Michael Finucane (Fine Gael)

We have no difficulty with allowing all Stages of the Bill to be dealt with this morning because it is non-contentious. It simply raises the borrowing capacity of the ESB. Considering the context of modern Ireland and modern times, and having regard to the skill deployed in the ESB, it is understandable that the borrowing requirement should be revised accordingly.

The ESB was established in 1927. It has served the country well, and there is tremendous respect for what it has done over the years. In recent times the word "liberalisation" has crept in. Many people anticipated that with liberalisation, the overall cost of electricity would fall. It is a cause of concern over the past three years that ESB charges have increased by 25%, which is certainly not consistent with the overall inflation rate. That has caused concern to the business consumer as well as to the domestic consumer. The cost of electricity for the domestic customer is less in Ireland than it is on average in Europe, but for the business customer the cost is greater than the European average price. Liberalisation has had limited impact over the past few years. When it comes to generating capacity, there is one other strong player in the market, Viridian. In a submission to the Minister in 2002, the Competition Authority stated:

...because of the manner in which the EU electricity directive has been implemented, we have a regulated, nominally vertically separated, super-dominant undertaking which brings none of the proven benefits of competition (as shown in other countries), but which costs, apart from the efficiency losses associated with separation, additional wasted resources in terms of the increased regulatory burden.

That is quite a strong statement, but in reading the Competition Authority's assessment and the documentation it produced, as well as other documents, I wonder about the ESB's attitude to Eirgrid. The statutory instrument introduced in 2000, which deals with the separation of Eirgrid for the transmission aspect, has not yet been implemented. Questions are being raised more than three years later with regard to that separation and what is happening in that area. The Minister is well aware that after all this time, Eirgrid appears to be stillborn. There appears to be no enthusiasm among ESB staff to transfer to it. One wonders about the ownership of Eirgrid and whether what is happening in the European context is desirable. I know that the Commissioner for Energy Regulation, Mr. Tom Reeves, recently submitted his views on this matter to the Minister. I have a copy of his comments, and he appears to have reservations about whether Eirgrid should be established at this stage. I would like to know what is happening to that statutory instrument introduced in December 2003. The concept was one of evolution, with generation on one side and transmission on another, along with distribution and supply.

One element which I have raised before the Joint Committee on Communications, Marine and Natural Resources, is causing concern to the committee. The Minister is aware that there has been great enthusiasm in this country for the wind energy concept. Farmers in particular viewed it as an alternative form of income. Farmers with land which, was not of value to them looked enthusiastically at the possibility of wind turbines. The Minister promoted that concept in accordance with the Kyoto Protocol as something we would like to see in this country as part of a wind energy programme. The concept was enthusiastically grasped. In seven years, the level of wind energy going into the system is about 211 MW.

Already, by means of AER VI, it is hoped that another 828 MW will come on stream, which will bring the total to over 1,000 MW. There are also applications stacked up within the ESB regarding other wind energy projects totalling nearly 1,000 MW. My concern relates to the moratorium because concerns were expressed by the ESB about the stability of the system as a result of all these wind energy projects coming on stream. The ESB concerns led to a moratorium on further applications. I also understand that the energy regulator expected to have a report ready at the end of April, but I do not know if that has been achieved. The ESB also has an input to the various stipulations and criteria for further wind energy projects because it had concerns regarding turbines and other issues.

There is an element therefore of waiting to see what new projects will emerge. If there is a megawatt capacity between the North and South of Ireland of about 7,000 MW — including 5,500 MW in this country — when does someone decide how many megawatts of energy the system can take if there are already concerns regarding the 211 MW within the system and concerns about stability? It is worth bearing in mind that concerns about stability have been expressed in many European countries, such as Denmark and Italy, which have enthusiastically grasped the wind energy concept.

