Peter Kelly (Longford-Roscommon, Fianna Fail)

This is a wide-ranging Bill which, when enacted, will have a vital role in driving forward a progressive energy agenda in a new global energy landscape with increasing demands on fuel resources. Key features of the Bill include a move towards all-island markets. The Bill also deals with electricity interconnections. East-west and North-South electricity interconnections are significant elements of energy policy. Both provide strong physical links with Northern Ireland and the United Kingdom and will integrate Ireland into wider European markets.

The Bill removes an impediment in law by facilitating regulated electricity interconnection not owned by the ESB. It also empowers the regulator, with ministerial consent, to secure interconnector builds by various means, including competitive tendering, direct authorisation or by the transmission system operator.

This Bill will provide the legal basis for the energy regulator, the Commission for Energy Regulation, to engage in the development of an aIl-island energy market with a milestone of 1 July 2007 for a single electricity market North and South. The aIl-island market will remove market distortions and minimise the wholesale cost of electricity. It will also create a more attractive location for new electricity generation investment and help to improve the security and reliability of electricity supplies throughout the island.

It is vital to ensure that both communities and economies on the island have access to safe, secure and sustainable energy supplies obtained through competitive energy markets. There is no doubt that this challenge can be met more effectively and to our mutual benefit if we work together.

This is especially fitting when considered in the context of the regional approach to the development of energy markets being pursued as part of the European Union's drive to create an EU-wide internal market in electricity and natural gas. The creation of an all-island energy market involves collaboration on issues ranging from improved interconnection, competitive markets and harmonised trading arrangements through to generation adequacy, security of supply, sustainable energy and energy efficiency measures.

A key priority is to establish all-island wholesale electricity trading arrangements. Other priorities will include the establishment of an all-island gas market in line with the commissioning of the infrastructure. It will also be vital to maximise the benefits of environmentally sustainable energy, from rapidly maturing wind generation and the combined heat and power business through to the growing rural biomass energy industry and the future promise of substantial energy from the sea.

There is no doubt there is extensive and wholehearted support for the all-island energy market. The issues involved are intricate and sometimes competing and not all of the benefits will be immediately achievable. However, the long-term reward will be a market that is much better placed to meet the future energy needs of the whole island. Given that a cross-Border energy market already exists, albeit in an nascent form, there is an acknowledged requirement that we ensure policy developments North and South are progressed in ways which advance the goal of improved economic and energy supply benefits for both parts of the island.

We must also act to ensure policies are developed to exploit opportunities for enhancing the value of the energy industries on the island through external links with Britain and continental Europe. The energy policy agenda must be widened beyond traditional market development issues to take account of national and international concerns with combating climate change. More particularly, there is a requirement to follow renewable energy and energy efficiency opportunities where the benefits can be enhanced by acting on an all-island basis.

Market structures need to be integrated and infrastructure investment secured to improve islandwide efficiencies in the sector. We also need co-ordination in the activities of the regulatory authorities and transmissions system operators. This must lead to unified regulatory and system operator arrangements for the island as a whole which are geared to the delivery of measurable benefits. Energy issues are complex, frequently interconnected and often related to long-term investment decisions. There are also differing stages of development between the electricity and natural gas markets and infrastructure. This means that achieving the most advantageous outcome for the entire range of energy policy issues will be a protracted process requiring the support, dedication and active co-operation of all stakeholders if the benefits of the all-island market are to be secured.

I know that Ministers North and South have confirmed that any policy, legislative, structural, institutional or resource issues that may unfavourably affect the development or effective functioning of the all-island energy market and which may arise in the course of implementing this strategy will be carefully examined and addressed, in conjunction with the relevant agencies. The aim will be to pursue complementary actions as far as possible.

Clearly, the test by which the value of a fully integrated all-island energy market should be judged is that energy users in both parts of the island are better off than they would be in two smaller markets which are mutually supportive good neighbours but which trade together opportunistically rather than systematically. The potential benefits of a mature all-island energy market should include a larger single market with competitive energy prices. There should be open and transparent competition at all levels in the marketplace and for all energy sources, including combined heat and power and renewables. It should also mean a more stable and attractive investment location and provide a boost to the competitiveness of the wider industrial sector.

There will be greater security of supply, an integrated infrastructure and the sharing of a more diverse energy mix. Greater energy efficiency will undoubtedly result in longer term savings through rationalisation of functions in regulation, system operation and transmission asset planning and ownership. It will also facilitate greater consumer choice of supplier of energy or energy services and enhanced organisation of energy research through the emergence of an all-island network of academic and industry expertise.

The Bill includes provisions to further enhance the safety of energy consumers and the public, ensuring Ireland continues to meet with international best practice in respect of electrical and natural gas safety. The regulator has been given robust new safety functions, which include the regulation of electrical contractors and natural gas installers. The regulator has also been granted additional powers to ensure rigorous enforcement, including, for the first time, the power to designate electrical and gas safety supervisory bodies, as well as the power to establish standards for training and registration, introduce certification schemes and prosecute rogue installers.

Other key features include the provisions enabling the Minister to introduce the full opening of the gas market by ministerial order in advance of the EU deadline of 1 July 2007. This will extend the benefits of liberalisation previously enjoyed by industrial and commercial consumers by enabling all natural gas customers to shop around for suppliers and get the best value. The Irish gas market has been undergoing a process of liberalisation since the enactment of the Energy (Miscellaneous Provisions) Act 1995. This process is being driven by both Government policy and developments at EU level. The enactment of the Gas (Interim) (Regulation) Act 2002 in April 2002 saw the establishment of independent regulation for the sector. That Act provided for increased competition in the natural gas supply market.

In July 2004, the then Minister for Communications, Marine and Natural Resources, Deputy Dermot Ahern, liberalised the natural gas market by making all non-household customers eligible to switch suppliers.

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