Seanad debates
Tuesday, 5 February 2019
Nithe i dtosach suíonna - Commencement Matters
Energy Regulation
2:30 pm
Michelle Mulherin (Fine Gael)
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I welcome the Minister to the Chamber to discuss this very important issue. I am very concerned about the way the energy regulator is doing its business. It is not providing transparency in its decisions or reaching those decisions in a timely manner. A project which clearly illustrates the problems with the energy regulator is the proposed Mayo renewable energy project, a 45 MW high efficiency combined heat and power biomass fuelled plant to be built on the former Asahi site outside Ballina. The project lodged applications to the regulator for various consents and licences in June 2018. Previously, the project, under a different promoter, had been licensed in 2012 by the energy regulator. Unfortunately in 2016, even though the project was partially built, progress stalled due to financial difficulties. Progress stopped but new promoters have now come on board.This project is worth €255 million, of which €95 million has been invested to date by the new promoters who have taken an equity stake of €95 million in the project. The promoters have taken on the task of revitalising and reviving the project. The planning permission has been extended by Mayo County Council and the promoters have received renewed consent from the Environmental Protection Agency, EPA, in respect of emissions. The promoters have received confirmation from ESB Networks that the grid offer remains in place and will be offered to the new company. However, the promoters have tried to deal with the energy regulator, now known as the Commission for Regulation of Utilities but have run into a stone wall. Initially the energy regulator appointed consultants and the consultant did not want to give the project a high efficiency certificate, as had previously been given and subsequent to that the energy regulator has retained new consultants.
International consultants retained by the new promoters have certified that no material change has been made to this project since it was initially certified in 2012. Equally to my knowledge, there has been no change in legislation. I am very concerned that there will be a repeat of what happened when Apple proposed to build a data centre in Athenry.
This project is a golden opportunity for north Mayo and is key to developing our national policy objectives, such as renewable heat and energy, to which I know the Minister is very committed. It is also tied in with the development of a data centre on the same site, which requires a renewable energy project to be co-located with it. This critical project has been stalled.
I believe that under the process that is being pursued by the Commission for Regulation of Utilities, the promoters should be entitled to know what the problem is and the reason for such delays when there has been no material change in the projects and why a second set of consultants had to be retained.
Second, in respect of the legislation covering the Commission for Regulation of Utilities, I believe there should be a time limit placed in legislation upon the regulator wherein it must give a decision. As the Minister knows, time is of the essence for the development of projects, promoters and investors do not wait around and will go somewhere else. This project is commercially sensitive to time delays.
With all the resources available to the energy regulator, why is it outsourcing the evaluation of the project to another set of consultants? All this is taking time, when we have a project that is time sensitive. As I have said already, we have seen what happened in Athenry. The whole community was devastated by the outcome of the delay in giving a decision of consent to Apple and ultimately because it took so long to do so, Apple pulled out.
There are commercial realities. There are climate change objectives and objectives for the development of the site. This site is in a peripheral area, where it is hard to attract investment and growth. This project offers a golden opportunity and I do not believe the energy regulator has dealt with these investors in a fair way. I do not believe it is fair from all the view points I have set out to the Minister and I believe it should be prescribed in legislation that the regulator should make a decision within a certain period. When Deputy Bruton was Minister for Jobs, Enterprise and Innovation, one of the directives that came from his Department and the Taoiseach of the day was that all Government agencies dealing with commercial projects should deal with them in a time-sensitive way and this clearly has not happened in this case. The other three agencies have given consent, but the regulator has not. Is this rocket science? Why is there no transparency? Why should I and any ordinary person not know what is happening in respect of a project which is of such critical importance in the area?
I look forward to the Minister's response.
Richard Bruton (Dublin Bay North, Fine Gael)
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I thank the Senator for raising this matter.
I should outline very clearly that the Commission for Regulation of Utilities is an independent regulator. The Commission for Regulation of Utilities is independent of me as Minister and it sets its own processes for application forms, application fees, processes it will go through, guidance it provides for applicants and so on. It also is fair to state that it is a body that engages in very substantial public consultation whenever it produces documentation that is for the guidance of applicants.It published the documentation to which the Senator referred in March 2012. The latter remains the documentation to which applicants should refer.
