Ivana Bacik (Dublin Bay South, Labour) | Oireachtas source

I am conscious that the main purpose of this Bill is to ensure we have sufficient electricity generation in place for this winter through to 2026 following the direction from the CRU to EirGrid to procure an extra 450 MW of power generation capacity. We appreciate the Government was left in the unenviable position of having to get this legislation through as quickly as possible to ensure EirGrid can legally procure the generators and have them in place. We understand EirGrid will then sell and transfer those to an electricity generator and enter into an operating agreement.

What we must ask is why this Bill is being rapidly pushed through the Oireachtas at such a late stage in this term. I urge the Minister of State to address the question of how we find ourselves so exposed to supply shortages and why this legislation is only being brought through now. I raised during the Order of Business, as did colleagues, that it is not good legislative practice to see legislation, especially when it is complex, being rushed through in the last few weeks of the summer term without pre-legislative scrutiny and without being given the time that would usually be spent on considering it. My understanding is the CRU direction was issued on 7 June, the Bill was approved, I think the Minister of State said, by the Government on 14 June and a waiver of pre-legislative scrutiny was granted on 21 June. This is an important and complex piece of law, designed to comply with EU energy rules, state aid law and procurement regulations and in a context, of which we are all conscious, that we may be facing an emergency in supply. We appreciate extra generation capacity cannot just be added in overnight but we believe this legislation could have been brought forward at an earlier date.

If we go back to last autumn, significant questions were even then being asked about the prospect of the lights going out. That was before the war in Ukraine began and before the brutal invasion by Russia. Even then, concerns were raised about the tendering process for generating capacity. The current crisis cannot be blamed on the war in Ukraine alone or on the rapid increase in gas prices, although the brutal war has clearly exacerbated energy security and supply issues internationally. We also appreciate that the current crisis represents a failure of long-term planning in this country on the transition to renewable energy sources. Throughout last summer and into the autumn, the pressure on electricity supply grew due to the growing demands from data centres, which the House has debated, as well as the transition from dirtier fuels like coal and the balancing needed to support the generation of wind power. This was constantly highlighted even before the war on Ukraine began.

We know 1 MW is considered enough to power 1,000 homes, so the capacity we are procuring is sufficient to power nearly 500,000 new houses and apartments. Considering only 33,000 or so units are likely to be built per year, if we generously assume 150,000 new homes are built over three years, that still leaves surplus capacity. Where will that energy go? There is no real transparency on this. This is another of the issues that arise. Some proportion of the new capacity will power new developments in the economy. The CRU stated in its announcement that these emergency measures were needed due to the increased risk of older generators becoming unavailable and ageing out. The older generators are also not as efficient as newer ones and have higher carbon emissions. However, we are concerned the measures will still lock in new fossil fuel generation capacity. The Minister of State might advise in his wrap-up speech if the announcement just last week of census figures showing record population growth, and the follow-on demands on housing, social services, workplaces and so on, have been factored into the proposed energy needs and planning for future winters.

Another important question that arises, even after this emergency procurement measure, is whether a similar exercise will be required next year or the year after. Again, the issue of planning for future needs arises. This legislation is possible because it deems there to be a "temporary electricity emergency", but how do we do we know whether an emergency is likely to take place in 18 months' time? Indeed, if that is to be the case, when does it start and end? Once we go down the route of getting the transmission system operator to source emergency extra capacity, it will become the default option if the electricity generation market is not operating properly.

A central question about these generators is what fuel they will run on. Again, there is a concern about enhancing our fossil fuel dependency. Will EirGrid be told what to procure?

Another question is what will be the cost to the State of developing and running such generators. Reports say it will be recouped from customers over a three-year period. Is the State putting up the capital spend in the first place? The Minister of State might clarify where the €350 million of capital funding for these generators is coming from. According to the announcement, "the Government [had] approved the necessary capital funding – in the order of €350 million for EirGrid". That is where we see that figure. We are told that this will support and enable implementation of the initiative for winter of next year, 2023-24. Will the Minister of State indicate whether this is direct capital aid from his Department's budget or if it represents borrowing by EirGrid? If it is from the Exchequer, will the capital allocation for the Department be increased and, if not, are there projects that may remain unfunded due to the need for this funding? We need to hear from the Minister of State what the additional cost will be and if there will be an additional cost to households.

This is happening at a time when energy companies are making extraordinary and unexpected profits due to the soaring prices of fossil fuels. The Labour Party has called for a windfall tax on excessive profits as a measure that could and should be included in budget 2023. The revenue raised could be used to fund additional climate mitigation and energy efficiency measures that would reduce further our reliance on energy imports at a time when we are seeing unprecedented insecurity of supply, largely due to the brutal Russian war.

While we are rushing through this law so these new gas generators can be put in place this summer, it has not been adequately explained why the ESB, a publicly-owned company, previously pulled out of a contracts to build a number of gas power plants. There has been extensive reporting in the Business Postby Daniel Murray on this and the matter has been raised in this House as well. We understand the size of the plants that were to be built would have been almost equivalent to what EirGrid will now have to procure. The question remains as to whether this has contributed to the supply crisis that underpins the legislation. Is one of the reasons for this legislation an expectation we would have additional capacity for power generation but can no longer rely on it? Is it likely that the ESB will be one of the electricity generators contracted to deploy and operate this emergency supply? A number of questions arise regarding the introduction of this emergency legislation.

