Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

Question 598: To ask the Minister for Communications, Energy and Natural Resources the full circumstances and timetable of the way CER and his Department arrived at the decision to sanction the ESB to build and operate the new generation plant at Aghada, County Cork; his views on the serious allegations that his Department delayed this decision in such a way as to cost the ESB and the Exchequer an additional €100 million plus in construction and start-up costs;; and if he will make a statement on the matter. [18937/07]

Eamon Ryan (Dublin South, Green Party)
Link to this: Individually | In context

Authorisation of ESB's construction of a 430MW Combine Cycle Gas Turbine (CCGT) plant at Aghada was granted by the Commission for Energy Regulation (CER), in the context of the CER-ESB Asset Management Strategy Agreement of 29 November 2006 on reducing ESB's dominance in power generation.

Ministerial approval for Capital Expenditure was considered by my predecessor, Minister Noel Dempsey and the Department in the context of the range of relevant issues and was granted contingent on ESB's compliance with the terms and conditions of the CER-ESB Agreement to the full satisfaction of the CER, on its establishment and operation as a fully ring-fenced subsidiary separate from ESB Power Generation in terms of licensing and business separation and on the condition that the output be sold to suppliers other than ESB Power Electricity Supply. There was no unnecessary or intentional delay to the granting of approval.

The estimated cost of ESB's construction of its new plant at Aghada reflects a fundamental shift in worldwide market dynamics for CCGT plant, fuelled by rising commodity prices for speciality steels and other prefabricated materials, in addition to increasing labour costs. The availability of engineering resources is also becoming a limiting factor restricting suppliers' ability to scale up production to meet the increasing demand. This shift is a worldwide phenomenon and is not restricted to projects in this country.

Prior to receiving Ministerial approval for the relevant capital expenditure on the Aghada project, ESB gave clear assurances that it had independently validated this upward movement in commodity prices and labour costs as part of its contract negotiation process and that it had satisfied itself that the cost of the power plant in Aghada reflects current global market prices and represents the best value for money outcome in difficult power plant market circumstances.