Brendan Kenneally (Fianna Fail)

I welcome the Bill and congratulate the Minister on facing up to and dealing with a situation that has particular relevance and in respect of which there is a sense of urgency.

Never in the history of the State have we been so dependent on a substantial, regular and guaranteed source of energy. With the entry of new players into the market, everyone needs to know precisely where they stand and how those new players can compete on a level playing pitch and be guaranteed rights and access to the market. Equally, the public needs to know that there will always be an energy supply, particularly as regards electricity. For all the criticisms levelled at it, electricity has served this nation extremely well, sometimes in difficult economic and budgetary conditions.

Traditionally, the ESB has been the dominant force in the Irish electricity market. This is hardly surprising when one considers that it has been the only supplier almost since the foundation of the State. I previously paid tribute in the House to the service the ESB has given to this country and its people. While I fully realise that there were deficiencies and that we have all had our problems with some aspect of its operations from time to time, the performance of the company has been exemplary. As we prepare for a major change in electricity supply and distribution and with more and more companies entering the electricity market, it would be wrong to forget the service the ESB provided to the fledgling State and the technical and financial difficulties the company was often obliged to overcome.

We must recognise, however, that we live in a new Ireland with a new economy, a larger population and a vastly greater demand for energy. The sector must, like everyone else, move with the times. A reliable electricity infrastructure, providing quality performance, is vital for Ireland's socio-economic development. The huge voltage transmission system is similar to our motorways and our broadband telecommunications network and is a component of the backbone infrastructure that supports the economy. In turn, the transmission network forms the backbone of the electricity supply system in Ireland. It is a meshed network of high voltage lines and cables for the transmission of electricity supplies throughout the country.

Electricity peak demand is forecast to increase by approximately 20% over the period of the transmission development plan 2006-10, which was issued early last year. In addition to the 532 MW generation connected to the transmission system towards the end of 2005, connection agreements in respect of a further 770 MW of generation capacity have been signed. All of this is expected to be connected by 2010.

The development plan sets out the development projects that will have been initiated to meet these future needs and discusses the potential for further development in the next five years. The main features of the plan, which involve developments in all parts of the country, include the extension of the 220 kV system into the north west; expansion of the 400 kV system to provide necessary bulk transfer capacity out of Dublin and Moneypoint; strengthening of the networks in and around Athlone, Castlebar, Cavan, Cork city, Galway, Letterkenny, Meath Hill, Newbridge, Tullamore and Wexford; connection of eight new distribution operator system operator stations; connection of ten new generators to the transmission system; reduction of high short-circuit levels in Dublin and Tarbert; strengthening of the Dublin-Louth corridor; and a second major interconnector with Northern Ireland.

In the current era, it is no longer prudent to depend on just one supplier in respect of our electricity needs and the forthcoming developments to which I refer illustrate the importance of guaranteeing continuity of supply and bringing competition into the market. Ireland is a small island with a small population and it makes sense to have an all-island market.

When the ESB was established — a period when we needed a reliable and constant supply of electricity to fuel our growth — there was precious little public capital available and very little investment money within the private sector. The ESB provided the required stability and we should be grateful to it for that. However, the Ireland of today is not that which obtained in the 1930s. Our needs are now different and far greater.

Security of supply is an important issue and the role that natural gas plays in this regard is often forgotten. For example, natural gas accounted 44% of electricity generated in 2005. In light of the significance of natural gas in the generation fuel mix, security of its supply is a key issue, particularly when one considers that Ireland is heavily dependent on imported natural gas. The Commission for Energy Regulation, is satisfied that the existing infrastructure is capable of meeting anticipated demand in the coming years. It is also satisfied that there are appropriate measures in place to protect security of supply of natural gas. Such measures include interacting with the UK transmission system operator to identify any issues affecting the importation of gas to Ireland and to establish procedures for managing the impact on Ireland's gas supplies of any supply emergencies in the UK.

There is adequate precedent for co-operation between our two islands. One month ago, 16 ESB crews travelled to the UK to help restore power to the thousands of homes that were left without electricity following some of the worst storms there in 17 years. The 16 crews and their managers set off in ESB vehicles to work in the Manchester and Liverpool areas under the direction of Manweb, the networks utility in the area. The Minister congratulated the crews and commented that the sharing of resources at times of need is an important factor in cross-country co-operation. Other measures in place and highlighted by the Commission for Energy Regulation include the establishment of a task force on emergency procedures to ensure a co-ordinated response to a supply issue affecting natural gas on both the gas and electricity systems would minimise any impacts on customers and requiring large thermal generation to be capable of generating on an alternative fuel and requiring five days on-site storage of same.

