Ossian Smyth (Dún Laoghaire, Green Party) | Oireachtas source

I am very glad to be here to introduce this Bill. It is an important part of the

Government's response to increasing concerns with regard to security of electricity supply, with particular regard to the identified generation capacity gap over the coming winters. It is in this regard that we produced the Bill. I am glad to be opening the debate today and to be able to set the context for the actions to be taken on foot of this Bill. I will describe the sections of the Bill and, having regard to its main provisions, set out some background as to why they are urgently needed. My overarching message is that while the provisions outlined in this Bill are part of a broader package of measures, it is critical to put the Bill and its measures into place before summer recess. I seek permission to achieve that.I will discuss the generation capacity gap that the provisions in this Bill seek to address, along with outlining how the measures in it will support our security of supply as we transition to up to 80% renewable electricity by 2030. I will reaffirm the urgency of the Bill to maintain a secure electricity supply for customers. I will also outline its necessity in helping to protect customers against increasing electricity costs through the establishment of a process to allow for the public service obligation, PSO, to be credited as a benefit to electricity customers when the Commission for Regulation of Utilities, CRU, calculates a negative PSO.

On the factors affecting security of electricity supply, Senators will appreciate that we in Ireland face additional pressures due to our geographical location, low levels of interconnection with other countries, fossil fuel dependency and the smaller scale of the Irish market compared to many other European countries. However, the most immediate factor affecting security of electricity supply in Ireland over the coming years is a potential generation capacity shortfall that was identified in EirGrid's all-island generation capacity statement published in September 2021. This potential capacity shortfall arises in periods of peak demand when there are low levels of wind generation and interconnection available to the system. The shortfall has arisen largely due to non-delivery of previously contracted capacity, increasing electricity demand and the increasing unreliability of existing plant. The CRU has statutory responsibility to monitor and take measures necessary to ensure the security of electricity supply. It is assisted in this role by EirGrid, Ireland's electricity transmission system operator.

On 7 June 2022, the CRU directed EirGrid to procure, using the most expeditious means available, approximately 450 MW of additional generation capacity from the winter of 2023-24 to the winter of 2025-26 to ensure a secure electricity supply for that period. This temporary generation capacity will be in place until more enduring capacity can be delivered through regular market auctions. The specific nature of this CRU direction requires the legislation before the House to ensure EirGrid can fulfil the direction as required. This legislation includes supporting provisions for EirGrid in its role of securing the temporary generation units with equipment manufacturers and contracting for its deployment and operation by electricity generators and ensures the necessary financial support can be given to EirGrid to achieve the objective. In this regard, I will bring a Supplementary Estimate next week to provide for the capital funding for EirGrid to place orders on the generation units required.

While this legislation facilitates security of supply through the provision of temporary generation, which ensures there is sufficient reserve capacity on the system to enable security of supply in peak periods when there is low wind generation and interconnection available, it is important to note that this will not impede any of our plans for renewables, interconnection, batteries, demand side response or energy efficiency. Having this reserve capacity available allows EirGrid to have more confidence in scheduling network outages for new connections to the grid such as new wind and solar farms from the recently announced renewable electricity support scheme 2, RESS 2, list of projects, without jeopardising security of electricity supply. This is very much in keeping with Government policy of delivering up to 80% renewable electricity by 2030.

Further to this, the Bill also provides for an increased borrowing limit for both EirGrid and Bord na Móna. This will enable EirGrid to invest in the Celtic interconnector with France and other necessary investments to ensure our grid can accommodate up to 80% renewables by 2030. The Bill also enables Bord na Móna to further develop its brown to green strategy and deliver new

investments to former peat harvesting regions.

To ensure the security of our electricity supply over the coming years, it is vital that the legislation be passed prior to the Dåil rising in order to make sure certain measures can be initiated in time, in particular that EirGrid from July 2022 can acquire electricity generation, sell and transfer the electricity generation plant to electricity generators and enter into agreements with electricity generators for the operation of the electricity generation plant. I emphasise the urgent nature of this situation and reiterate that it is of paramount importance that the legislation be passed immediately.

Crucially, as well as providing for the provision of temporary generation capacity for the coming years, the Bill establishes a process to allow for the PSO to be credited as a benefit to electricity customers when the CRU calculates a negative PSO. This provision will enable the delivery of savings to electricity customers. Under current legislation, the PSO levy is charged to all final electricity customers to fund renewable electricity generation schemes in support of national policy objectives. The RESS has introduced a two-way floating premium, which means if the wholesale market price is higher than their bid price the supplier pays moneys back to the customers through the PSO mechanism.The existing legislation, however, does not provide for crediting a negative PSO levy.

