Ossian Smyth (Dún Laoghaire, Green Party) | Oireachtas source

I move: "That the Bill be now read a Second Time."

Having regard to the unprecedented pressures on the energy sector, I am pleased to have the opportunity to commend the Bill to the House. I will open the debate by setting the context for the actions to be taken on foot of the Bill. Although many Members will be familiar with these issues, it is important to take this opportunity to set out the complex situation we will find ourselves in with regard to security of electricity supply and the wider pressures on the energy sector. I will also describe the sections in detail and, with regard to its main provisions, I will set out the background and why they are needed. However, my overarching message is that while the provisions the Bill will establish are part of a broader programme of actions, it is critical that it be passed prior to the Dáil rising and, therefore, I seek Members' support to achieve that.

First, I will discuss the generation capacity gap that the provisions in the Bill seek to address, along with outlining the broader programme of actions and measures being taken to address security of electricity supply over the coming years, including how the measures in the Bill support the transition of our electricity grid to up to 80% renewables by 2030. Second, I will reaffirm the urgency of the Bill to maintain a secure electricity supply for customers. Finally, I will outline the necessity of the Bill in protecting customers against rising electricity costs through the establishment of a process to allow for the public service obligation, PSO, to be credited as a benefit to electricity customers when the Commission for Regulation of Utilities, CRU, calculates a negative PSO.

On the factors affecting security of electricity supply, Deputies will appreciate that we in Ireland face additional pressures due to our geographical location, low levels of interconnection with other countries, fossil fuel dependency and the smaller scale of the Irish market compared with many other European countries. However, the most immediate factor that will affect security of electricity supply in Ireland over the coming years is a potential generation capacity shortfall that was identified in EirGrid's all-island generation capacity statement, GCS, published in September 2021. This potential capacity shortfall arises in periods of peak demand and largely due to non-delivery of previously contracted capacity, increasing electricity demand and the increasing unreliability of existing plant.

The CRU has statutory responsibility to monitor and take measures necessary to ensure the security of electricity supply. It is assisted in this role by EirGrid, which is Ireland's electricity transmission system operator, TSO. On 7 June 2022, the CRU directed EirGrid, the transmission system operator, to procure, using the most expeditious means available, approximately 450 MW of additional generation capacity from the winter of 2023-24 up to the winter of 2025-26. This is to ensure a secure electricity supply. This temporary generation capacity will be in place until more enduring capacity can be delivered through regular market auctions.

The specific nature of this CRU direction requires the legislation that is before Members today to ensure EirGrid can fulfil the direction as required. This legislation includes supporting provisions for EirGrid in its role of securing the temporary generation units with equipment manufacturers and contracting for its deployment and operation by electricity generators. The legislation also ensures the necessary financial support can be given to EirGrid to achieve the objective.

While this legislation facilitates security of supply through the provision of temporary generation, which ensures there is sufficient reserve capacity on the system to enable security of supply in the peak periods when there is low wind and low interconnection available, it is important to note that this will not impede any of our plans for renewables, interconnection, batteries, demand-side response or energy efficiency.

Having this reserve capacity allows EirGrid to have more confidence in scheduling network outages for new connections to the grid, such as new wind and solar farms from the recently announced renewable electricity support scheme, RESS, 2, list of projects. Having this backup capacity gives more confidence to the grid operator to make these necessary connections and upgrades without jeopardising security of supply. This is very much in keeping with Government policy of delivering up to 80% renewable electricity by 2030.

Further to this, the Bill also provides for an increased borrowing limit for both EirGrid and Bord na Móna. This enables EirGrid to invest in the Celtic interconnector with France and other necessary investments to ensure our grid can accommodate up to 80% renewables by 2030. It also enables Bord na Móna to further develop its brown to green strategy and deliver new investments to former peat harvesting regions.

In order to ensure the security of our electricity supply over the coming years, it is vital that this legislation be passed prior to the Dáil rising to ensure certain measures can be initiated in time, in particular, that EirGrid, from July 2022, can acquire electricity generation, sell and transfer the electricity generation plant to an electricity generator and enter into an agreement with an electricity generator for the operation of the electricity generation plant. I press the urgent nature of this situation and reiterate that it is of paramount importance that this legislation is passed immediately.

Crucially, as well as providing for the provision of temporary generation for the coming winters, the Bill establishes a process to allow for the PSO to be credited as a benefit to electricity customers when the CRU calculates a negative PSO. This provision will enable the delivery of savings to electricity customers.

Under current legislation, the PSO levy is charged to all electricity final customers to fund renewable electricity generation schemes designed by the Irish Government in support of national policy objectives. The RESS has introduced a two-way floating premium, which means if the wholesale market price is higher than the bid price, the supplier pays moneys back to the customer through the PSO mechanism. The existing legislation does not provide for crediting a negative PSO levy.

