Brendan Kenneally (Fianna Fail)

I welcome the Minister of State to the House. I am pleased to have the opportunity to contribute to debate on this Bill because one of the greatest challenges we face today is maintaining a constant supply of safe, clean and sustainable energy and the reduction of costs in the future. Problems as well as opportunities will arise in various areas, so we have to be ready to meet difficulties and optimise the opportunities.

I envisage that the future of energy provision will be within an all-island context. Given the hopeful signs of political progress emanating from Northern Ireland, it is inevitable that as conditions become more stable, industrial and economic growth will create a demand for energy and a greater opportunity for us to co-operate in its supply. That suggests the need for an all-island energy market which I feel is not only possible but also desirable and almost inevitable. One of the functions of the Commission for Energy Regulation will be to develop a market for an all-island supply of energy. The cost of such a project has been estimated at approximately €80 million, 70% of which will be paid for in the southern jurisdiction, with the remaining 30% falling to the North to finance. Doing this will ensure security of supply and more competitive pricing as a result of economies of scale. Customers will also benefit, particularly if they can be sure of their supply and are able to switch suppliers in an open and free market. Thus far, there has been a competitive market for non-domestic electricity consumers but not generally for domestic users. We need to move towards opening the entire island to competition because it is expected that the market in Northern Ireland will be fully open by April 2007.

One of the main factors driving up the cost of electricity is the price of fuel for generation. However, these proposals should bring more efficiencies and greater competition in the market for generating electricity and in distribution. In Britain, it is estimated that 11 million out of 26 million consumers, including 8 million out of 20 million gas consumers, have changed suppliers. The comparative figure in the Republic is only 40,000, most of whom are commercial customers. However, in the telecommunications market, Irish people clearly have no difficulties in changing to companies which offer cheaper services and the better value for money. Such a choice on the electricity side is novel here and, while not yet fully available, it will become as much a feature as flexibility is in telecommunications.

Traditionally, the ESB has been the dominant force in the Irish electricity market, which is hardly surprising given that it has been the only supplier since the foundation of the State. The company has served Ireland well in its three quarters of a century of existence and, while there have been occasional flaws and deficiencies, the quality of the service has, in the main, been superb.

I welcome the proposals to facilitate the interconnection of electricity generated by systems not in the ownership of the ESB. While this will make inroads into the dominant position of the ESB, I have no doubt that the company's vast experience and decades of tradition will allow it to take this new challenge in its stride and that it will emerge a stronger and more competitive entity. Such has been proven to be the case in other sectors and I have every confidence in the ESB to do likewise. Smaller players should be an essential part of the energy industry in this country and they should form part of the Government's energy policies. Viridian Power and Energy, which owns the Huntstown power station in Dublin, is the only large-scale independent power plant operator in the country but even that company is restricted in its contributions to the national grid. New investors will be reluctant to enter the market if a dominant and largely monopolistic player such as the ESB remains. By facilitating an interconnection for other potential suppliers, we will encourage commercial investment in energy.

I mentioned previously in this House the provision of a small hydro-electric system in my constituency which will have the dual effects of providing some of the cleanest energy possible and demonstrating to other prospective investors the potential for small independent ventures to be financially viable. I am pleased to observe that progress is being made on this significant scheme, which I pass regularly, and I note that the line to the national grid is currently being laid.

In the context of my earlier comments on Northern Ireland, it is essential that we provide another interconnector between our jurisdictions. Regardless of the outcome of the present political dialogue, which I am sure will be successful, we will have a closer relationship and a greater interdependence between North and South. If we can link across a continent to Russia for our gas supplies, it is commonsense to guarantee the connection with Northern Ireland for electricity. The present interconnector is less than effective and suffers many constraints. We have progressed politically and we need to reflect our advances in the hardware to give both our communities a greater security of supply. The question also arises of the interconnector from Scotland to Northern Ireland, which guarantees our neighbours sufficient supplies. We can in turn benefit from this, just as we can from the 500 MW interconnector which will be constructed between Ireland and Wales.

While supply can technically flow in either direction, according to which country has excess supply at any given time, the most likely scenario is that we will be the recipients of electricity from the UK. This opens up an entirely new debate in regard to nuclear energy because we would be taking our electricity through a grid supplied by nuclear sources. We are a nuclear-free country, and with the occasional exception everyone wants to keep it that way. It is bad enough to have Sellafield on our doorstep and other nuclear stations on the east coast of Britain to threaten our wellbeing without generating the same threats in our own country, over which we have full jurisdiction. I admit to some reservations on the matter, which is one reason I have consistently pushed to make us as self-sufficient as possible in energy supply. I repeat that we must put more resources into researching the generation of electricity from other renewable and sustainable sources such as wind, wave, biomass and the like.

The big problem is encouraging independent generation and getting such power into the grid, and every effort must be made to make the task as easy as possible. We are daily told of the imminence of peak oil production, of the substantial demand that will come from the greatly expanding economies of China, India and other eastern countries, and of instability and insecurity regarding the supply of gas from eastern Europe. We have seen how the gas supply to Russia's neighbours was shut off, and while there does not appear to be any threat at present to those who can pay for their supply, we do not know what will come down the tracks in a decade or two.

Now is the time to provide for the hard times, to encourage home-produced energy and do what we must to guarantee easy access to the grid for those who enter the market, removing insecurity from the equation for them. We should be mature enough to realise that people do not invest vast sums in any enterprise without a reasonable expectation of success, and while there are still obstacles, they can be easily removed. The ESB is doing a good job and has served us well, but this is 2006, with massive energy needs, and not 1956, when demand was easily satisfied.

While I have concentrated on electricity, the Bill also deals with the supply of gas. Once again, I am very much in favour of opening up the market and getting ever more suppliers involved. We have outgrown the State monopoly that in many areas guaranteed our very survival in the darker days of Ireland's growth and development. We have a very different economy now. We have different needs, mainly because they are greater, and our economy needs competition to thrive.

That is why we need Aer Lingus and why there should be more than a single dominant player in any service. The Bill proposes to open up the gas market fully by 1 July 2007, something to be welcomed. There will be a dividend for both the consumer and the country as a whole. I do not propose to enter the present debate, if we can call it that, regarding the Corrib field, except to say a supply from that source had been expected in 2003. That has not arrived, and we need the reassurance that such a supply can be give, and the sooner, the better. It is high time the dispute was brought to an amicable and mutually acceptable conclusion, with gas flowing into the grid. We currently have two gas supply lines or interconnector pipelines from Scotland to the north of Dublin and from Scotland to Northern Ireland. The interconnector between this jurisdiction and Northern Ireland is to be completed very soon, which should give us a greater degree of confidence regarding supply.

This is a positive Bill with several constructive and necessary provisions, measures that will have to be implemented if we are to continue to grow as a modern country and economy. I commend it to the House.