This is perhaps a good opportunity to refer to the controversy regarding the bringing ashore in Mayo of gas from the Corrib field. This has been stoutly and resolutely resisted by a small number of local people, supplemented by imported protestors with few, if any, links with the area and seemingly little consideration for the future of this country and successive generations of its children. If there are still perceived deficiencies in Shell's handling of the gas pipeline or any other element of its essential operation, I have no doubt the Minister and officials of his Department are well capable, if allowed, of discovering a way to address them in a comprehensive and amicable fashion. As the protests go on and as more information becomes available, the credibility of the protest diminishes considerably. It is to be hoped some formula can be found sooner rather than later to fully resolve the issues, but I doubt that all of the protestors are open to such a course. The majority of the local population do not have a problem and the minority do not have an acceptable solution.

An all-Ireland market for electricity will encourage competition among a growing number of players and will inevitably result in economies of scale. There can be sharing of strategic costs and a greater security of supply generally to customers. This will hopefully lead to lower prices, but that will also depend on international fuel price escalations which are totally outside our control. Other than that, competition should help to drive down prices and keep them in check in the same way it does across the entire economy. We see this from other markets, where prices are lower because of competition. We do not need to look beyond our own country to see the beneficial effects of that.

In Britain it is estimated that 11 million out of 26 million consumers have changed supplier, while 8 million out of 20 million gas consumers have changed their supplier. The comparative figure in the republic is only 40,000 and most of those are probably on the commercial side. Those figures are a couple of years old at this stage, but I have no reason to believe they have changed substantially in the meantime. In due course in this country, experience will result in much greater flexibility and less blind loyalty in the customer base.

As the market grows in Ireland, people will have an even greater opportunity to change supplier if they so wish. It will be in everyone's best interests to be more efficient and to hold onto their customer base. The transfer capability of the existing North-South interconnector is restricted, especially for transfers from south to north. The provision of a second interconnector has been studied and costed and will be provided sooner rather than later. The benefits to the island as a whole from the existing interconnector from Northern Ireland to Scotland and a proposed interconnector between Ireland and Wales will not be fully realised without further North-South investment. The next step in meeting our goals is to have a simple wholesale market for trading electricity which spans the entire island.

The Bill envisages that the new market will provide for a common set of trading arrangements that will apply to both Ireland and Northern Ireland. These will be set out in licensing and contractual arrangements agreed with market participants. Day to day trading will be managed by a single market operator that is established by the two transmission system operators, EirGrid and System Operator Northern Ireland, SONI, as a contractual joint venture. An all-island long-term objective would be that by the end of the decade we would expect to see an all-island competitive electricity market where legacy costs have largely disappeared, where the generating plant mix is much more efficient and environmentally sustainable, and where customers are able to exercise real choice in their selection of supplier.

In recent times most people have come to the realisation that there is not an endless supply of energy-giving fuels. It has also dawned on us that we must rein in our rampant destruction of the environment and that we must start now. We may not be, by any measure, the worst offenders or the greatest sinners in regard to the production of carbon emissions, but we must play our part and be seen to. We must not, of course, continue to exceed our quotas under the Kyoto agreement. There is recent evidence that we have slowed the increase.

It would not take a great deal of effort on our part to reduce the demand for energy. We need only look at the waste of electricity and gas to realise we can do much better. Many lights can be switched off and many machines, from industrial to personal computers, printers, televisions, battery chargers, overnight central heating — the list is endless — can be switched off when not in use to effect considerable savings. The "Power of One" campaign can teach us a great deal.

After some thought, I have come to the conclusion that we are nothing less than spendthrift when it comes to energy. Who has not left on lights that are not required, used clothes driers when the sun is shining, maintained heating at too high a temperature, left the heating running when they are away overnight, failed to put a lagging jacket on the hot water tank, used the hot water tap for simple hand-washing or opened a window instead of turning down the heat? The list is endless. None of these makes a great deal of difference in isolation but together they make a significant saving and, multiplied by a large percentage of the population, the difference can be enormous. The simple message is that if we do not increase our demand for energy, we will not have to produce more and the benefits are great and visible all round.

The debate about electricity generation by nuclear power is still ahead of us. On the one hand is the acceptance of electricity from another country generated by nuclear power, on the other is our continued use of fossil fuels which are rapidly diminishing, particularly by the burning of coal, which, by any standards, is a dirty process. There is also the debate about alternative and renewable energy resources such as wind and wave power, biofuels and hydro-electric. Most of these are being used, but not by any means to the fullest extent. If we were to develop fully these other systems, we would have sufficient generation capacity, with standby access to gas and oil, to do us well into the future.

The nuclear debate lurks in the shadows but like so many other contentious issues in this country, it will be upset by extremist opinion on both sides. I have no desire to promote nuclear energy but when the debate starts, please let it be reasoned, measured and logical.

This Bill is a necessary step forward and further evidence that the country is growing up and leaving the constraints of a less than happy past behind us. I commend it to the House.