Seán Power (Kildare South, Fianna Fail)

I apologise for not distributing it earlier. We will make it available and if it needs to be autographed or anything else, we will facilitate that as well.

The Members of the House will be aware that Bord Gáis Éireann has a statutory mandate to provide a system for the supply of natural gas that is both economical and efficient. Unfortunately, the requirement to deliver a network on an economic basis means that some areas miss out on the benefits of natural gas as the construction of the necessary infrastructure does not meet the economic criteria set out. However, Bord Gáis Éireann has developed the network extensively since its establishment in 1976 and now 18 counties in Ireland and four in Northern Ireland are connected to the natural gas network.

Members will be aware that the procedures for determining whether towns or locations can be connected to the network were changed in agreement with the Commission for Energy Regulation in such a way that instead of towns being evaluated individually, they would be taken in groups or clusters. This resulted in several towns being connected that would not have qualified under the previous method. Eleven towns along the Mayo-Galway pipeline were earmarked for connection to the natural gas network in phase one of Bord Gáis Éireann's new towns analysis under this connections policy. Six of these have been connected and the remaining five will be completed this year. Phase two confirmed that six more towns will be connected. Cashel was connected in 2008 and the remaining five phase two towns will be completed this year.

Bord Gáis Éireann has almost completed phase three of its new towns analysis as part of its connections policy to establish whether it is feasible to extend the gas network further. I understand the publication of this report is imminent. However, I reiterate that the locations under examination must meet the economic criteria before the network can be extended to these areas.

Bord Gáis Éireann's gross borrowing is expected to reach the existing statutory borrowing limit of €1.7 billion this year. The existing debt is made up mainly of long-term facilities put in place to fund the large gas transmission projects, to which I referred, that were completed over the past ten years. The expansion of the gas network in recent years from 8,200 km in 2000 to its current 12,500 km has also been funded by long-term debt matching the expected life of the infrastructure.

The operation and development of the gas network in the next five years includes adding another 1,500 km of pipeline to the network; the connection of 150,000 new customers; replacement of the remaining cast-iron network with polyethylene pipes; and investment in new systems and technology to provide improved customer service. Bord Gáis Éireann will continue to meet its emergency response standards and pipeline safety standards.

Bord Gáis Éireann also intends entering the domestic retail electricity market this year. With its existing customer service operations, billing systems and mechanisms related to its retail gas business, savings can be made in this area when providing a retail electricity service, thus providing added value to both Bord Gáis Éireann and its customers.

Members of the House will be aware that Bord Gáis Éireann is also in the process of constructing a 445 MW combined-cycle gas turbine electricity generating plant at Whitegate, Cork. The board's plan is to develop a portfolio of electricity generating plant, including renewable generation and flexible power plants, to support renewable power generation. This access to its own supply of electricity will ensure a stable, vertically integrated business model, which will ensure, in turn, Bord Gáis Éireann's long-term competitive commitment to the electricity retail market.

As I mentioned to Members of the Dáil when the Bill was introduced, Bord Gáis Éireann has an ambitious capital investment programme of up to €2 billion over the coming five years with a view to becoming a competitive dual-fuel supplier in the Irish market. The enactment of this legislation to increase the statutory borrowing limit to €3 billion is an integral part of this process. This development is in line with the Government's energy policy framework document, Delivering a Sustainable Energy Future for Ireland, which specifically provides for the sustainable development of State energy companies. Bord Gáis Éireann's commercial direction will provide competition and environmental sustainability, which are key pillars of the policy framework.

The development of business interests outside its traditional core business of natural gas transportation and supply does not impact negatively on the price of gas to Bord Gáis Éireann customers. The company's gas business is regulated by the Commission for Energy Regulation which allows Bord Gáis Éireann a regulated rate of return on its transportation business. It can only recover costs on investments approved by the Commission for Energy Regulation, CER. In setting the rate of return, the CER applies the cost and level of borrowing of an efficiently operated and financed company with comparable systematic risks to Bord Gáis Éireann. Therefore, the board is incentivised to borrow funds as efficiently as possible.

The security of gas supplies was to the fore recently when difficulties between Russia and Ukraine emerged following last Christmas. I assure Members that Ireland is not experiencing any impact on gas supply arising from that situation. Ireland's demand for gas is met almost entirely by imports from the United Kingdom. Irish imports account for approximately 5% of the UK gas market. The vast bulk of UK gas demand is met by indigenous North Sea production and imports from Norway. The UK is also interconnected with continental Europe and receives some gas from Russia. However, this accounts for less than 2% of the gas in the UK system. On this basis, the recent Russia and Ukraine situation did not impact adversely on Ireland. However, the situation clearly underlines the strategic importance of diversifying our sources of gas supply. In this regard, the Corrib gas field, which could meet 60% of our annual demand for gas for approximately five years, is very significant.

The part Bord Gáis Éireann has played in the development of the economy since 1976 has been significant. The robust gas supply network developed by Bord Gáis Éireann, including connection to the UK grid through the interconnectors, has guaranteed security of supply in the long term. Given that 60% of our electricity is generated by gas, the secure supply of natural gas has provided the necessary assurance to prospective competitors in the electricity generating sector that investment in electricity generation in Ireland is an attractive business proposition. In this context, the development of the gas network, while not physically reaching all areas, has benefitted all areas of the State through its support of the electricity market. In the process, Bord Gáis Éireann has contributed €686 million in dividends to the Exchequer since its foundation, including €28 million paid in December last year.

Since 2000, Bord Gáis Éireann has increased turnover from €496 million to €1.2 billion. Profits have increased from €70 million to €142 million. Net assets have increased from €672 million to €1.3 billion, placing the utility on a sound financial footing. This success has allowed Bord Gáis Éireann to develop its network continually, making a vital contribution to the national economy and providing excellent service to its customer base. It is in a strong position to meet the challenges it faces in terms of environmental sustainability and competition while ensuring a safe and secure supply of natural gas.

It is important to note that an increase in Bord Gáis Éireann's statutory borrowing limit does not give it permission to raise its borrowing to his level. Each project put forward by Bord Gáis Éireann will require the approval of the Minister for Communications, Energy and Natural Resources with the consent of the Minister for Finance. The board is obliged to act in its best interests and no proposals will be supported that would put the long-term sustainable future of the utility at any unnecessary risk. Ongoing borrowing levels will be monitored and will be subject to full commercial criteria, such as ability to repay and protection of the balance sheet. Clearly, Bord Gáis Éireann plays a pivotal role in our economy. I ask the Members of the House to support the proposed increase in Bord Gáis Éireann's statutory borrowing limit to €3 billion. Go raibh maith agaibh.