Regarding the basis for the rulings of the regulator, it essentially interprets European legislation as well as our national legislation. In this instance, it is establishing the heat efficiency of the particular plant. The European documentation sets out the issues that must be considered. I am sure the Senator and the applicant have already had regard to those issues. This is a complicated matter by any standard. The regulator must examine several issues in the context of an application, including electrical, thermal and overall efficiency, power-to-heat ratios, electricity from the high-efficiency combined heat and power and primary energy savings. It does so in accordance with formula set out in the original directive and its annexes. The regulator has been transparent about what are the requirements. I cannot second-guess its assessment of an application such as this, no more than the Minister for Housing, Planning and Local Government can second-guess An Bord Pleanála when it independently assesses an application made to it.
The legislation clearly sets out that the regulator is not accountable to the Minister but it provides for accountability to the Committee on Communications, Climate Action and Environment. The independent regulator is accountable to the Oireachtas, as ought to be the case. I cannot shed light on why nothing has changed in the view of the promoters but they have not been granted the approval which was previously given. That is entirely a matter for the Commission for Regulation of Utilities to assess. Unfortunately, I am not in a position to provide an insight as to what difficulties this application may be encountering other than to point the Senator and the applicants to the very detailed guidance on what needs to be submitted, the calculations conducted by the regulator and how it weighs applications. The very detailed source document specifies the terms within which it operates.
I understand the Senator's enthusiasm to have the plant approved. However, in order to access state aid or aid through the various refit programmes it must, in addition to acquiring planning permission and EPA approval, fulfil certain criteria which are set independently, policed by the EU and administered by the Commission for Regulation of Utilities. Obviously, it is an important element in any project but there be an independent process to vet approval in any case where benefit is being conferred. It is not a political decision and nor should it be. That is the position as I understand it. The company must complete whatever requests have been made of it by the Commission for Regulation of Utilities in order to facilitate a decision being made in a timely way.
Michelle Mulherin (Fine Gael)
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The fact is that if it were not for a financial difficulty encountered in 2016, the plant would be up and running. It had received all the necessary consents. The regulations which the Minister has to hand have not changed since 2012 and formed the basis upon which the regulator originally issued consents. There has been no material change in the application. Perhaps somebody made an error somewhere wrong along the way. There are serious questions to be answered by the regulator in respect of this matter. I will be bringing it to the attention of the Joint Committee on Communications, Climate Change and Environment in order to get some answers. There is a lot at stake.We are talking about renewable heat and renewable electricity. This is a whole package and an awful lot of work has gone into it for the regulator to say it got it wrong in the first place. I do not accept that and common sense should prevail. There are clearly issues within the current process when the regulator had to get a second lot of consultants. Notwithstanding the complexities, things should be clear and transparent. They have to make sense to somebody, somewhere, and some empirical standard and test has to be applied. The consultants who previously dealt with this are now saying regulations have not changed and the general public will want to know why such a project, especially in north Mayo, cannot be got over the line. They will also want to know why a Government agency is delaying it in a way that is quite inexplicable.
If a clear explanation could be given by the Minister or the regulator, whose job it is to do so, I would at least have something to take back to people but I have no answer at this point. The regulator appeared before the special climate action committee and he had nothing to offer on that occasion but I will raise this again as it is very important for the north Mayo area.
Richard Bruton (Dublin Bay North, Fine Gael)
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The Senator knows as well as any of us that An Bord Pleanála makes decisions and does not engage in a process of toing and froing with public representatives or others. It has planning guidelines and seeks to implement them in the fairest way possible. I cannot shed any light on what difficulties are arising. The EU code states that each generational unit shall be compared with the best available and economically justifiable technology for the separate production of heat and electricity on the market in the year of construction of the cogeneration unit. That suggests that a unit in construction in 2012, as against a unit in construction in 2018, will be compared to different economically justifiable and best available technology. A regulator continues to evolve against the rules which are set for it. It does not follow that if something was approved in 2012, it will be identical in 2013. In annexe 3, it states that they are looking at a different test, and at today's technology rather than that of 2012.
I do not know anything about the process but it is not as clear cut as asking why the regulator is not repeating what it did before. It has to evaluate it because it would be giving out valuable public subsidies, supported by electricity users, and it is right that it be independently vetted. I have to defend the integrity of the CRU. It is a highly professional body and an OECD review in 2018 reported it as operating to the very highest standards. There is no question of doubt in the public mind about how the CRU does its work. It is accountable to the Oireachtas as set out in legislation.