Noel Dempsey (Meath, Fianna Fail)

The all-island energy market will also serve as a stepping stone towards the development of European regional energy markets. To ensure that Ireland reaps the benefits in terms of competition and security of supply from market integration, the Government has committed to enhanced physical interconnection with our neighbouring energy markets. As a result of this policy, electricity interconnection capacity with Northern Ireland will be doubled by 2012. The Government also approved an Exchequer contribution of €12.7 million towards completion of the gas network in Northern Ireland, which will include an extension of the natural gas pipeline from Belfast to Derry and construction of a North-South interconnector. The State's contribution recognises that cross-Border gas infrastructure is an essential part of the agreed North-South aspiration of an integrated all-island energy market.

On foot of a recent Government decision, a new 500 MW east to west electricity interconnector between Wales and Ireland will be completed by 2012. In its progressive decision to secure the construction of the east to west interconnector, the Government noted the advice of the Commission for Energy Regulation on the potential benefits to Ireland of interconnection with the UK market, which include enhanced security of supply, the promotion of competition in the electricity supply market and integration of Ireland's small, and largely isolated, electricity system into the wider European electricity market. East-west interconnection will afford Ireland direct and secure access to the UK and EU mainland energy markets. It will also offer potential opportunities for export of Irish wind generated electricity and to assist that sector.

It should also be noted in this context that the Government has made specific provision for electricity interconnectors in the Planning and Development (Strategic Infrastructure) Act 2006. This Act provides for a more streamlined planning procedure for a range of strategic infrastructure developments, including energy infrastructure such as interconnectors. The Government policy of interconnection and integration with neighbouring markets goes hand in hand with its progressive approach to the liberalisation of the Irish electricity and gas markets.

In 2005, we introduced a statutory instrument, SI 60 of 2005, which provided for the implementation of a suite of liberalisation measures, including the full opening of the retail electricity market in Ireland. This occurred on 19 February 2005, when all 1.8 million customers became free to shop around for their electricity supplier. This date is well in advance of the July 2007 deadline for full liberalisation of the electricity markets as set down by the EU in the Second Electricity Directive.

To underpin and accelerate electricity market liberalisation, I asked Deloitte & Touche, in the context of preparing the Green Paper, to undertake a review of the Irish electricity sector and provide a comprehensive in-depth analysis of institutional arrangements and market structures. It found that the size of the Irish market is a significant factor as is the dominance of ESB arising from its ownership of a large and diverse portfolio of plant and particularly from its ability to set prices.

The Deloitte & Touche report states that without changing the current structure, we will continue to face difficulties in attracting new entrants to develop competition and choice for consumers. The market will evolve slowly without a competitive downward pressure on prices. There will be few opportunities to break the current cycle of market evolution. None of the Fine Gael speeches referred to this matter. This scenario is not in the interests of market players or consumers, nor is it in the interests of the competitiveness of energy costs and the economy. The Deloitte & Touche report is a useful contribution to the energy debate and the analysis is incorporated in the Green Paper.

The Government recognises the fundamental role played by the ESB in the economic and social development of the State and the strategic value of maintaining the ESB as a strong and commercially viable company into the future. The retention of natural monopoly networks in State ownership is also a core policy tenet for the Government. What the electricity market needs is more competition, more innovation and more choice for consumers. Threatening to sack the regulator, as Fine Gael has asked me to do tonight, will not enhance the market. It will do nothing for confidence in the market and certainly will not increase competition.

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