Tommy Broughan (Dublin North East, Labour)

We were so burned and scorched by the Eircom experience — and Deputy Durkan will pose questions later this afternoon on that issue and the Babcock and Browne situation — that there is an almost visceral fear among the people we represent, who believe we should not allow our key electricity transmission, distribution and generation assets to become the playthings of venture capitalists.

Energia, which is part of the Viridian Group, is the most significant independent operator in the newly liberalised electricity market, although it operates solely in the non-domestic sector. At present there are seven independent electricity suppliers in the market providing electricity to an estimated 42,000 customers. This represents approximately 30% of the total annual electricity supply. The outcome of market opening has been very disappointing so far, especially in the domestic sector. Several weeks ago, for example, Airtricity announced that even though it had more than 8,000 domestic customers, it was leaving the domestic sector completely. Airtricity blamed the Commission for Energy Regulation for "regulatory failure" because the price the company had to pay for top-up power was, it alleged, unjustifiably high. Although the commission rejected this allegation, it launched its own investigation into electricity pricing and tried to explain why electricity market prices were higher from August 2005. Airtricity had also criticised the wind moratorium, which was lifted in early 2005.

So far, the promise of the all-island market has proved extremely disappointing for consumers. One of the key reasons put forward for liberalising the gas and electricity markets and the basis for the entire single European market project, was that increased competition and market opening would benefit European consumers and businesses in the form of lower prices and more choice. However, the Irish experience has been the exact opposite, with consistently increasing prices and little choice, especially in the domestic sector. Electricity prices have increased by an astonishing 61% in the past five years, the highest rise of any EU country. Prices for industry have increased by 41% since 2000 and many commentators have said that these sky-rocketing prices will threaten the competitiveness of the economy. Similarly, gas prices have increased by more than 35% for domestic users since 2003. Almost no natural gas users, apart from those in five or six towns in the west, have a choice of natural gas supplier.

Unfortunately, this Bill holds out no promise of lower electricity and gas prices from the summer of 2007 because it contains no provision for assessing consumers' needs and addressing the energy poverty that affects up to 750,000 citizens. This is an area to which I will return on Committee Stage.

At a recent meeting of the Joint Committee on Communications, Marine and Natural Resources I questioned members of the Commission on Energy Regulation. The only hope given by Commissioner Finn was that "prices in an all-island market would be lower than they would be if there were two separate markets operating independently". As I said at the time, and I hope my colleagues will forgive me, that was a response worthy of Dr. Garret FitzGerald. I remember being in Dr. FitzGerald's economics class years ago where he referred to the fact that the rate of the increase in unemployment was falling.

The proposal that the Minister will issue ministerial directives to the regulator and energy industry appears to offer little to consumers, given the reference to "general policy direction", which is very vague. If this proposal is modelled on the Minister's performance of directing the other main regulator, ComReg, the new power of direction for the Commission for Energy Regulation will be totally inadequate.

Recent media reports have shown that many families are now scrimping to pay key household bills, such as for heat and light. A survey in the Irish Independent showed that people are finding energy bills more difficult to meet and this is also made clear to Members who speak to their constituents. People in very poor households are forced to go to the Health Service Executive to seek supplementary benefit or to agencies like the Society of Saint Vincent de Paul. The estimates for Irish households which experience some level of fuel and energy poverty are frightening, ranging from 225,000 to 750,000 people. The Labour Party believes it is unacceptable for so many people to have to live without adequate access to basic provisions such as heating and lighting. Therefore, I will table amendments to Part 2, section 3 to ensure that serious measures are put in place to tackle this pernicious and often hidden form of poverty.

The President of the United States, Mr. George W. Bush recently described America as being "addicted to oil" in his state of the union address. If that statement is true of America, it is even truer of Ireland. We have exceptionally high, and increasing, levels of dependence on imported sources of oil and natural gas. Ireland's rate of total import dependency is extremely high, at 87%. What has the Government and the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, done about this? Nothing.

Forfás published a report this week on the problem of Ireland's oil dependency. It is clear from that report that Ireland has one of the highest rates of import dependency in the EU. Our per capita oil consumption increased by more than 50% between 1990 and 2002. Forfás is very critical of the absence of proper energy planning under the current Fianna Fáil, Progressive Democrats administration. The report also valuably reflects on exemplar countries like Sweden, to which I referred earlier.

With regard to section 8 which refers to emergency measures, oil is excluded. Why is that? If this is dealing with emergency energy, why does it only refer to gas and electricity? Where is the reference to oil, given that we hold so much of our oil stocks abroad? Perhaps we can return to this issue at a later stage.

There are clear advantages to natural gas over oil. It is a cleaner fuel source for generating electricity and is not set to peak and decline as early as oil. It has often been described as a "bridging fuel", bridging the gap between the decline of the current oil-based energy system and the development of a more diversified one. Our consumption of natural gas is increasing rapidly but in 2004 an estimated 81% of our natural gas was imported with only 19% produced from indigenous sources. In that context, Part 3 which deals with natural gas safety is very important and welcome. Sections 10 to 12 clearly define and provide for new functions for the Commission for Energy Regulation to regulate and invigilate natural gas installers, promote the safety of users and the public generally with regard to natural gas and certify natural gas installers, as well as outlining complaints procedures for installers and the relevant sanctions. We have had recent warnings about the dangerous inefficiency of the invigilation of natural gas and electrical installers. During the recent debate on the Stardust tragedy, it was pointed out that the electrical system in the Stardust was installed by unqualified people. More than 25 years later we are only now inserting this provision into law, which seems astonishing.

