Eamon Ryan (Dublin South, Green Party)

I thank Deputies for their contributions and the indication of general support for the provisions of the Bill. As Deputy Burke says, it is a short but critical Bill that will provide Bord Gáis Éireann with the ability to increase its capital base from the current level of €1.7 billion to €3 billion.

Deputy Burke's last comment related to the cost of energy in the economy and the clear recognition that in order to have a competitive advantage we must ensure our prices are competitive and as low as they can be, given the variation in and volatility of international fuel prices. In the past year we have seen volatility in gas, coal and oil prices which has caused difficulties for all players in terms of the price of energy in the market.

With regard to gas supplies — this brings me to the point made by Deputy Coveney — I hope the significant reductions we have seen in recent times will mean that the price increase signalled may not now take place. We should be into the realm of reductions such has been the consistent reduction in the price of gas. However, this is a matter on which the energy regulator must decide and adjudicate. The apportioning of fuel costs and the models used are in the hands of the regulator and it is up his office to bring down the cost where possible.

The need across the economy for us to have a low-cost competitive energy supply frames my response to the number of Deputies who raised the possibility of the gas network being extended to a range of new towns. I fully understand the impetus behind each Deputy's request, including for Wexford, the Leas-Cheann Comhairle's county. I understand the reason counties and towns seek the extension of the gas network as it may facilitate the development of other industries in these areas. However, the primary responsibility of both the regulator and the companies involved is to be competitive and keep prices as low as possible. In that regard, any decision to extend the network must be based on an economic case that demonstrates dthat there is cluster demand and a viable business case in terms of the increased cost involved in extending the network.

Deputy McManus asked about the implications the Corrib project may have for gas prices. The project should have an effect in reducing prices, but this will be marginal because we are, ultimately, connected with the UK gas markets which are, increasingly in turn, supplied by Norwegian and more distant gas supply sources. I hear from people who have a knowledge of the market and how it works that an increased supply to a market where supply is constrained has the overall effect of dampening down prices. Such a gap between supply and demand in recent years has driven prices higher. Therefore, anything that helps to increase supply gives a cushion between supply and demand. Even if it only has a marginal effect in terms of overall supply, it has a much more significant effect in terms of price reductions. The availability of gas from a number of supply sources, including the Corrib gas field, would have an effect beyond the actual flows with regard to the overall market in reducing prices. This is a factor on which all parties in the House are of a common mind. We agree that we need to develop our natural resources, in this case our gas supplies.

Deputy McManus asked about the taxation of any such gas supplies. It was made clear in August 2007, when I was able to obtain Government approval for a change in the tax terms on profits from our natural resources, that the new tax rate that would apply — up to 40% on the most profitable fields — would only apply to new licences. The arrangements for existing licences remain as they were when granted. The State does not revoke or change contracts halfway through. To do so would have significant implications for the reputation of the State across a range of businesses. Even ordinary householders would understand this, as the conditions would be similar in the domestic environment. If a householder made a contract with a builder to build an extension or a new house and then changed the terms half way through the process, their reputation would be damaged. I was glad, on behalf of the State, to be able to increase the taxation terms in order that any future licence arrangements we enter into would give a greater return to the country.

Deputy Coveney raised a number of points with regard to the development of Bord Gáis. I agree that in its history it has shown itself to be a well managed and effective company which has made proper strategic investments. I also agree with him on the number of new strategic directions that are appropriate. As Minister, I support them. The development of its capabilities as a dual fuel supplier where it may bring competition to the supply sector, be able to provide householders with billing and other arrangements for both electricity and gas supplies and bring about efficiencies brings real benefits to the householder. This will benefit the electricity and gas markets and is something I very much support.

I support the ongoing expansion of Bord Gáis Éireann into the electricity area and its ambitions in that regard, particularly in the development of new renewable technologies, which I believe provide a real opportunity for expansion in our electricity system.

I also agree with Deputy Coveney that the development of the company on an all-island basis was a strategically correct decision. It allows the company to achieve greater efficiencies and to derive some of the cost benefits that arise from operating on an all-island basis. Moreover, the gas and electricity markets here now are determined increasingly by east-west relationships. Our two-line interconnector with Scotland is a crucial item of infrastructure and highlights our utter dependence on the UK market, because more than 95% of our gas is imported from that supply source. Moreover, the UK in turn has gone from being a gas exporter a mere four years ago to being a country that this year relies on imports for approximately 40% of its needs. Consequently, we must recognise, when considering any gas future, how dependent we are on international markets and must protect our position accordingly. I also agree with Deputy Coveney regarding the broader strategic points he was making. It is important that Bord Gáis Éireann and other parties here should develop their gas storage facilities, which will protect us from any future gas supply shock.

I also agree with him it is appropriate not to limit the development of this new energy future in respect of renewable generation to the generation side only. There is great potential for us to develop our transport system in a way that accommodates and benefits such a renewable electricity sector by using electricity as a primary fuel supply in addition to gas-powered and other vehicles. I look forward, as the Minister with responsibility for energy, to working with the Minister for Transport to turn Ireland's transport system greener as we switch to sustainable long-term fuels.

This will require strong companies in both private and public ownership. I perceive publically and privately owned companies to have similar flexibility and ambition in respect of how they manage their affairs, which is appropriate and correct. The Minister's job is to set the overall policy context and then to leave management and boards to use their own skills and expertise to develop business opportunities that will benefit the people in the long run. I have given clear direction that the development of energy efficiencies and renewables constitutes the crucial energy policy direction I wish this State to take. I look forward to companies from both the private and public sectors taking up the challenge to supply the energy needs of the Irish people. I commend the support from both sides of the House for this Bill because I believe that by providing proper borrowing limits for Bord Gáis Éireann, Members are helping it to achieve these two crucial objectives.

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