Wednesday, 3 November 2021
Saincheisteanna Tráthúla - Topical Issue Debate
I expect that the Minister of State will confirm that the role and responsibilities of the entities accountable for the energy sector, namely, EirGrid and the Commission for Regulation of Utilities, CRU, can be summarised as "EirGrid's task is to deliver a safe, secure and reliable supply of electricity now, and in the future" and the "CRU's mission is to protect the public interest in Water, Energy and Energy Safety" by ensuring "safe, secure and sustainable energy and water supplies at a reasonable cost" and "to help deliver a secure, low carbon future at least cost." It should be clarified by the Minister of State how the energy crisis has escalated to a stage where emergency generators are required urgently in Dublin. Are EirGrid and the CRU competent and capable of fulfilling their duties? Given that the buck stops with the Minister, what has the Minister of State's Department been doing to ensure that they are fulfilling their duties?
Deregulation of electricity generation started in the early 2000s with the aim of liberalising the market. It should be explained why, despite no longer proceeding because of a recent legal challenge, ESB North Wall was initially selected by EirGrid, with support from the Department, to provide 200 MW of emergency generation without due process. Will the Minister of State clarify whether there was any payment or advance made by EirGrid to the ESB associated with the emergency generation? If so, how much was it?
Since that controversy, it has come to my attention that EirGrid is now running a new tender process that has a strong bias towards the ESB North Wall site. I have learned that the technical criteria and timelines swing very much in favour of the ESB. One example is the six-month delivery timeframe between the contract's award in March 2022 and the commencement of service provision by quarter 3 of that year. Another example is the suggestion by EirGrid that fast-tracked planning should be considered because the standard planning process is unlikely to be open to being utilised for the successful delivery. However, this fast-track process under section 181(2)(a) of the Planning and Development Act 2000, which was amended in June, only appears to be available to the ESB, as it is described as a "statutory undertaker". Is there a cosy relationship between the ESB and EirGrid that is enabling the former to get what is undoubtedly an unfair advantage?
Earlier this year, the ESB withdrew significant generation capacity and paid penalties to the tune of approximately €4 million in respect of 400 MW of generation that was due to become operational next October as part of the capacity market auction. Last December, it shut down the West Offaly power station and the Lough Ree power station in the midlands, removing 228 MW of generation capacity. This makes for a total of 628 MW. When the ESB's media spin is filtered out, one can see that it has abandoned the midlands, having profited from the region for decades.
Will the Minister of State please explain why the ESB, a semi-State company, is being rewarded handsomely despite exacerbating the supply shortage? Could the ESB have orchestrated this crisis by exercising its market power knowing that it would be rewarded as I have outlined?
The position of successive Governments for almost 20 years has been that competitive energy markets result in greater choice for consumers and businesses in terms of suppliers, products and prices, support competition and drive down prices.
Operating within an overall EU framework, responsibility for the regulation of electricity and gas markets is solely a matter for the Commission for Regulation of Utilities, CRU, the independent energy regulator. The CRU was assigned responsibility for the regulation of the electricity and gas retail makers under the Electricity Regulation Act 1999 and subsequent legislation. The CRU has a wide range of economic, customer protection and safety responsibilities in both energy and water.In line with long-standing policy on deregulating price setting, CRU ended its regulation of retail prices in the electricity market in 2011 and in the gas market in 2014. Given that retail prices are no longer regulated, they are set by all suppliers as entirely commercial and operational matters for them. Each such company has its own different approach to pricing decisions over time, in accordance with factors such as their overall company strategic direction and developments in their cost base.
Data from approved price comparison sites show consumers can make significant savings by switching energy suppliers. Accordingly, one of the main thrusts of Government policy on energy costs is focused on the competitive market. Government policy has supported competition to drive down prices. Based on CRU data, active customers who switched supplier or renegotiated with their current supplier every year for the last four years could have saved €704 on gas, €1,097 on electricity or €1,696 on their dual fuel costs. A recent CRU survey found that over half of electricity and gas consumers have switched supplier at least once.
