Seán Power (Kildare South, Fianna Fail)

I thank Senators for their very positive contributions. I very much appreciate their support in progressing the Bill through Committee Stage. The Bill has been passed by the Dáil and will make its way to the President for consideration and signature into law.

As I mentioned earlier, we are attempting to increase the statutory borrowing limit of Bord Gáis Éireann from its existing €1.7 billion to €3 billion. This will provide the company with the legal ability to access funds to develop its strategic direction which it has outlined on a number of occasions.

Bord Gáis Éireann has been in operation for over 30 years and in that time, it has developed the gas network which runs to almost 12,500 km of pipeline serving over 600,000 customers. The expansion of its natural gas network in the past 30 years has ensured that a clean, efficient and environmentally clean fuel is available to a considerable portion of the population. Another portion of the population does not have the opportunity to avail of this fuel and I hope we can increase that service throughout the country.

The board has made a critical contribution to the development of the economy in many ways. Major infrastructure projects delivered by the board over the past 12 years have been on time and within budget. They include the pipeline to the west, from Dublin to Galway and on to Limerick; the South-North pipeline, from Dublin to Belfast; the Mayo-Galway pipeline, which will facilitate the transportation of Corrib gas to the Irish market; the north-west pipeline from Belfast to Derry; and the second gas interconnector with Scotland, which has secured the supply of gas to Ireland since its completion in 2002.

In that time, Bord Gáis Éireann has paid close to €700 million to the Exchequer in dividends. An increased ability to borrow funds will allow Bord Gáis Éireann to develop the gas network further over the next five years and it is planned to extend the network by a further 1,500 km and to connect another 150,000 new customers during that period. For safety reasons, all remaining cast iron pipelines will be replaced by polyethylene pipes. Bord Gáis Éireann will also invest in new systems and technology to improve its customer service further.

Wave energy was mentioned and the possibility of further investment in that regard. Bord Gáis Éireann is actively involved in the development of renewable energy. At present the focus is mainly on wind energy but it is also looking at various methods of generating electricity through renewable sources. The technology in regard to wave energy is very much in its infancy and at an early stage of development. Bord Gáis Éireann is very keen to support the development of this technology through its strategic investment division with a view to securing a varied portfolio of renewable generation.

The emphasis has been on the wind energy area and it is obvious technology in that area is much further advanced and developed. One can see it working quite well around the country. We are still very conscious of the resource we have off our shore and are very keen to develop that.

Senator O'Reilly asked about energy prices. A review of the price was not due for some time but we have asked for one to take place as a matter of urgency. The regulator will meet interested parties over the next few weeks and we expect he will come back and present options to us in three to four weeks when the matter will be brought before Government. From our point of view, that cannot happen quickly enough. As the Senator will be aware, the responsibility of setting prices is not something that rests on the Minister's shoulder but is the regulator's job. We are anxious that the regulator does his job and that we get a decision on this as quickly as possible.

While Bord Gáis Éireann's safety standards are of the highest quality, there is no room for complacency and there is always room for improvement.

The board will continue its endeavours to further improve its emergency response standards and pipeline safety standards. It is now taking a leading role in the energy sector generally as well as building a portfolio of electricity generating assets, including the 445 MW plant at Whitegate and other wind-based renewable projects it is seeking to develop.

A retail domestic electricity business provides much needed competition in that sector. We talked about reducing pricing, something on which we could all agree. There is nothing better than competition to reduce prices. We encourage it and it continues to be our policy.

There have been many contributions today and last week, not only by Members of this House, but also by Members of the Dáil on the provision of natural gas to various locations around the country, which to date have not yet been connected to the natural gas network. As I said before, Bord Gáis Éireann is obliged to have regard for economic factors when assessing the potential for rolling out its gas network and in some cases it is just not economically feasible to bring gas to particular locations.

I know Members on all sides are anxious and make the case that gas be provided to particular areas such as small villages. We cannot ignore the economics of that. If it is not viable to bring gas into one area, people who are receiving it pay more than they should for it. Bord Gáis Éireann has made some changes to the way it deals with areas. Instead of dealing with an area on its own, it can now be dealt with as one of a cluster, which means more areas can receive gas.

Bord Gáis Éireann has always tried to be as flexible and as innovative as possible when examining the economic feasibility of delivering gas to locations. It proposed to the regulator that the economic criteria for assessing towns might be amended so that instead of looking at locations individually, towns could be grouped before the economic criteria are assessed. This proposal was accepted by the regulator and it resulted in several towns being connected, whereas under the previous policy this would not have been possible. Under its new towns analysis established in line with the new assessment criteria, Bord Gáis Éireann is close to completing phase 3. Hopefully, several more towns will have been found to meet the required economic criteria for connection to the network.

All these developments are in line with the Government's energy policy framework document up to 2020, Delivering a Sustainable Energy Future for Ireland, which provides for the sustainable development of the State energy companies as well as ensuring environmental sustainability, security of supply and competition in the energy sector for the benefit of customers.

There has been much discussion recently on gas prices. As I mentioned before, the gas business section of Bord Gáis Éireann is regulated by the Commission for Energy Regulation, which allows it a regulated rate of return on its transportation business. It can only recover costs on investments approved by the regulator. In setting the rate of return, it applies the cost and level of borrowing of an efficiently operated and financed company with comparable systematic risks to Bord Gáis Éireann.

However, rising energy costs are a major concern. The two-phase approach to tariff regulation adopted by the regulator last year resulted in price increases in the Irish market which were lower than those in some other markets, where increases in gas tariffs of over 40% were imposed. The Irish gas tariff increase was 20%. In taking this approach, it took account of the difficult economic situation and the impact of price increases on business and consumers.

While the regulator is required to ensure that regulated tariffs are cost reflective, the Minister has asked it to look at the possibility of lowering energy costs to consumers in a non-distortionary fashion through an expedited review of tariffs. If current trends in energy prices, particularly gas, continue, a double digit cut in gas prices might be feasible later this year. Looking at the long-term pricing of gas, there is no reason that cannot be achieved and we are very confident it will be. The Government's priority is to ensure that swift action is taken in the interests of energy consumers.

The part played by Bord Gáis Éireann in the development of the Irish economy for more than 30 years has been significant. We have a robust gas supply network with a secure supply in the long term. This security of supply of natural gas has also supported investment in electricity generation in Ireland in recent years. I thank the Members of this House for their support for the proposed increase in the statutory borrowing limit for Bord Gáis Éireann to €3 billion and for the passing of this Bill through all Stages in a very efficient manner. I acknowledge the very constructive contributions from Members.