Committee Reports > List of Committees > Joint > 1985 > Committee on Commercial State-Sponsored Bodies > Report No. 03 - Bord Gais Eireannn

APPENDIX 10

EXTRACTS FROM GOVERNMENT STATEMENTS ON ENERGY POLICY.

1.Extract from statement of the Minister for Industry & Energy in the Dáil on the debate in the Estimate for Industry and Energy, 9 June, 1983.

“Bord Gáis Éireann have responsibility for the development and transmission of our natural gas resource. The Government’s policy is to supply natural gas for distribution by efficient and forward looking town gas companies in our major cities and towns when a supply can be economically provided, and to underpin the security and cost of electricity generation to which I have already referred and to develop remunerative export markets for natural gas. The completion of the Cork - Dublin pipeline in December 1982 on time and within budget, marks a major milestone in the development of this strategy, and all involved are to be complimented.

The supply of natural gas to the Dublin Gas Company has enabled that company to reduce their prices to consumers substantially and to plan an ambitious development programme to expand the sales of gas in Dublin for domestic and industrial use. The terms of supply are at present under discussion between Bord Gáis Éireann and the company.

The next stage of development will be to consider supplies to towns when a supply proposal is economic and can be regarded as having an acceptable prospect of commercial success. Urban areas with existing gas distribution systems such as Limerick, Waterford and Clonmel, have made considerable progress in putting such projects together. The extension of supply to other population centres and industries, especially those near the Cork - Dublin pipeline, which do not have a town gas supply will also be considered. The preparedness of such centres themselves to distribute and market the gas will be an important factor in any decision.

BGE’s capital programme for 1983 amounts to £22 million about 30 per cent of which will be funded from their own revenue and the remainder from borrowings. The programme covers residual expenditure on the Cork - Dublin natural gas pipeline project, the construction of a loop line to the north of Dublin and the possible expansion of the grid to other centres, such as Clonmel….”

2.Building on Reality 1985 - 1987, Energy, Paras. 3.51 and 3.52.

3.51 Natural Gas: The Government have decided that natural gas should be distributed in towns and cities where this is economically feasible. The objective will be to capture, for the benefit of the community, the maximum value which can be achieved for the gas, while at the same time making gas a most competitive and cost-efficient fuel. Town gas systems will be developed where the cost of the infrastructure can be recovered and an adequate price paid to Bord Gáis related to the true value of the gas as measured by its opportunity cost.

3.52 The allocation of gas to ESB and NET reflects the reality that these organisations were the original customers for the gas and provided the basis for the development of the field. These arrangements do not capture for the Exchequer the full value of the gas. The Government have considered charging full heavy fuel oil price for gas sold to both ESB and NET. However, in view of the current level of electricity prices, the Government believe that a price increase arising from such a policy would not be practical at this stage. Future arrangements for NET and ESB are currently under review.

3.White Paper on Industrial Policy, 12th July, 1984, Paras. 4.4, 4.7, 4.8.

Industry’s Costs

4.4 For over 60% of Irish firms, energy costs account for between 5% and 6% of total turnover. For a small number this proportion can be as high as 40%. The two main components of energy costs are fuel oil and electricity prices. Industrial fuel oil, electricity, and post and telecommunications charges are amongst the highest in the EEC…”

Energy Prices

4.7 The Minister for Energy, as part of a long-term programme, has taken a number of initiatives to bring energy costs in Ireland more into line with those prevailing on average in other European countries and to promote greater competition in energy markets generally.

4.8 Greater competition has been fostered in energy markets by promoting the sale of natural gas to industry. This is having, and will continue to have, the effect of reducing the relative costs of other competing energy products (particularly oil)….