As part of its statutory role, the CRU also has consumer protection functions and monitors energy retail markets to ensure competition continues to develop for the benefit of the consumer. As part of its statutory functions, including under SI 630 of 2011, the CRU carries out various market monitoring and reporting functions in association with its responsibility to ensure the market operates competitively for the benefit of the consumer. Under that statutory instrument, the CRU may take actions it considers necessary to ensure final customers benefit from competition in the supply of electricity and gas. Measures introduced by the CRU include a stipulation that electricity suppliers provide customers with an estimated annual bill, highlighting the yearly average electricity bill for a particular electricity supplier rather than just the discounted offers. Additionally, suppliers must issue a written notification annually to prompt consumers who have been on the same tariff or a non-discounted tariff for more than three years to consider switching.
The Deputy may also wish to note the CRU published two reports on competition in the market in 2017, in line with an action in the 2015 energy policy White Paper. The first report was a consumer-focused assessment of the development of competition in retail markets and its impact on prices. The CRU then followed up with an analysis of energy supply costs to understand the drivers.
The Deputy will note the CRU is accountable to a joint committee of the Oireachtas and not to the Government or the Minister for the performance of its functions, including in respect of competition. The CRU met the Oireachtas committee most recently on 5 October. The Deputy may also wish to note the CRU provides a dedicated email address for Oireachtas Members which enables them to raise day-to-day questions on regulatory matters directly with the CRU at firstname.lastname@example.org timely direct reply. Again, this is part of the system under which Members can exercise and deliver on their oversight function. I would urge Members to use this efficient and streamlined process to assist them in fulfilling their statutory obligations in respect of CRU accountability.
I thank the Minister of State. I respect that he may not be privy to some of the information and queries I have relayed in my presentation. I acknowledge the CRU might well be accountable to an Oireachtas joint committee, but the same cannot be said for EirGrid. EirGrid is the responsibility of the line Minister.
On the questions I asked, I am led to believe the amount paid by EirGrid to the ESB, approved with the sanction of the Minister, was €10 million and that €10 million was a down payment on a €110 million contract. That is highly unusual, I would say. It was sanctioned and paid in the midst of a process that could not subsequently be defended in the courts and was, therefore, withdrawn. I ask the Minister of State respectfully to find out if this money has been repaid, who is responsible, who is culpable and who is paying for this failure of EirGrid and the CRU to provide the sort of competition that was and is necessary to have lower prices in the energy sector? In the context of climate action and COP26 in Glasgow, we have been saying we want to be a net contributor into the future in terms of energy generation. We have, and are, failing currently and the public is paying for this in terms of ridiculously high energy prices.
I do not enjoy exposing these matters. I am a Government Deputy. I am intent on playing my part in implementing the programme for Government, especially having worked hard on behalf of my party to present it to our members and to the Dáil. However, when I see and recognise wrongdoing, and I see lethargy at this level and to this extent, it is my duty to highlight it. The Minister for the Environment, Climate and Communications, Deputy Ryan, is accountable in this issue. He must respond quickly to the issues I have raised. Based on the facts I have presented and in light of the role of EirGrid and the CRU, which I set out earlier, and of the Minister, there are questions about all three living up to their collective commitment to provide a secure, reliable supply of electricity, which is at present far from being secure and sustainable energy at a reasonable cost.
I thank the Deputy. As he rightly stated, I have not previously heard the statements he put forward today and they are not in documents I received before this, but I will try to address them.
On procurement, the Deputy raises a question about whether additional energy generation capacity was correctly procured. There is the possibility under European and Irish law to procure things in an emergency capacity when they are needed. That is strictly laid out in law. There are certain situations where a contracting authority can decide to go through an accelerated form of procurement, to skip things like competition, quality control and transparency, where that is warranted and it is an emergency situation. If the Deputy has a particular question about a particular procurement, I am willing to investigate it.
The Deputy also made reference to, I think, a cosy arrangement between the ESB and EirGrid and he suggested the shortage of energy supply for this winter could in some way possibly have been orchestrated by the ESB. These are serious things to say. I invite the Deputy to substantiate them with more information. I will talk to the Minister, Deputy Ryan, about it as well. His office and my office are open to the Deputy if he wants to come forward with more information or if he wants to have the matter investigated further. As I said, they are very serious things to say.
In terms of the midlands, it has always had a critical role in the generation, distribution and supply of electricity throughout the country or the supply of energy at least in different ways. That will continue. It is Government policy to make sure the midlands is invested in, there is a just transition, and more capacity in renewable energy is focused on the midlands to replace what was there and what is part of the heritage of the midlands.