Eamon Ryan (Dublin South, Green Party)

I propose to deal with amendments Nos. 10 and 11, which I do not propose to accept. I made it clear on Committee Stage that while I had some sympathy in regard to the arguments being put forward on behalf of Endesa, the carbon revenue levy is being applied to all electricity generators earning windfall gains equally. We are doing this by levying all windfall gains earned through participation in SEM arising from the SEM committee decision requiring generators to pass through the opportunity costs to carbon.

Endesa purchased its generating stations in a private commercial transaction. This was a commercial decision made by a private sector firm. It has been stated that it entered the market on the basis of the existing market structures between now and 2012. However, when Endesa made that decision and purchased the generating stations, there could be no certainty as to the likely future price of carbon or, indeed, a range of other assumptions such as electricity demand.

Additionally, there was no certainty that generators would continue to be able to benefit from the SEM committee decision allowing them to pass on the opportunity cost of carbon to electricity consumers. Indeed, the SEM committee specifically stated that governments should take action to recover these windfall gains, hence the situation was clear when Endesa made its commercial decision.

It has been said that our treatment of the PSO plant provides a precedent for treating Endesa differently. However, I do not believe this is the case. The PSO plants are only treated differently because they operate differently from any other plant in the market. The bulk of their output is excluded because these generators do not benefit from the SEM decision requiring generators to pass through the cost of carbon. For the small proportion of their output which earns carbon windfall gains, the amendments we discussed earlier will levy that output.

Every generator benefiting from the SEM committee decision will now be subject to the levy according to its carbon emissions. Any preferential treatment to exempt one firm from the carbon levy would raise concerns about the equality of treatment for all generators in this levy. In this regard the impact of the levy on Endesa is likely to be very minor since its generation stations are rarely dispatched and hence rarely earn carbon windfall gains. Any levy liabilities borne by Endesa pale into significance when viewed against the sums already invested by Endesa and its stated future investment plans.

It should also be noted that investments in new power generation tend to have a projected lifespan of approximately 30 to 40 years. This levy is simply recovering a temporary windfall gain from generators over the next two and a half years so any effect it could have on investments with such a long projected payback is minimal.

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