In recognition of the rising cost of living and of the impact on households and businesses of increasing energy bills, the Government approved, on 14 June 2022, legislative amendments to enable PSO payments to be credited as a benefit to electricity customers when the Commission for the Regulation of Utilities, CRU, calculates a negative PSO. This legislation is required in order for the CRU to be able to direct that the PSO can be credited to customers over the period from quarter 4 of 2022 to quarter 3 of 2023. This credit has been provisionally calculated by the CRU to be in the order of €75 for the average domestic customer. The CRU is expected to make its final decision on the credit amounts later in July. It is vitally important in these times of rapidly rising energy costs that we allow passage of this Bill to deliver this saving to households and businesses and, in particular, financially vulnerable residential consumers.

I will devote my remaining remarks to the subject matter of the Bill. It is designed to enable EirGrid to take certain emergency measures, including acquiring electricity generation plant and entering into agreements with electricity generators regarding electricity generation plant, for the purpose of ensuring and protecting security of supply, pursuant to a direction of the CRU. For that purpose, the Bill provides for the Minister for the Environment, Climate and Communications to give financial support to enable EirGrid to take certain measures. The Bill also increases the borrowing limit of EirGrid through an amendment of the Electricity Regulation (Amendment) (EirGrid) Act 2008. The Bill includes an amendment of the Electricity Regulation Act 1999 to provide for payments to final customers of certain benefits relating to compliance with a public service obligation. The Bill also increases the borrowing limit of Bord na Móna, through an amendment of the Turf Development Act 1998.

I will provide a section-by-section summary of the Bill. There are 14 sections. Section 1 is a standard provision which provides for definitions. Section 2 sets out that expenses incurred by the Minister in the administration of the Act are to be paid out of moneys provided by the Oireachtas, to the extent sanctioned by the Minister for Public Expenditure and Reform.

Section 3 provides that EirGrid shall take urgent measures, as required, under a direction from the CRU to ensure security of electricity supply, including acquiring electricity generation plants, selling and transferring such plant to an electricity generator, and entering into an agreement with an electricity generator to operate the electricity generator plant. It provides for the operation of generation plant in line with the CRU direction and for operations to cease upon the fulfilment of the direction or 31 March 2027, whichever is earlier.

Section 4 prevents EirGrid from operating a generation plant acquired by it pursuant to a direction from the CRU and provides for it to enter an agreement with an electricity generator to sell the emergency generation plant and undertake its operation. This section also ensures that the electricity generator may only receive reimbursement of reasonable costs and a reasonable return as may be approved by the CRU for undertaking this activity, and that upon termination of the agreement, the electricity generator shall dispose of the electricity generation plant in an arm's length transaction in accordance with any direction of the commission. This section includes a provision that in all circumstances EirGrid shall be paid the full price of the electricity generating plant and any profit received on a sale of the plant by the electricity generator.

Section 5 provides for obligations on EirGrid to take measures, as required, under a direction from the CRU to ensure security of electricity supply and ensures that EirGrid obtains no benefit other than reimbursement of reasonable costs and a reasonable return as may be approved by the CRU.

Section 6 ensures that all functions performed under this Act shall be in compliance with laws and treaties of Ireland and the European Union.

Section 7 provides for the Minister to provide financial support to EirGrid in an agreed form and manner, with the consent of the Minister for Public Expenditure and Reform. It obliges EirGrid to use financial support for the purposes of complying with a direction of the CRU only, and that the use of any income or revenue received in connection with the agreement with electricity generators shall only be used for the purpose provided or the purpose of making distributions to its shareholders as determined by the directors of EirGrid.

Section 8 provides for a quarterly report by EirGrid to the CRU.

Section 9 provides for the CRU to make further directions to EirGrid, the public electricity supplier or an electricity generator to address the temporary electricity emergency, and where such a direction is not complied with, to apply to the High Court to make such order as it thinks fit.

Section 10 provides for the CRU to report upon progress to the Minister no later than 31 October 2026 and for the Minister to make an order to extend the period for which the emergency generation can be operated by one year, upon approval by both Houses of the Oireachtas. Section 11 provides for an increased borrowing limit for EirGrid of up to €3 billion.

Section 12 provides for the amendment of the Electricity Regulation Act 1999 to allow for PSO payments to be credited as a benefit to electricity customers. Calculation of the annual PSO levy is a matter for the CRU. On 14 June, the CRU issued a draft determination that gives the potential for a refund of about €75 for the average domestic customer with the passage of this enabling amendment.

Section 13 provides for the amendment of the Turf Development Act 1998 to increase Bord na Móna's borrowing limit to €650 million.

Section 14 provides for the Short Title and commencement of the Act.

I have outlined the main provisions of this emergency measures Bill and provided additional detail on the sections. I hope this will be of assistance to Senators. I look forward to an informed and meaningful debate and to working constructively with Senators on all sides of the House.