A significant concern I and my Labour Party colleagues have about this proposal, one that I have already mentioned, is that it will lock in more fossil fuel generation. Will the emergency plants be decommissioned after the winter of 2025-26? How will that impact on our climate emissions targets and our capacity to reach those targets by 2030? We know some less efficient generation may be replaced but is this in effect a way to quickly put in place extra capacity that renewables cannot deliver in the short to medium term? Does this amount to a tacit acceptance we cannot meet our targets? If so, that is obviously of immense concern.

Again, is this new extra capacity really to allow for the development and operation of data centres? So many questions have been asked about data centres and their feasibility at a time when we are under such pressure to meet crucial emissions reduction targets. Friends of the Earth has asked a number of important questions about what alternative measures have been considered, such as demand-side management. Again, we have debated that issue in this House, including the question of imposing a moratorium on new data centres. I am aware that several Committee Stage amendments have been tabled on data centres and energy security and supply. I urge the Minister of State to give them serious consideration. We also ask that the social, economic and environmental impacts of the generators be carefully monitored. Will the Minister of State clarify how the placement, approval and licensing of these emergency power plants will be assessed?

Another provision in the Bill is to increase the borrowing capacity of Bord na Móna to €650 million to support its brown to green transition. That is obviously a hugely important programme, although as a previous speaker noted, the reference to turf in the Bill is unfortunate. We might all agree on that, whatever our other views, especially considering the aim of the company is to move away from peat extraction. That move is very much to be welcomed but it would be useful for the Minister of State to outline what projects or investments this borrowing will support and give a commitment that a strategy from Bord na Móna will be presented to the Oireachtas joint committee. We have an opportunity in Bord na Móna to build out a national wind company and a national retrofitting company. This would be State-led development that would secure our energy transition and underpin a just transition.

Regarding the public service obligation, PSO, levy, not all members of the public may be familiar with this levy on their electricity bills. It is set annually by the Commission for Regulation of Utilities, CRU. It appears as an €8.60 charge, before VAT, at the bottom of bimonthly bills. At present, the annual charge for households adds up to just over €56 a year after VAT. This came into effect in October 2021. The core purpose of the PSO levy was to support renewable energy, peat and security of energy supply plans. Generation from turf ended some time ago, however. My understanding of the CRU decision is that the increased wholesale price of electricity due to rising fossil fuel prices and the increased demand means that further collection of levies to support renewables are no longer immediately needed. I ask the Minister of State to address that point. Questions must be asked in respect of how successful the PSO has been in delivering on its objective of security of supply, given that the Bill has been introduced and we have been told its main purpose is to allow emergency procurement by the grid operator of sufficient supplies for the winter after next, with a secondary purpose being to refund PSO levies.

The question remains as to what went wrong in the long-term planning if we are now seeing a reversal of the PSO programme. It was previously announced by the Government that the PSO would be set to zero from October, providing for a saving on bills. The Minister indicated this mechanism would be used to offset the carbon tax increase. However, for the first time, the CRU earlier this month issued a draft determination that there should be a refund. As the Minister of State outlined, section 12 of the Bill will provide for a refund of approximately €75. The Government is calling it a saving but it should not be forgotten that this is a refund of money people have already paid and, although the PSO levy will not have to be paid from this winter, families and households are paying for the cost of inaction. Essentially, households are paying for our collective failure to build sufficient renewable capacity, combined with our ever-growing reliance on imported gas for energy generation. This means households are paying for a lack of energy security through increased fossil fuel prices. Will the Minister of State, when wrapping up the debate, indicate his views on the future use of the PSO and whether it will be reapplied in future?

I am conscious that I have asked a significant number of questions. I see the Minister of State is nodding. I do not need the full 20 minutes allocated to the Labour Party to point out that the Bill raises several critical questions for households who are already in fear. They are facing a winter when there will be real fears in respect of insecurity of supply and lights literally going off. To be fair, that is not just the case in Ireland, as this is an international crisis. However, many of us in opposition have been calling for the Government to adopt targeted measures in the form of a mini-budget or emergency budget. What is needed is a series of targeted measures to alleviate the hardship being faced by many households. This comes in a context where we in the Labour Party are saying Ireland needs a pay rise. Households need to have increased income in their pockets to meet the significant rises in the cost of living, of which the huge increases in energy bills are just one aspect. The Labour Party is conscious the prices of food, childcare and many necessary essentials for households are also rising. It is in that context that I am raising all these questions. They are fair questions to put as we debate the Bill.

I will conclude on a point that is also in the context of the cost-of-living crisis faced by many households. The Labour Party is conscious the PSO is a fixed charge on households, irrespective of energy use or household income. That means those who use the least energy and those with the lowest income pay the same amount as others. The Society of St. Vincent de Paul pointed that out previously and called for a review of the application of the PSO to low-income and struggling energy customers. The Minister of State might consider that. We know from recent ESRI publications that one third of households are already in energy poverty. The Society of St. Vincent de Paul has called for the introduction of social tariffs for energy supplies, a policy we in the Labour Party support. We again call on the Minister of State, and all Ministers across Government, to examine this serious issue of energy poverty as part of a comprehensive cost-of-living package, preferably this summer but certainly in the October budget. All present anticipate that substantial measures will need to be introduced in October if the Government does not move any sooner. The fear that already exists among many households in respect of the further hardship that will be caused by rising fuel and energy prices in winter is a serious issue. I know that is appreciated by all present. It is in that context I raise these questions on the Bill, its provisions, impact and purpose and the background to its introduction. It is unfortunate it is being brought through the Houses so speedily and without the pre-legislative scrutiny that, ideally, it should have undergone.

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