Wednesday, 13 March 2019
Saincheisteanna Tráthúla - Topical Issue Debate
Commission for Regulation of Utilities
I thank the Leas-Cheann Comhairle and the Ceann Comhairle for allowing me raise this issue and I particularly thank the Minister for taking it.
The Minister will be more than familiar with the Mayo renewable power project which is located in the former Asahi plant just outside Killala in County Mayo. This project will give 42 MW of combined heat and power, CHP, which will greatly aid us in attaining our national targets in this area. At its peak, it could over 300 construction jobs and, potentially, 130 full-time positions when it is up and running.
It has had a chequered history, however. The plant received, in 2012, a CHP plant certificate under the refit scheme at 100% rate. On that basis, it proceeded to construction, involving expenditure to date of €95 million, and the sod was turned by the former Taoiseach, Deputy Enda Kenny, with much publicity.
In 2016, there were changes in the structure and the financing of the company. It was then required to resubmit for permissions, which it received very efficiently and expeditiously from Mayo County Council and from the Environmental Protection Agency.
However, the grant of the 100% rate, which had been given in 2012, was reapplied for and on this occasion to the Commission for the Regulation of Utilities of water and electricity. That application has taken eight months to decide on. Instead of 100%, it came back with an 18% approval which has completely changed the viability of the project. The project itself has not changed. The environmental impact of the project has not changed since 2012. Nothing has changed in this project since 2012 except this analysis. The application for the re-analysis was made, not on the back of an envelop but by internationally renowned companies with expertise in this area which dealt with all of the issues and presented all of the challenges that were given. This project is now under threat. The job potential, the energy potential and the contribution to Ireland's carbon targets are all under threat.
I understand and appreciate that the Minister cannot intervene in the Commission for the Regulation of Utilities, CRU. However, that cannot make it unaccountable. As a former Minister of State at the Department of Enterprise, Trade and Employment, I ask is it acceptable that investors are allowed to proceed with expenditure of €95 million on the basis of all of these permissions being in place and then, effectively, on the basis of a change of mind, that investment is left in the ground. Is it appropriate that a community, which was given this offer of significant job creation and potential in terms of further energy, is left hanging and without any information today as to where it can go? Is it appropriate that there is no avenue of appeal, bar a judicial review which is enormously expensive for any business to take? What has changed since 2012 in terms of the make-up of the project that has made CRU issue such a different decision today?
I am aware that the Minister cannot interfere but we need answers. One cannot have unaccountable Government bodies going around making decisions like this. I would appreciate if the Minister could offer some pathway by which we can remedy this and address it quickly because we have already lost eight months in their analysis, and so that we can give assurance that Ireland, and Mayo, is a place that one can invest in, that one can be confident about such investment and that we are interested as a country in proceeding with this kind of project.
I acknowledge that Deputy Calleary and indeed Senator Mulherin have been in touch with me on a number of occasions about this. There is a great degree of concern in Mayo about this project and I fully acknowledge that.
Deputy Calleary acknowledges in his comments that this is an entirely independent regulator and it is independent under EU legislation. That is the essence of the approach.
What is at stake here is a decision on the level of effective subsidy that would be provided for a plant on the basis that it achieves certain desirable features that were set out in the programme agreed at EU level. It requires the regulator to evaluate any project that comes before it and look at matters such as its electrical, thermal and overall efficiency, its power-to-heat ratios, the electricity from combined heat and power, the amount of fossil fuel displaced and all the other issues that are set out and the CRU has set out clearly for any investor to evaluate.
The decision in respect of its evaluation, which the Deputy acknowledged has seen a much lower certification of combined heat and power than was originally given, is a matter for the CRU.
The question of accountability of the regulator is one not to the Minister but to the Oireachtas committee. It is open to the Oireachtas committee to invite the regulator to attend and explain the approach that it takes, but I have full confidence in the regulator's fairness of approach in these matters. Indeed, not so long ago, the OECD conducted an evaluation of the CRU's procedures and practices and found it to operate in a strong manner. There is not any question that the CRU does not conduct its affairs in the fairest possible way.