At some stage, someone must say that the system can take only a certain amount of the wind energy and all the wind energy projects which have been given planning permission, as well as those stacked up in a queuing system within the ESB, will have to be reconsidered. In local authorities around the country, various wind energy projects are going through the planning process and there is an expectation from the people behind them — private companies as well as groups of farmers — that these wind energy projects will be established. I am concerned that with people having gone through all that process there will come a point when someone decides that no more projects can be accepted. What thinking has gone into bringing this jigsaw together to see what is achievable or desirable, where we might stop, and what would be sustainable? The wind energy aspect should be looked at very seriously by the Commission for Energy Regulation, within the ESB and within the Department. We should have a position paper regarding what level of wind energy is attainable, desirable or sustainable. That area concerns me.

The statutory instrument SI 445 was issued on 20 December 2000. At some stage, someone will have to say whether that statutory instrument is sustainable or feasible or whether it will ever be implemented. The Commissioner for Energy Regulation has written to the Minister in that regard, and someone in the Department must decide whether Eirgrid will ever get off the ground as a separate entity,or whether in the current context it is desirable that it should do so.

I recently met ESB personnel involved in the grid and transmission area. I was very surprised about the forced outages and availability across all generators, something about which the Minister should also be concerned.

We talk about electricity outages, breakdowns and faults but I was surprised to learn that from 1997 to 2004 there was a rapid deterioration in that area. There has also been a deterioration in terms of system availability and generation capacity. Concern has to be expressed in both those areas when one considers the major power outage that occurred in New York last year and those in other countries. I wonder if there is concern at this stage about the graphs which highlight difficulties in those areas and the ESB system being able to provide an efficient electrical output for the future in terms of the business plans and domestic consumers. I would be interested to hear the Minister's reaction to that point.

On the point the Minister raised about Moneypoint, it is easy to go back in history but I remember the debate at that time on establishing a coal-burning station at Moneypoint and the famous debate with regard to the proposed nuclear station at Carnsore Point. Nuclear energy was considered out of order and I welcome that because if it were to be considered now, especially with the scale of the disaster at Chernobyl, there would be a furore. However, we have to consider the alternative forms for the production of electricity.

When Moneypoint was going ahead, environmentalists suggested that scrubbers be put into the chimneys but, because of financial constraints on the ESB in building that generating station, they were not put into the chimneys. The European Union has now dictated that the ESB has to make a decision in that direction by 2011. My understanding is that a decision will be made in the next few months and it will have profound implications for Moneypoint. If it proceeds with spending the €250 million to address the environmental problems in Moneypoint and put in place environmental controls, which I hope it will do because it is a successful, established company, will it have the same generating capacity? Naturally, we will see an improvement in the environment as a result.

I grew up in Foynes, in Limerick, although I am now living in Newcastle West, and I was always concerned that nearly 50% of the country's sulphur dioxide emissions were being spewed into one specific area along the estuary. Due to the confluence of the winds it was usually spewed into an area surrounding Foynes. We often hear about acid rain and other environmental concerns but that was always a specific concern of mine. I always believed Moneypoint was a major contributor to that problem and that has been proven now. An improvement in the situation at Moneypoint is long overdue, and money has to be spent in that area. If there are concerns with regard to the generation aspect, the ESB will need a re-adapted Moneypoint because extra generating capacity will have to be created.

On the long-term stability of the electricity market, despite the reservations I expressed about wind energy and the experts' concerns about how that will affect the electricity supply, what is important now is an interconnector between the United Kingdom and here. The Minister will correct me if I am wrong but I understand the possibility of two interconnectors between the UK and Ireland is being considered. If we are concerned about stability in the future and so on, it is important to have that interconnector.

I read in a newspaper during the week, and this may be of concern to the Minster also, that the workers in the ESB have said that if certain concessions are not given with regard to negotiations for a pay increase, there may be a threat to our supply in the next few weeks. I hope sanity will prevail and discussions take place because the last thing we need at this stage is an ESB strike which will inhibit supply. In fairness to the ESB, it has an excellent industrial relations record, with the exception of minor aberrations over the years, and I would like that to continue.