Fergus O'Dowd (Louth, Fine Gael) | Oireachtas source

I thank the Deputy for raising this matter. I am responding on behalf of the Minister, Deputy Rabbitte.

The Minister has no actual statutory function in this matter. Responsibility for the regulation of the electricity generation market is a matter for the Commission for Energy Regulation, CER, which is an independent statutory regulator. In regard to giving the go-ahead, the Deputy may not be aware that such authorisations on licences are wholly regulatory matters and the Minister has no role of approval.

A generator connecting to the network must hold an authorisation to construct or reconstruct a generating station and a generator licence. The CER is responsible for assessing and for granting or refusing to grant these permits. The conditions imposed in the authorisation and in the licence must be met by the generator and compliance is monitored by the CER.

The CER was assigned responsibility over the regulation of the electricity sector following the enactment of the Electricity Regulation Act 1999 and subsequent legislation. The CER's responsibilities include the liberalisation of the electricity generation and retail market in order to encourage the entry of competition and new investment. Market rules were established for both a wholesale electricity market and a retail electricity market, while licensing processes and procedures have been introduced for all market participants. The electricity sector has continued to develop under the regulatory guidance of the CER.

The single electricity market, SEM, is the wholesale electricity market for the island of Ireland, regulated jointly by the CER and its counterpart in the North, the Utility Regulator. By combining what were two separate jurisdictional electricity markets, the SEM became one of the first of its kind in Europe when it went live on 1 November 2007. The SEM is designed to provide for the least costly source of electricity generation to meet customer demand at any one time across the island, while also maximising long-term sustainability and reliability.

The decision-making body which governs the market is the SEM committee, consisting of the CER, the Utility Regulator and an independent member, who also has a deputy, with each entity having one vote. The detailed rules of the SEM are set out in the trading and settlement code.

If the Deputy is concerned over the ancillary services payments and their role in the economics of new generation plant, he should note the details of capacity and ancillary services mechanisms are a matter for the SEM committee acting in consultation with EirGrid-SONI, the transmission system operators, TSOs. Again, I have no function in this matter.

The SEM committee and the TSOs on the island are currently engaged in a programme led by the TSOs called DS3 - Delivering a Secure, Sustainable Electricity System - which has the aim of ensuring that the electricity system can continue to be operated in a safe and secure manner with increasingly high levels of wind generated electricity to 2020. The system services workstream is one of a significant number of work areas examining system policies, system tools and system performance. While the Minister has no direct role in respect of DS3, he is encouraged to facilitate progress as it will facilitate increased penetration of electricity generated from renewable sources, thereby enabling Ireland to reach our mandatory renewable target by 2020.

System services are services which the TSOs will need from generators or from demand in order to be able to operate the system securely. In the context of higher levels of wind, they include more flexible and fast-acting plant. The system services workstream is currently at an important stage of consultation with external stakeholders such as Lumcloon Energy and all generators. A consultation on the TSO's views on the financial aspects was open between 19 December 2012 and 13 February 2013. EirGrid has met over 20 stakeholders since the consultation opened.

It would be highly inappropriate for the Minister to interfere with this transparent, independent regulatory process, which is being led by EirGrid-SONI and which is subject to a decision by the SEM committee. The outcome of the process will benefit all citizens. While there is no ministerial function in this process, I encourage all industry players to participate in the open and consultative regime. I impress on them the need to engage directly with the TSOs and the regulatory authorities as these bodies have the statutory responsibility in regard to this matter.

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