The European Commissioner for Energy, Mr. Andris Piebalgs, who recently gave a very interesting presentation to the Joint Committee on Communications, Marine and Natural Resources, has strongly urged the Irish Government to establish natural gas storage facilities to increase the security of our energy supply. In a recent reply to a parliamentary question that I tabled on 25 January 2006, the Minister stated that "The CER is in discussion with Marathon Oil Ireland Limited regarding the development of natural gas storage facilities at south west Kinsale." That is something I welcome but there is no reference to it in the Bill. There is also the possibility of storage at Kilroot in Belfast, when the all-island market is established. These are issues that should be pursued, given their importance to the energy security of the country.

It is also critical that the gas in the Corrib gas field is brought ashore, but this must be done in an agreed, safe and acceptable manner. By some estimates, the Corrib field has enough reserves to supply more than 60% of Ireland's natural gas needs for a decade or more. Mr. Peter Cassells, who has an excellent track record as a mediator and negotiator, is currently in charge of the negotiation process. It is hoped that a breakthrough which will be acceptable to the people of Rossport and the brave men who spent so much time in jail, will be brought forward so that this vital energy source can be secured, giving us a window of opportunity. It will allow this and the next Government a chance to put in place an all-round energy policy. Last year I introduced the Petroleum and Other Mineral Developments Bill which sought to ensure greater accountability to the Dáil in the regulation of exploration and production of natural resources. I hope the Minister will consider the Bill again for the regulation of other energy sectors.

The Bill proposes to allow the Minister to give ministerial direction to the Commission for Energy Regulation, CER. I welcome any mechanism whereby a Minister can issue policy directions to a regulator on important issues such as energy production and climate change. However, the track record of the Minister and his predecessor, Deputy Dermot Ahern, has been dismal with the CER and ComReg. The proposal is modelled on the Minister's performance of directing ComReg, making the new power of direction for the CER inadequate.

Although the new policy direction functions are being introduced, when I question the Minister on critical issues he has declined to answer on the grounds that it is within the CER's remit. Yesterday, I raised with the Ceann Comhairle the fact that a raft of parliamentary questions seeking to understand how the CER is invigilated were ruled out of order. It seems the regulator is an independent body with no reporting responsibilities to the people.

In the present volatile energy situation, I welcome the Minister's decision to introduce emergency measures in the event of a sudden energy crisis. Oil, critical to the transport sector, must be included in these measures. It makes up one third of our energy production and I hope Ireland can diversify from it as Sweden is attempting. In the meantime, contingency plans are needed.

The Minister claimed the electricity supply demand balance for the winter was tight but that the CER continues to monitor the situation closely. It is of some concern in light of the warnings being issued in Britain and our overwhelming dependence on gas imported through the British market that similar contingency plans were not in place in Ireland last winter. Considering the recent events between Russia and Ukraine over gas supply, Ireland is exposed to supply problems.

In recent years serious electricity disruptions have occurred in Birmingham, London, California, the north-east United States, Canada and northern Italy. These were primarily due to problems in the deregulated power markets. Keeping the lights on and powering and heating our homes and hospitals is the most critical service any Government can provide for its citizens. In light of the serious difficulties experienced in Britain and the wider European energy markets, it is imperative the Minister ensures adequate and sufficient measures are in place to cope with any sudden and potentially destabilising energy crisis.

I have some concerns about the measures in the amending of Part VIA of the Electricity Regulation Act 1999 that allow for the implementation of emergency measures. They do not provide for sufficient clarity that in the event of an energy crisis, the Minister will assume the direct leadership necessary to deal with the crisis. In reality, this appears to give the Minister power to direct the CER and the energy industry in the same manner as the policy direction sanctioned for the CER or ComReg. It seems vague and imprecise and does not spell out the lead role the Minister must take in the event of an energy crisis.

There are concerns that section 7, on the provision of the interconnector and the insertion of a section 2A in the original Act, allows for the involvement of merchant construction, competitive tender and the long-term interest of customers. We need to avoid the situation in which Britain is embroiled. Over recent winters the wholesale price of British gas was profoundly affected by the deficiency of the interconnector to Belgium. The British market was increasingly at the mercy of traders trying to get the best possible spot prizes. Ultimately, British households suffered with higher prices.

I welcome the belated appearance of the Bill, the all-island functions for the CER and the key safety provisions in electricity and gas. I especially welcome the provisions on combined heat and power and liquified natural gas. The Bill, however, is an overall disappointment. On the Order of Business, Opposition spokespersons have constantly asked about the Bill's progress. We were led to expect a fundamentally new vision for energy policy with targets on energy consumption efficiencies, renewable energy and the challenges of climate change and the depletion of oil and gas resources. None of these issues is tackled by the Bill.

The Green Party spent much of its recent conference criticising the Labour and Fine Gael parties for not espousing a joint energy policy with the Government parties. Obviously, there are strategic difficulties in that the Government has had nine years to prepare a fundamental energy policy but has not. Why should the good ideas from our parties be the saviours of the Government? I hope the Green Party will work together with the Labour and Fine Gael parties to put forward a sustainable and alternative energy vision and to present it to the country in the early spring of next year. Whatever happens in the next general election, I hope all parties recognise the realities of energy production and work together in that regard.

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