There may be some issues of misunderstanding. The CRU is always open to meet the sponsors to clarify any issues that may need explanation or if there are issues of clarity. There was - I understand this was partly the delay - quite an amount of information acquired and exchanged and to my knowledge, considerable care has been taken over this decision.
I cannot intervene, as the Deputy has indicated, in a decision such as this. However, I can point to the fact that it is open to the company to meet the regulator and seek explanations or engagement on some of the assessment that has been carried out. The assessment is done against an objective set of criteria. The regulator has assessed many other projects in similar ways and I understand many have been well short of the 100% allocation in terms of the certification of combined heat and power.
The two avenues I mentioned are the only avenues open: from the Oireachtas point of view, the CRU may be invited to the committee and from the company's point of view it can of course seek clarification of the basis of the decision that has been made. It is not open to me to intervene in a case where an independent regulator evaluates the extent to which an application meets important criteria that must be met under this state aid provision.
The independent evaluator already assessed this project in 2012 and gave it 100% certification. The project has not changed. The regulator reassessed it and then reduced 100% certification to 18%. We must be able to get answers in that regard.
I accept the regulator's independence. The Minister used the word, "misunderstanding." There is a lot of misunderstanding in a reduction from 100% to 18%. Either the misunderstanding was in the first place in giving it 100% certification which then allowed a pathway of €95 million worth of investment or the misunderstanding is in this phase in bringing it to 18%.
I certainly will pursue with the committee Chairman, Deputy Hildegarde Naughton, bringing the regulator before the committee, and I understand Senator Mulherin will do the same. However, as the Minister with responsibility for climate action, Deputy Bruton must also be satisfied that we have the kind of pipeline of projects to assist us meet our targets. Surely the Minister should look at this project from a Department point of view, without interfering in the CRU, to see whether the project is adding up in terms of the refit and whether it is adding to the kind of targets the Minister needs to meet for the country.
As a former Minister of State with responsibility for enterprise, I reiterate that it is not good enough for the Minister to be sitting on the fence in respect of this project, leaving 130 jobs in abeyance and €95 million of investment literally in the ground. It is a project in respect of which many people were very happy to have their pictures taken. The project is needed for regional development and national targets in the area. I accept the independence of the regulator but it cannot be unaccountable either. I will pursue its appearance before an Oireachtas committee but the Minister's Department should engage and see if our pathway to reaching national targets in combined heat and power are being affected by the way the regulator does its business.
Under this scheme, we give a premium payment on the basis that high-efficiency combined heat and power is delivered. A biomass combustion generating electricity would get a much lower rate of electricity pricing if it did not meet certain criteria setting it aside as high-efficiency combined heat and power, displacing fossil fuels and so on. That is the basis on which the premium is payable and the state aid rules underpinning that are approved by the European Union. When it comes to the interpretation of whether a project has met those standards, it must done independently of the Government. Those are the established rules of the renewable energy feed-in tariff, REFIT, 3 scheme. Somebody must independently assess each project to see if it is delivering efficiencies, carbon reductions, fossil fuel replacement and so on that were intended by giving this additional state aid to it. The CRU does that.
I am fully confident the commission does this in a fair and objective way. I have not see the papers surrounding this and it would have been improper if I had seen them as it is entirely a matter for the CRU. Every project that comes in is fairly evaluated against these rules. Many projects have come in and been evaluated and not all are getting 100% certification. The Deputy has correctly said we must be attentive in achieving our climate targets, and I am determined to step up the pace of achievement for those targets, but it does not mean a Minister will interfere in the way in which existing rules or new rules developed to promote decarbonisation will be applied. This must be independent of the Government, and that is what the CRU is doing.
I know the Deputy wants more of an explanation but I can only offer the information I gave already. Either the company should approach the CRU or the Oireachtas could ask the CRU to explain how it handles these applications.