Noel Dempsey (Meath, Fianna Fail)

Structural reform is necessary in the interests of the market, the consumer and the ESB. Enhanced competition in generation will act as a catalyst for improvements in operation and maintenance costs, productivity, availability, flexibility and innovation. The ESB's dominance in mid-merit price-setting generation increases the potential for abuse of market power and thereby does little to incentivise investment by independent players. I am very conscious that new players need to be encouraged to invest in this market segment to redress this position. I am confident that the establishment of the single electricity market, with its proposed use of a capacity payment mechanism, helps the process of beginning to deal with this issue in a positive way.

I am also proposing the option of creating a "land bank" of suitable power generation sites to offer a predictable pattern of access to suitable generation sites in Ireland for new entrants to this market. This would remove a significant barrier to new entry and has been used successfully elsewhere to encourage new entry. This option would see all suitable sites being effectively controlled by an independent body, such as CER or the TSO, which is EirGrid, and being made available to new entrants to the market as necessary. These new structural and institutional arrangements are important features of the evolution of a truly liberalised and competitive electricity market in Ireland. In this context I also welcome the establishment of EirGrid as a fully-fledged legally independent transmission system operator on 1 July. This is another critical milestone in the process of opening up the Irish electricity market in line with Government policy and with the EU internal energy market.

The Government has embarked on a process of opening the natural gas market progressively. As of 1 July 2004, all industrial and commercial consumers are free to shop around for their own natural gas supplier. The final stage in this process, the full opening of the gas market to the domestic level, is provided for in the Energy (Miscellaneous Provisions) Bill 2006, which is currently on Report Stage in this House.

I have already outlined the challenges faced by all EU member states and the wider international community in dealing with increasingly volatile international fuel prices. While it is clearly not within the power of any one country to impact upon this market volatility, we can take steps to mitigate our exposure to fuel price fluctuations through enhanced fuel diversity and energy efficiency, and this will be addressed fully in the White Paper.

The Government has a long-term and ongoing commitment to encouraging and supporting indigenous fuel sources, exemplified by the public service obligation imposed on ESB to utilise peat for power generation. The Government is committed to progress a full range of policy options to ensure that Ireland is not excessively exposed to any single fuel or supply source. The Green Paper outlines a number of options, including co-firing, clean-coal technology and a significant expansion of the use of renewable sources. While the Green Paper sets specific and ambitious targets, they are ultimately achievable for the proportion of electricity consumption the Government aims to have generated from renewable sources by 2020. We have proposed a 30% target, which represents a doubling of the 2010 target. We have set about supporting this objective by the new €119 million renewable energy feed in tariff, which is a vital component of Government policy, representing the most important incentive mechanism for the construction of new renewable energy generation. The REFIT scheme critically underpins the ambitious targets we have set. As outlined in our programme, we are also committed to the use of wind and tidal energy.

We can show real evidence of practical actions in other areas on the renewable side, including the comprehensive range of grant supports to develop greener homes, commercial bioheat, the CHP and the biofuels initiative. The Government recently launched a major national awareness campaign focusing on energy efficiency, which is positive.

The Fine Gael motion calls on me to do two things, to initiate a full review of the regulatory arrangements which approve price increases for electricity and gas and to introduce legislation to enable the Oireachtas to compel the CER to instigate a review of prices at any time so that price movements can be factored into the cost of energy. Last April Fine Gael published what purported to be a national plan for alternative energy as its response to what it sees as the energy crisis that faces us. That threadbare review makes no mention of regulation.

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