Finian McGrath (Dublin North Central, Independent)

I am grateful for the opportunity to contribute to the debate on the Bill. Energy and electricity are key issues, particularly given our vibrant economy. All Members should inform themselves on this issue and engage in the debate on the legislation. Before addressing the details of the Bill, I propose to put down some markers. Customers and taxpayers must be given priority in the electricity and energy areas. I urge the Minister to put people at the heart of the legislation.

The Minister of State, Deputy Browne, may have two quotas in County Wexford but he should listen to taxpayers' concerns about high energy costs, particularly electricity. Recent significant increases in energy prices are not acceptable to citizens, especially elderly people, and industry. Consumers, who have supported the ESB for generations, are up in arms about the price increases.

The issue of electricity must be handled in a sensitive fashion. It should not be treated in the manner Dublin City Council and the management of the Dublin Port tunnel are treating the water issue on the north side of Dublin. It is bad enough that residents in Fairview, Marino and Santry must put up with damaged homes but tomorrow night at 8 p.m. their water supply will be switched off until 6 p.m. on Sunday, 3 December. This measure is being taken to facilitate works in Fairview Park as part of the Dublin Port tunnel works. It is unacceptable that the residents of Fairview, Clontarf, Raheny and Killester should be without water for two or three days. The decision is a further example of management failure, not as the latest term would have us believe, "systems failure". I call on the Dublin city manager and the Dublin Port tunnel management team to look after the residents in question and treat them with respect.

The main provisions in the Bill are to establish a single electricity market, SEM, committee to enable efficient decision-making on single electricity market matters; establish a framework for the performance of the functions of the Commission for Energy Regulation relating to the single electricity market; provide for information sharing between the various parties to the SEM to facilitate the effective operation of the market; make provision for the objectives of the Minister and the CER with regard to matters which affect or are likely to affect the SEM; provide a licensing framework for the establishment of an SEM market operator to carry out the trading and settlement functions of the market; establish a licence modification process to ensure existing and new licensees can trade in the new market; and establish the terms and conditions of appointment of the SEM committee and provide for the way it transacts its business. These are the core issues addressed in the legislation.

Section 5 inserts a new section 8B, which provides for the drawing up and publication of procedures and working arrangements in respect of the SEM. Section 7 amends the Act of 1999 by the insertion of a new section 9B. This section will provide for the functions of the CER relating to the SEM. These functions will include the establishment of the SEM, together with the procedures to be adopted with regard to giving effect to the market and the making of regulations for the purpose of trading in electricity on an all-island basis, including a trading and settlement code. Section 7 also requires all licensees to make available all the electricity they generate or that is generated by them for supply for trading in the SEM.

Provision is made in this section with regard to the appropriate threshold to be applied in relation to different classes of licensees. Section 11 provides for the establishment of a market operator to carry out on a day-to-day basis the trading and settlement of the new market. The market operator function will initially be jointly carried out by the transmission system operators, North and South. These sections are the core features of the Bill.

The regulatory proposal is the regulatory impact assessment, RIA, for the primary legislation that will facilitate the introduction of the single wholesale electricity market between the South and North. It sets out the strategic focus and intended effect of the establishment of the SEM on the island of Ireland. The SEM entails the development and enforcement of new all-island arrangements for trading of wholesale electricity. This will be of vital importance to the development of electricity supply on the island.

Politicians, North and South, must give a lead on this issue. It saddens me to hear Unionist spokespersons such as Nigel Dodds or Jim Wells argue against the economic benefits of an all-Ireland economy. A cross-Border electricity body makes common sense because it will benefit users. The leaders of unionism must wake up and recognise the sensible aspects of the British-Irish Agreement, of which this Bill is one element. They have nothing to be afraid of and the DUP should show leadership on this issue. Rather than stabbing him in the back, party members should support their leader.

I urge Unionists to come into the real world and work with everyone on this island. We want to accommodate and respect diversity and understand each other. Yesterday's findings by the sub-committee on the Barron report demonstrated that we never want to return to the violence we experienced on this island for 30 years. I ask the leaders of unionism to consider the sensible options available to share power and resources, including energy. Years ago, anyone who argued in favour of cross-Border economic co-operation was dismissed. It is now an important argument to make.

