Eamon Ryan (Dublin South, Green Party)

I welcome the opportunity to speak on the Bill. I note that SONI is the acronym for the transmission operation in Northern Ireland, while CER is the equivalent here. We could call it the "Sonny and Cher Bill", which would be an easy way to remember it, as we have so much legislation covering this sector. I commend all those who have been involved in the negotiations to get agreement on the Bill. It is of major significance not just for the country's future energy policy but also as a general move towards reaching agreement on issues from which both parts of the island can benefit. It must have been, and may still be, a difficult negotiating position to begin with two transmission operators, two energy regulators and two Departments. They say that something should never be designed by a committee but those involved seem to have done their work well in this case. Hopefully, we will be able to legislate in time to have a single electricity market operating by November 2007. That is a testament to their efforts.

I imagine that matters have not necessarily been fully completed yet because the "i's" must still be dotted and the "t's" crossed. That is only part of what we are engaged in now. The broader energy and electricity issues to which Deputy Broughan and others referred will still come into the equation before we finally reach agreement to establish the whole process. I am speaking about the issues of perceived dominance and competition in the market. I respect and understand Deputy Broughan's analysis that the attempted introduction of competition in the electricity market would seem to have been combined with what can only be described as a remarkable increase in prices. There is an argument for going back to a single State-controlled operation, such as we had in the 1990s and before, when we seemed to have cheaper electricity. I am not too sure that is possible, however, on a number of counts. For one thing, it is not possible under the EU arrangements to which we are committed. Market opening is something we are mandated to follow as EU members. To a certain extent, the new energy future we are looking at — in terms of the need rapidly to develop new energy resources, including new electricity supplies — may work better in a climate where we are encouraging innovation by new people in the market.

I am afraid that in my discussions with senior ESB management, both at the Committee on Communications, Marine and Natural Resources and elsewhere, I have seen no commitment to the new renewable energy future we require. There has been no expenditure on research and development in that area and no development of any real consequence in new energy supplies, such as wave or tidal, although the ESB has been engaged to a certain extent in the wind energy business. The ESB was awarded one of the contracts for offshore wind development on the Kish bank, but it subsequently backed out of the project. The project is now languishing when we should be leading the world in that sort of new energy technology.

It may well be in our interests to have a more competitive market. Given the political circumstances in which we live we are mandated to open it and having a half open market simply will not work and will bring the worst of both worlds. Either we revert to a centralised, State controlled system with one company as predominant supplier or we open it entirely. Going halfway could leave us in a position where we cannot attract new entrants or where the cost of attracting new entrants pushes the price up. The dominance of the ESB in this regard can be managed in different ways and I am not averse to the Government's solution of divesting the ESB of some of its key infrastructure, sites where new power stations can be built, which can be held in State ownership.

I agree with Deputy Broughan that nobody is arguing that vital transmission assets should not be in State ownership. Even the sites on which power stations can be built are, in a sense, an extension of the transmission network and the solution could be leasing from the State of such sites on a long-term basis for operation by individual companies. I do not agree with Deputy Broughan that today's announcement from the Commission for Energy Regulation, CER, has resolved this issue.

My cursory glance at the press release tells me CER has given permission for Aghada but I do not believe permission has yet been given by the Government. Having heard the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, speak on the issue during Question Time last week, I do not believe the Government will be satisfied with the trade off between the closure of Tarbert, other peat plants and small emergency generation plants and the building of a plant at Aghada. I understand negotiations will centre on further reductions in the stations at North Wall and Great Island. I cannot be certain on particular stations but the general principle did not relate only to the closure of emergency generation stations, or to Tarbert, which was already shut down. There are tough decisions facing the Government in the next six months.

The answer the Minister, Deputy Noel Dempsey, gave to my question last week indicated he expects this issue to come to a head by January as there will be a submission from the ESB or its unions to the Government regarding the Green Paper on electricity and a specific proposal on the leasing of sites will be a high priority. My understanding of the Minister's answers to our questions was, unless an agreement was reached on this, the Government would not give permission for the State company to invest the necessary money in Aghada. I would be surprised if today's announcement by CER sees the issue resolved.

I am concentrating on this because it is an issue that may concern our neighbours in the North as they enter the single electricity market. This matter no longer solely concerns consumers here in terms of a price competitive market but it is of interest to consumers in Northern Ireland as they will be entering such a market. While the dominance of the ESB will be reduced in a single electricity market it will still be in a strong position if business continues as usual.

Another solution I propose, for a variety of reasons, is that ownership of the transmission and distribution grids be maintained by the State, but in separate State ownership. This would give clear differentiation and create fair market conditions where one operator, by dint of owning the transmission network, will not have an advantage in an electricity market where they are competing together. The logic of this position is clear and may help in the reduction of electricity prices.

Another concern I have, in terms of competition, is that we concentrate too much on the ESB, and Deputy Broughan is correct in this regard. There is now a second major player and I have concerns relating to Veridian, the transmission operator in the North, and the development of a duopoly in this single market, just as Vodafone and O2 have stitched up the Irish mobile phone market. It would be easy for two companies to manage the market in such a way that they gain super normal profits while the consumer experiences higher prices. This is something we must ensure does not occur in the electricity market.

I welcome this development not only due to the North-South aspect but because it seems we are moving towards a comprehensible market mechanism, at least for the average lay person like myself, though I am sure it is incredibly complex. In comparison to the local node pricing mechanism that was considered previously, an impossibly complex market model which seemed to me an exercise to entertain the highest astrophysicists, this, at least, has the benefit of being a system in which there is confidence that does not require a massive amount of modelling to see how it will work or the despatch arrangements that will apply in the end.

As we move towards a single electricity market we should also look towards a single energy policy between North and South. If there are competitors in the market and we are operating different support mechanisms questions will be raised in the long run. I look forward to the day the British Labour Party or the British Government advises us on energy policy rather than Fianna Fáil because they appear to be doing a better job. They have initiated many innovative mechanisms including smart metering which seems to have been ruled out by the regulator in this country, though it applies north of the Border. The British Government is moving towards a distributed electricity transmission system which is, again, something the Government and regulator do not appear to want. They have moved towards a strong and consistent support mechanism for things like offshore wind which has a rock system. We have no support system for offshore wind and despite being the much vaunted island nation with so much wind our Government does not see fit to support such proposals. Perhaps an all-Ireland energy market will bring benefits to this country such as wisdom from north of the Border being imported down into Fianna Fáil, if there is no electoral change in the mean time.

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