Tom Sheahan (Kerry South, Fine Gael)
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Question 51: To ask the Minister for Communications; Energy and Natural Resources if he has received a copy of the Frontier Report on the transfer of ownership of the distribution network to Eirgrid; the recommendations contained therein; when he will publish same; and if he will make a statement on the matter. [37849/10]

Eamon Ryan (Dublin South, Green Party)
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The independent analysis of the electricity transmission assets by Frontier Economics Limited is being finalised and will be submitted to me shortly. The unbundling of the transmission assets involves the resolution of complex technical, financial and operational issues, as well as the possible development of legislation. The independent analysis includes an assessment of costs, benefits and regulatory impact, EU developments and the all-island single electricity market. The process has involved input from the direct key stakeholders and others.

The direct stakeholders comprise management and unions of the ESB, EirGrid and the ESB employee share ownership trust, ESOT. All direct stakeholders have pivotal roles to play in the process of engagement and analysis. Their co-operation is vital in achieving outcomes that are in the best interests of the economy and energy consumers, as well as the two State entities.

Both EirGrid and the ESB have vital roles to play in delivering our national targets for renewable energy and energy efficiency, as well as security of supply and energy competitiveness. The unbundling of the national transmission assets will be progressed in a way that ensures viable futures for both EirGrid and the ESB, as well as delivering on EU legal obligations on transmission unbundling in the interests of the energy sector and energy consumers.

Leo Varadkar (Dublin West, Fine Gael)
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I have two questions. The Minister said the report is being finalised. Will he confirm whether he has already seen the draft report? A draft report was submitted to him about three weeks ago. Has he seen it and will he comment on it? Second, would the Minister not agree that it does not make sense for a small country such as Ireland to have two network companies, one owning the distribution network and one owning and managing the transmission network? Would it not make sense to merge ESB Networks Ltd. and EirGrid into a single entity, similar to what has been done in Portugal, for example? Is that an option that has been considered in the report? It can be done under the EU directive. It has been done in Portugal and it is probably a model followed in other countries. Did he receive the draft report some weeks ago and does the report consider the possibility of merging EirGrid and ESB Networks Ltd.?

Eamon Ryan (Dublin South, Green Party)
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I have not seen the report but I understand it has arrived in the Department. It goes through the process of being seen by the Assistant Secretary General and the Secretary General before coming to me for consideration. That process has not yet been completed, so I have not seen a copy of the report yet.

I believe it is appropriate to have a separation of the ownership of the EirGrid transmission assets. We created EirGrid as an independent company and it is operating independently. I cannot see how that is enhanced by having assets in its ownership in a separate location. That is my personal view. I accept this is complex and that it is right for us to take a high level view of it in terms of the economic costs and the mechanisms for making that happen, but I believe it is the right thing to do. I do not understand the Deputy's proposal with regard to the creation of a single utility or single network company. Is he saying he would prefer to sell the generation and supply company and create a separate single network utility where distribution and transmission would be together? If not, and if he is seeking to maintain the distribution company and the generation and supply company as a single unit and bring EirGrid back into it, it would be a significant reversal of policy.

I have set out my personal view and the Deputy can hold a different position. I look forward to seeing the report. It is right to check the Deputy's view and to get genuinely independent consultants-----

Leo Varadkar (Dublin West, Fine Gael)
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Is the report considering that option?

Eamon Ryan (Dublin South, Green Party)
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My recollection of the terms of reference is that the report was to consider implementation of the Government policy, as set out in the White Paper in 2007 and in the programme for Government in 2007, which was a separation of the ownership to EirGrid. It was looking at that option. I have not seen the final report to see what other options it might have examined. However, I am interested to know which of the two options the Deputy is considering, a separation of the network distribution company from the generation and supply business and an integration with the transmission or simply returning to the ESB as it was.

Leo Varadkar (Dublin West, Fine Gael)
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I presume the Minister has read our policy which is to reintegrate EirGrid back into ESB Networks Ltd. and sell the generation and supply. It is no secret that it has been our policy for two years. However, that is not the question I asked, which is whether the Frontier Economics report has been allowed to consider other options, such as the options put forward by my party, or if it is only allowed to consider the issue of who owns the distribution network?

Eamon Ryan (Dublin South, Green Party)
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Commissioning this report was part of the process the Department went through in which it set up Fergus Cahill as an independent chairman to bring in the parties to examine how to implement Government policy, which was to bring the network assets into the ownership of EirGrid. That was its primary task. As a side element to its work the report might have examined various different options but I have not seen the final document. However, its primary task was to examine the analysis of the Government proposal as set out in the programme for Government three years ago.

Eamon Ryan (Dublin South, Green Party)
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The terms of reference allow consideration of all such matters, including costs, compensation and other mechanisms. It was for that purpose we considered it right to get an independent consultant of international repute to examine what all the costs are. There are different views and assessments of those costs from both companies and other parties that have an interest, such as the ESOP. To get clarity on that and to assist us in answering some of those questions were among the reasons for commissioning the report. Frontier Economics was also asked to look at all options available to us to ensure compliance with the EU third energy package. There is an EU dimension to this in terms of a requirement for us to have proper separation. Frontier Economics was examining this within the European Union context as well as within the context of the programme for Government.

Eamon Ryan (Dublin South, Green Party)
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My understanding is that in 2006, if I recall correctly, the instigator for the separation of the ownership was set out in a Deloitte report. That initial report was considered by the Government at the time. It was quite a complex report but one of its elements was towards the separation. The initial costings and economic analysis were set within that. This report is for the purpose of getting firm economic costings. The Department was obviously working on how to do this on a statutory basis. From a policy viewpoint, my strategic sense is that this makes sense but we were always going to have to go through the process of carrying out the detailed cost-benefit analysis and examining the transactional costs involved in the separation. That is the reason the Frontier Economics report was commissioned and this process has been undertaken.