In recognition of the rising cost of living and the impact on households and businesses of increasing energy bills, the Government approved, on 14 June 2022, legislative amendments to enable PSO payments to be credited as a benefit to electricity customers when the CRU calculates a negative PSO. This legislation is required in order for the CRU to be able to direct that the PSO can be credited to customers over the period from the fourth quarter of 2022 to the third quarter of 2023. This credit has been provisionally calculated by the CRU to be in the order of €75 for the average domestic customer, which is a net saving from the current charge of more than €127. The CRU will make its final decision on these amounts in July. It is vitally important in these times of rapidly rising energy costs that we allow passage of this Bill to deliver this saving to households and businesses and, in particular, financially vulnerable residential consumers.

I will devote my remaining remarks to the subject matter of the Bill. This Bill is designed to enable EirGrid to take certain emergency measures, including acquiring electricity generation plant and entering into agreements with electricity generators in relation to electricity generation plant, for the purpose of ensuring and protecting security of supply, pursuant to a direction of the CRU. For that purpose, the Bill provides for the Minister for the Environment, Climate and Communications to give financial support to enable EirGrid to take certain measures. The Bill also increases the borrowing limit of EirGrid through an amendment of the Electricity Regulation (Amendment) (EirGrid) Act 2008. The Bill includes an amendment of the Electricity Regulation Act 1999 to provide for payments to final customers of certain benefits relating to compliance with a public service obligation. The Bill also increases the borrowing limit of Bord na Móna through an amendment to the Turf Development Act 1998.

I will provide a section-by-section summary of the Bill. There are 14 sections.

Section 1 is a standard provision which provides for definitions.

Section 2 sets out that expenses incurred by the Minister in the administration of the Act are to be paid out of moneys provided by the Oireachtas to the extent sanctioned by the Minister for Public Expenditure and Reform.

Section 3 provides that EirGrid shall take urgent measures as required under a direction from the CRU to ensure security of electricity supply, including acquiring electricity generation plants, selling and transferring such plant to an electricity generator and entering into an agreement with an electricity generator to operate the electricity generator plant. It provides for the operation of generation plant in line with the CRU direction and for operations to cease upon the earlier of the fulfilment of the direction or 31 March 2027.

Section 4 prevents EirGrid from operating generation plant acquired by it pursuant to a direction from the CRU and provides for it to enter an agreement with an electricity generator to sell the emergency generation plant and undertake its operation. This section also ensures that the electricity generator may only receive reimbursement of reasonable costs and a reasonable return as may be approved by the CRU for undertaking this activity, and that upon termination of the agreement, the electricity generator shall dispose of the electricity generation plant in an arm's length transaction in accordance with any direction of the commission. This section includes a provision that in all circumstances EirGrid shall be paid the full price of the electricity generating plant and any profit received on a sale of the plant by the electricity generator.

Section 5 provides for obligations on EirGrid to take measures as required under a direction from the CRU to ensure security of electricity supply and ensures that EirGrid obtains no benefit other than reimbursement of reasonable costs and a reasonable return as may be approved by the CRU.

Section 6 ensures that all functions performed under this Act shall be in compliance with laws and treaties of Ireland and the European Union.

Section 7 provides for the Minister to provide financial support to EirGrid in an agreed form and manner, with the consent of the Minister for Public Expenditure and Reform. It obliges EirGrid to use financial support for the purposes of complying with a direction of the CRU only and that the use of any income or revenue received in connection with the agreement with electricity generators shall only be used for the purpose provided or the purpose of making distributions to its shareholders as determined by the directors of EirGrid.

Section 8 provides for a quarterly report by EirGrid to the CRU.

Section 9 provides for the CRU to make further directions to EirGrid, the public electricity supplier or an electricity generator to address the temporary electricity emergency and, where such a direction is not complied with, to apply to the High Court to make such order as it thinks fit.

Section 10 provides for the CRU to report upon progress to the Minister not later than 31 October 2026 and for the Minister to make an order to extend the period for which the emergency generation can be operated by one year, upon approval by both Houses of the Oireachtas.

Section 11 provides for an increased borrowing limit for EirGrid up to a value of €3 billion.

Section 12 provides for the amendment of the Electricity Regulation Act 1999 to allow for PSO payments to be credited as a benefit to electricity customers. Calculation of the annual PSO levy is a matter for the CRU.

On 14 June, the CRU issued a draft determination that gives the potential for a refund of approximately €75 for the average domestic customer with the passage of this enabling amendment.

Section 13 provides for the amendment of the Turf Development Act 1998 to increase Bord na Móna's borrowing limit to €650 million. Section 14 provides for the Short Title and commencement of the Act.

I have outlined the main provisions of this emergency measures Bill and provided additional detail on the sections. I hope this will be of assistance to Deputies. I look forward to an informed and meaningful debate and to working constructively with the Deputies on all sides of the House.

See this speech in context