Eamon Ryan (Dublin South, Green Party)
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Question 74: To ask the Minister for Communications, Marine and Natural Resources the timeline on approval of new investment in the Aghada power plant; the communication he has had with the ESB and CER with regard to the proposed leasing of the ESB's current sites; and if the approval of new ESB power plants is conditional on progress being made in this long-term leasing proposal. [38779/06]

Noel Dempsey (Meath, Fianna Fail)
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The Government's energy policy Green Paper, Towards a Sustainable Energy Future for Ireland, identifies the dominance of the ESB as one of the factors influencing the apparent reluctance of independent generators of scale to enter the market. This dominance arises from the ESB's continued ownership of a large and diverse portfolio of plant and particularly from the company's ability to set prices, through its ownership of virtually all mid-merit plant on the system. The Green Paper is informed by a range of analyses, including the Deloitte report, and it recognises this as an issue to be addressed as an immediate priority.

The Green Paper also notes that the ownership of prime generation sites capable of further development for generation purposes is perceived as conveying a number of advantages on ESB over new entrants seeking to establish themselves in the power generation sector, in terms of planning and access to infrastructure. In that context, we are giving consideration to the creation of a State-owned landbank of suitable generation sites to incentivise the development of new independent generation capacity.

Although it is the case that additional generation plant will be required for security of supply reasons in 2009, the question of the ESB being permitted to bring forward new generation plant must be examined in the context of the company's dominance in the power generation sector, the development of competition and the overall structure of the electricity sector. Any decision to approve ESB investment in new power generation plant at Aghada would be conditional on agreement on a strategy to address the company's dominance and market power, particularly with regard to mid-merit price-setting plant. Any such approval would also be contingent on compliance with all the terms and conditions that would accompany authorisation by the Commission for Energy Regulation, CER.

I confirm that in the context of developing the White Paper, discussions are ongoing on how best to progress and deliver the requisite reduction of market power and create the conditions for meaningful competition.

Eamon Ryan (Dublin South, Green Party)
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I thank the Minister for outlining the position. I presume the ongoing discussions to which he referred are between the Department and the ESB and that, within the ESB, both unions and management are involved. I am sure the unions have an interest in this issue.

The Minister referred to the tight timeframe within which we must work given that, by 2009, it is predicted we may not have sufficient power generation to meet our expected growing needs. Moreover, it takes several years to develop and deliver a power station. In this context, when does the Minister believe a decision must be made in terms of securing a conditional agreement which takes account of, on one hand, the ESB's ability to build a new power plant and, on the other, the ability of the Minister to set up a State owned landbank of some of these mid-merit plants? Is there a timetable according to which he expects a decision in this regard? Will he outline how these discussions or negotiations are proceeding?

The Minister said any decision to approve ESB investment in new power generation plant at Aghada would be contingent on compliance with all the terms and conditions that would accompany authorisation by the CER. Does the Minister have authority to direct the CER in this regard? Does he have a say in the conditions that apply in regard to any such planning permission?

Noel Dempsey (Meath, Fianna Fail)
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I have had discussions with the ESB on several occasions, including some, for instance, in the context of the Green Paper and in the aftermath of the Deloitte report. Departmental officials have discussions with the ESB on a regular basis about an entire range of issues relating to energy and electricity markets, security and adequacy of supply and so on. It is my understanding that the ESB and the CER also engage in discussions, but I am unsure as to the degree of formality. I am not sure whether those discussions take place in the context of a consideration of licensing a plant. There would also be discussions between EirGrid and the ESB, between EirGrid and the Department and between the CER and the ESB. A whole range of different bodies and organisations meet to discuss these issues on a regular basis. It is hoped to finalise the White Paper in January and it would be useful if it was published in the context of finalisation of the Aghada proposal. It will also include the energy capacity requirements until 2012. I understand I do not have power to direct the CER on specific conditions on a licence.

Bernard Durkan (Kildare North, Fine Gael)
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Has the Minister had direct discussions with the ESB, Bord na Móna, Bord Gáis Éireann, Airtricity and other service providers in determining the strength of the electricity grid? Has the Minister examined all the options available? Is he satisfied that agreement will be reached between the ESB and other potential service providers in the sharing of the various sites as identified in the Green Paper?

Noel Dempsey (Meath, Fianna Fail)
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I have regular contact with EirGrid, BGE, Bord na Móna and the ESB. I had regular contact with the CER, EirGrid and the ESB on the capacity of the grid for this winter. This included two face-to-face meetings with the CER and EirGrid to get their assurances that the system has the required capacity for this winter. The most recent of these meetings took place last Thursday. I have an assurance from both parties that they are satisfied grid capacity is adequate. They have taken several measures, including providing for the importation of electricity if necessary, to ensure adequate supply over this winter. Other power plants will come on stream over the next 12 months which will help this.

Eamon Ryan (Dublin South, Green Party)
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If the Minister does not have power to direct the CER in this, what is his estimation of the ESB unions' and management's position on this? Does he believe they will agree to the concepts set out in the Green Paper on the separation of these plants into a separate State-owned company? If not, how does the Minister intend getting agreement on this proposal early in the new year?

Tommy Broughan (Dublin North East, Labour)
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If the Minister is so confident in our energy capacity for the winter, why did he reserve 300 MW on the interconnector? From the daily reports from the CER, the gap between capacity and generation appears very tight. Is the Minister confident we will get through the winter without a break in supply?

Noel Dempsey (Meath, Fianna Fail)
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The Deputy should have listened carefully to what I just said. I was assured by the bodies responsible for security of supply that all matters are in order. When I received that assurance in June, I asked for further assurances. I met the bodies recently to ascertain what extra measures they had taken. Capacity is tight but those are the expert bodies that have advised me. At the last meeting, the CER and EirGrid gave details of the extra precautions taken to ensure an adequate supply during the winter, one of which is importing electricity from the North. That was not in place prior to the meetings or my inquires. I am conveying to the House the confidence that has been expressed to me by the two bodies responsible for security of supply.

I do not want to anticipate the ESB unions' position on the Green Paper proposals. As part of the consultation process, they have the opportunity to make their views known.