are satisfied that the involvement of the ESB in this area will cause us to see a considerable reduction in coal prices across the board. Estimates are given that there will be a reduction in price of up to 20 per cent over time but, one way or the other, we have the combined effect of a fantastic facility in Moneypoint and a more competitively priced product to the consumer.

I will deal with some of the specific points made during the course of the debate. Senator Bradford seemed to doubt the veracity of my statement in my introductory speech when I said that the latest publication by UNIPEDE on electricity prices indicated that Irish prices compare quite favourably with those in other EC countries. I want to emphasise that this report on electricity prices has been produced by the industry themselves in Europe. It is the only authoritative report available. It is factual and there are no subjective views or comments in it. I think the Senator can be quite happy that, in relation to the generality of prices throughout Europe, the downward trend in ESB prices in recent times has brought about a very significant change in our placing in the league. I hope that will continue. The Senator was anxious also that we should have independent scrutiny of ESB prices. Any ESB price reduction or increase is obviously subject to the approval of the Minister. The fact that there have been a number of reductions over the past three or four years shows that the present arrangement is working satisfactorily. If we were to consider establishing an independent tariff review body, it would have to cover all other areas in the energy market, not only the semi-State but the private producers also. With the trends as they are, it appears that is not necessary at this time. time.

[485] The Senator also mentioned having targets for annual price reductions. We would be somewhat more ambitious in that we would not confine ourselves to just having an annual target but matters are reviewed every six months. Depending on various fluctuations, any opportunity, within any given time, however short, would be availed of to reduce prices.

There was some worry about excess capacity. Thankfully, we could hear the last of that in the course of the next ten years. We now have an annual growth rate of about 2.7 per cent with significant potential for growth in our industrial, agricultural and other spheres. If this trend continues — and we hope it will — the excess capacity will disappear by the end of the next decade and the ESB at that stage, assuming those considerations will work out, will again have to look to the possibility of a new capacity.

The question of ensuring transparent accounting was raised. The provisions of the proposed Bill allow the Minister to attach any conditions he sees fit to the establishment of subsidiary companies. The whole purpose of the Bill is to enable the ESB to set up companies in order to operate their ancillary activities on a separate basis to the core business.

Senator Hogan was anxious that the Government should require ESB accounts to be presented within a six month period after the end of the accounting year. In fact, this is an obligation on the ESB and all State companies. The ESB not only comply with that but, in most cases they present their annual report within a shorter period. This is to be welcomed.

The question of the treatment of accounts of the subsidiary companies in ESB accounts can be dealt with under section 2 (6) of this Bill. Some Senators were worried about the power of the board to lend money. The powers given to the ESB under this Bill merely give them the same commercial freedom private companies enjoy. The Minister still retains his statutory powers in relation to the control of the board and the policies which they pursue. There is no danger [486] that the ESB, in the light of the provisions of this Bill, would have the freedoms feared by Senators. On the basis of experience up to now, there is no reason to have fears one way or the other.

With regard to safety standards and the register of electrical contractors, the question of safety in electrical installations is at present the subject of discussions between the Department of Energy and the Department of the Environment, with a view to improving that area. I accept that it is a bone of contention and that there are quite a number of installations which were carried out many years ago which now require inspection and renewal. Of course, the main responsibility for that lies with the individual owner, but the Department of Energy and the Department of the Environment are studying this matter to find the best way to highlight it and get public awareness to ensure that we have properly updated installations.

Senator O'Toole referred to sections 8 and 9. He was extremely worried about the provisions relating to rates. Section 8 is a temporary measure, pending the introduction of rates for the ESB under the Valuation Act, 1988. The Valuation Act allows for global valuations of the ESB's property but it will take about a year or so to finalise the valuation of the ESB's assets. In the meantime, the sum levied by the Government is based on advice as to the likely liability of the ESB to rates. The question of apportionment of rates to be paid by the ESB is not a matter for the Minister for Energy, but for the Minister for the Environment who is examining that aspect.

I agree with Senator McGowan who stated that the local authorities have power, under the Planning Acts, to determine what a particular company might be liable for in respect of road damage because of their operations. I want to say to Senator O'Toole that the concept of obliging the direct payment of rates etc., to a local authority in the context of Moneypoint and developments like that could, in fact, have a very uneven outcome in the country as a whole. If you could envisage a county, for instance, [487] with very little development of that kind, they would obviously require some further support from the Government. The concept outlined by the Senator requires a certain refinement.

Senator O'Toole was also worried about the restriction on transport by road and rail. Many other Senators were quite supportive of this provision and it is mainly intended to protect jobs in other ports that all coal moved from Moneypoint will have to be moved by sea regardless of who owns it. However, in the future, circumstances may change. Like any legislation this will have to be viewed in the light of experience. The general attitude at present obviously is to maintain that facility and there is every reason to believe that with the congestion on our roads, this is the correct course. In addition it maintains employment at other ports.

The question of what other by-products might arise was raised. At present the ESB are only concerned with fly ash, a by-product that can be used as an additive to cement. There is no question of getting involved in the gas area. There is another company very directly involved in that area.

Senator Hogan was concerned about the ESB getting involved in activities which are directly related to their present activities and which have a potential for profits. Involvement in coal extraction from Ballingarry mines for instance, which is an anthracite mine, does not fall into this category and it would be inappropriate for the ESB to become involved. Senator McGowan was concerned about the question of expanding the range of involvement into the oil area and again it is not appropriate for the ESB to become involved in the oil industry or with its distribution. First and foremost, they do not have the required expertise. Secondly, the Irish National Petroleum Company are the State body charged with responsibility in this area and, as in relation to gas, we have been concerned to eliminate any potential overlapping in these services, and this [488] would obviously come under that precise heading.

The Leas-Chathaoirleach was concerned about the problems of Bord na Móna and the fact that we did not mention them in this Bill. I suppose it is always possible to find some area that was not referred to but, to treat the matter more seriously, the Minister for Energy is in the process of commissioning a consultancy to study Bord na Móna, to look at their future prospects and, in particular, the linkage and relationship with the ESB. This report is expected to be available in the course of the next six months and at that stage we will have the opportunity to discuss further the possibilities and, indeed, the difficulties which the Senator outlined in Bord na Móna and in particular the employment problems which any diminution of their operations would create for the midlands.

I have tried to cover a number of the points that were made. We will have a further opportunity to deal in greater detail with other contributions on Committee Stage. I would like to thank the Members of the Seanad for their co-operation and I look forward to a speedy passage of the remaining stages of the Bill.

Question put and agreed to.

Committee Stage ordered for Tuesday, 21 June 1988.


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