The objective of the legislation is to establish a single wholesale electricity market for the North and South, which will facilitate improved competition and investment opportunities by expanding the market. Why would anyone oppose such a development? This market will facilitate the exploitation of efficiencies and economies of scale in areas such as generation reserves, plant mix and fuel usage and will introduce more transparent and equitable trading arrangements. The all-Ireland dimension makes economic sense. Many of our friends in the North must face economic reality. The North cannot depend permanently on Britain. Let us work together on this island to develop our resources in the national interest.

A large number of small industries are being hammered by high energy costs and the problem must be addressed. In my constituency, for example, the Cadbury factory provides excellent employment for people on the north side of Dublin, particularly in the Coolock area. It and many other companies, notably small businesses, have raised questions about high energy costs. We must support them when it comes to electricity costs. If electricity costs are low, they will be more competitive and employ more people.

According to the explanatory memoranda, the benefits to be gained from the effective functioning SEM include more efficient generation dispatch, leading to lower cost of generation; a larger single wholesale market, facilitating greater economies of scale and scope; energy prices set competitively, although we must guard against any 3% increase; a predictable and stable trading system; increased attractiveness for generation investment and supplier entry; increased security of supply; integrated system planning leading to more robust infrastructure on the island; and shared costs of maintaining fuel diversity.

It is important that we consider the economic analysis. The memorandum states:

The overall findings of a draft Cost-Benefit Analysis to assess the long-term economic impact of the Single Electricity Market (SEM) are positive. The analysis set SEM start-up and running costs (€199m NPV) against quantification of efficiency/system benefits (€346m NPV) resulting in an estimated net social benefit of €147m NPV over ten years. Over twenty years, the net social benefit is estimated at €428m NPV.

With regard to the distribution of benefits, the benefit share is split roughly even — 54% Ireland/46% Northern Ireland and mostly accrues to customers North and South — roughly 80/20 split customers/generators.

In addition to the quantitative benefits, the study suggests that a range of other benefits will accrue from the SEM, that are not amenable to objective quantification, including improved competition, reduced market power, environmental savings and enhanced effectiveness of regulatory institutions from pooling of experience.

In addition to the Cost Benefit Analysis, which takes a long-term view of SEM impact, a study on the short-term price impact was also undertaken. The findings of the analysis suggest that, at current fuel price projections, electricity prices could rise by between 0.3% and 3.0% in Ireland in the first year, 2008. The impact on prices in 2009 could be somewhere between a reduction of 1.9% and a slight increase of 0.7%.

Economic analysis is important when dealing with this legislation but the important thing is to ensure the customer lies at its heart. We must consider the effect this will have on the economy and on workers. The country is mostly working now, although there are still areas of high unemployment which we must deal with. There are still blackspots and areas of disadvantage and we must ensure that now we have the extra resources, priority is given to those people and investment directed into these areas. We all have them in our constituencies.

This morning I was in Coolock to see the fantastic new plan for Cromcastle, which will demolish the maisonettes and regenerate the area around the Northside Shopping Centre, taking in Coolock and Cromcastle, with new housing and factory units and a better shopping centre. We must ensure that electricity costs are kept at a minimum so people can develop to their full potential. I wish the people well and commend those involved in this project, particularly those providing proper housing. For many years, parts of this area were devastated by drugs and anti-social behaviour. When I see people coming up with creative solutions to problems I welcome them and support them. Even if people on the opposite side argue against them, I will challenge them in this House and outside because we must prioritise and put our money into disadvantaged areas. Part of that strategy is economic.

There must also be an educational strategy. There is no point turning up in these areas when the kids are ten or 12; we must get in there when they are at an early age and invest in pre-school education. Breaking the cycle of social and economic disadvantage can be achieved through education, quality housing and decent jobs. We can already see the benefits for those who have gained in recent years, who had been long-term unemployed but who now have a real job and a sense of self-esteem. Many of these people are making a massive contribution, often setting up their own small businesses. I commend those who are taking risks to achieve this. The private and public sectors are both involved. We must oppose those elements in the Government who think the whole world's problems will be solved by the private sector.

I welcome this debate. This is an important Bill and we must put the customer, the taxpayer and the citizen at its heart.

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