Seán Power (Kildare South, Fianna Fail)

I acknowledge the contributions of Members of the House. They have all supported the provisions of the Bill. Senators raised a number of matters that were also raised during the Dáil debate on the Bill, including issues pertaining to security of supply, costs, competitiveness and the extension of the gas network.

Senator Burke spoke about the exclusion from the gas network of certain villages that are on the periphery of towns that are served by the network. It is clear that people in some areas would like to be connected to the network. I remind him that no locality will be served by the network if it does not make economic sense. Following a change that was made to the relevant system of evaluation, towns are no longer judged individually. Centres of population can now be considered in groups or clusters. This gives them a better chance of being included, obviously. A number of towns have been already successful in this regard.

I was also asked about the possible extension of the network. I remind the House that Bord Gáis Éireann is obliged to consider economic criteria when it is examining whether it is feasible to extend the gas network to a particular location. I assure the Senators who have raised the matter that we have made some changes to the process. I hope we will continue to see the extension of the network and the subsequent connection of more and more homes to it.

The issue of security of supply was mentioned during the course of the debate. The Commission for Energy Regulation is developing long-term strategic plans for the licensing of the Kinsale field as a storage facility. The Department of Communications, Energy and Natural Resources is working with the Northern Ireland Department of Enterprise, Trade and Investment to examine options for increased gas storage on an all-island basis. The Members who spoke about security of supply highlighted the recent difficulties between Russia and Ukraine. The dispute in question, which was widely covered in the newspapers, reiterated the importance of security of supply. It is important for us to develop the Corrib gas field and to bring those supplies ashore as quickly as possible. We are making every effort to ensure that happens.

The Department of Communications, Energy and Natural Resources is working with the European Union to deliver fully integrated regional gas markets in northern Europe and to provide for the diversification of supply. The storage of liquefied natural gas is an important element of security of gas supply strategies around the world. The development by Shannon LNG of a liquefied natural gas terminal near Tarbert, which is on the Shannon Estuary, is another important element of the development of the market in the context of security of supply. When the Corrib field is in full production, it will significantly reduce our reliance on imports during its lifespan. It is estimated that it will meet 60% of annual demand and 40% of peak demand for approximately six years, until supply is expected to start to decline. It is thought that significant potential exists for further substantial oil and gas finds in Irish waters. One of the Department's key priorities is to encourage further exploration activity in the Irish offshore zone.

Statistics on Ireland's energy imports underline the imperative need to reduce this country's dependence on fossil fuels. The Government is committed to delivering on ambitious targets for the accelerated development of renewable energy, which will progressively and sustainably reduce our dependence on imported oil and gas. Installed wind-powered electricity generation capacity has now reached 950 MW and is set to reach more than 1,000 MW by the end of this year. As wind power penetration increases, we are on target to provide 15% of our electricity from renewable sources by 2010. This figure is set to increase to 40% by 2020, assuming there is a consistent build rate of the necessary infrastructure. While we have set ambitious targets, we have shown in recent years that we have the capacity to meet such targets. There is a willingness to do so.

Last Friday, I had the pleasure of meeting a number of people who are involved in the industry. They are making a valuable contribution to the renewable energy sector, which is one of this country's real success stories. At a time when many sectors of this country's economy are experiencing serious difficulties and are concerned about the future, the renewable energy sector can look to the future with great confidence. The Department of Communications, Energy and Natural Resources looks forward to working with those involved in that sector to achieve our important goals.

The goals and objectives of Bord Gáis Éireann are in line with Government policy. It is crucial that there is competitiveness in the various sectors of the energy industry. Bord Gáis Éireann provides competition in the gas and electricity retail sectors while ensuring that the natural gas transportation network, which is a strategic national infrastructure asset, is developed and maintained to the highest specifications in terms of safety and cost. Bord Gáis Éireann ensures that it is operated as efficiently as possible by the independent transportation system operator, Gaslink. Bord Gáis Éireann maintains the network to ensure the long-term security of the supply of natural gas in Ireland. The proposed increase in the statutory borrowing limit of Bord Gáis Éireann will give the board the financial ability to continue the impressive growth of the organisation. It will also allow Bord Gáis Éireann to continue to make a considerable return to the State as shareholder, not only through dividend payments but also through increased shareholder value. A strong State-owned gas network will provide comfort to potential investors looking to the State. The guarantee of supply of natural gas has been instrumental in recent years to the decision by various players to invest in electricity generation in Ireland. The continued strong performance of Bord Gáis Éireann will contribute towards the presentation of the State as an attractive location for investment. We recognise the competition that exists from other countries and that we must make ourselves as attractive as possible to those who are willing to invest here and create much needed employment.

I note Members' concerns regarding gas prices. Bord Gáis Éireann is granted a rate of return by the Commission for Energy Regulation that allows it to recover its costs plus a small margin for future development of the network. Any approved gas prices are based on the optimal company standard applied by the regulator. Under its establishing legislation, and according to competition rules, Bord Gáis Éireann is obliged to operate a system that is economical. It cannot, therefore, operate at a loss, as this would undermine other suppliers, existing or potential, in the open competitive gas supply market. Decisions on Bord Gáis Éireann prices are a matter for the regulator. It must also purchase gas in advance, which is why decreases in wholesale gas prices are not immediately reflected in domestic prices. The request for a substantial price increase last summer was not granted, with the regulator opting instead to review the matter towards the end of the year. This was a wise decision, as proved by the subsequent decrease in wholesale prices.

I thank Members for their constructive contributions. I look forward to putting the Bill on the Statute Book as quickly as possible.