Northern Ireland Assembly Flax Flower Logo

Northern Ireland Assembly

Tuesday 5 March 2002 (continued)

Ms Morrice:

I understand that the 1998 Act refers to "at least five" members. There is no specific point that refers to only five members.

Mr Dalton:

I apologise. The Member is correct. The 1998 Act refers to "at least five" members. The Commission does not necessarily have to have only five members. However, the 1998 Act clearly indicated that the Commission was expected to have five members.

I assure the House that none of the procedures that are being recommended today are particularly contentious. I hope that the House will agree the proposed Standing Order by means of a cross-community vote, and that, as a result, the Commission will represent the entire House in dealing with its administrative matters. I commend the amendment to the House.

Mr C Murphy:

Go raibh maith agat, a Cheann Comhairle. I thank the Members who contributed to the debate. I also thank the Rev Robert Coulter for welcoming the proposed Standing Order on behalf of the Commission.

I shall respond to the points made by Jane Morrice. There is nothing to prevent the Assembly from changing the number of members of the Commission. The 1998 Act specifies the number as

"5 or such other number as may be prescribed by standing orders".

The Commission has been in operation since devolution, and the number of members has not presented a problem. No representations to increase the number of members on the Commission have ever been made to the Committee on Procedures. If Members feel strongly about the matter, the Committee will revisit it, and it will be for the House to decide.

The Committee felt that membership of the Public Accounts Committee or the Audit Committee was incompatible with membership of the Commission due to the nature of the Commission's powers and functions, such as entering into contracts and investing money. That may cause conflicts of interest or lead to suspicion about a Member's probity.

The Committee also specified that Ministers and junior Ministers should not sit on the Commission. It would be difficult for them to find time to attend meetings, and it would be unreasonable for them to receive yet another addition to their salary for membership of the Commission. The Chairpersons and Deputy Chairpersons of Statutory Committees already receive an addition to their salary and are not eligible, so there is consistency between their treatment and that of junior Ministers.

With regard to Chairpersons of other Standing Committees, the Committee on Procedures and the Commission are agreed that a holder of an office that already attracts an addition to his or her salary should not be eligible for an office that would qualify for a further addition.

The Senior Salaries Review Body (SSRB) is due to report in April, and it may recommend that Chairpersons of Standing Committees should qualify in the same way as Chairpersons and Deputy Chairpersons of Statutory Committees do at present. If the recommendation is made, and passed by the Assembly, that Chairpersons and Deputy Chairpersons of Standing Committees should receive an additional salary, the Committee on Procedures will undertake to look again at the Standing Order to reflect that.

I trust that I have answered most of the questions. I would like to thank Mr Dalton and other Members for their comments. The Standing Order sets out a clear method of appointment for Members to the Assembly Commission. It redresses a gap in Standing Orders and fulfils the requirement of the Northern Ireland Act 1998. It also reinforces the importance of the Assembly Commission as a body to represent the interests of all Members, not only those of the larger parties.

Mr Speaker:

I have been listening to what Members have said, as I usually do, and, before calling on the House to vote, I would like to clarify something. It does not seem to me that there is a reference to members of the Public Accounts Committee and the Audit Committee, but to the Chairpersons and Deputy Chairpersons of the Public Accounts Committee and the Audit Committee. There was an interchange between the Chairperson and a Member about members of those Committees. I wish to draw attention to the fact that when Members are voting, they are voting only on the question of Chairpersons and Deputy Chairpersons, not on the question of Members.

Mr B Hutchinson:

On a point of order, Mr Speaker. I am the Deputy Chairperson of the Audit Committee. My understanding of my responsibilities, and the Committee's responsibilities, does not match up with what the Chairperson of the Committee on Procedures has just said. What is the procedure? The Audit Committee does not award contracts to anyone. Its responsibility is to ensure that the Northern Ireland Audit Office has its budget. We have no responsibility other than to ensure that it has its budget and that its estimates come in at a certain level.

Mr Speaker:

That would be a legitimate point to put in a debate, and it would be a case for tabling an amendment. However, from an order point of view, what is on the Order Paper is competent. It may not be pleasing, and the arguments adduced may or may not be welcome or acceptable, but there is nothing out of order about the amendment. I simply wanted to ensure, on the other matter, that Members were clear about what they were voting on, because there appeared to be some lack of clarity.

Mr B Hutchinson:

Further to that point of order, Mr Speaker. The reasons for excluding the Chairperson and Deputy Chairperson of the Audit Committee are wrong, and they are legally wrong in terms of Standing Orders with regard to responsibilities.

Mr Speaker:

From an order point of view, it is perfectly legitimate to put down what is here. It is perfectly competent. The arguments adduced for doing so may be a subject of dispute. I understand what the Member is saying, and if the Member or any other Members wish to change it that will require the tabling of an amendment - clearly not in this debate but at a subsequent time. That would be the proper way to address the question. I now hope that everyone is clear about what they are voting on, and I will, therefore, put the question. As this is an amendment to Standing Orders, the vote requires cross-community support if it is to pass.

Question put and agreed to.

Resolved (with cross-community support):

"74. Appointments to The Assembly Commission

(1) The Assembly shall by resolution appoint the prescribed number of Members of the Assembly to be members of the Commission.

(2) Appointments under paragraph (1) shall be made within 28 days after the first sitting of the Assembly after dissolution.

(3) Any resolution under this Standing Order shall require cross-community support.

(4) In the event of a vacancy occurring, the Speaker shall, as soon as may be possible, inform the Assembly of the vacancy. Any vacancy shall be filled by resolution of the Assembly within 28 sitting days of the vacancy occurring.

(5) A person shall not be eligible for appointment as a member of the Commission if he/she holds a relevant office.

(6) Where a Member of the Assembly is appointed to a relevant office he/she shall forthwith cease to be a member of the Commission.

(7) A Commissioner may at any time resign by giving notice in writing to the Speaker.

(8) In this Standing Order a relevant office means a Minister, a junior Minister or a Chairperson or Deputy Chairperson of:

(a) a Statutory Committee;

(b) the Public Accounts Committee;

(c) the Audit Committee."

Committee for Enterprise, Trade and Investment:
Report on the Energy Inquiry


The Chairperson of the Committee for Enterprise, Trade and Investment (Mr P Doherty):

I beg to move

That this Assembly approves the report of the Committee for Enterprise, Trade and Investment on its inquiry into the Energy Report (3/01R) and calls on the Minister of Enterprise, Trade and Investment to implement the Committee's recommendations at the earliest opportunity.

A Cheann Comhairle, as Chairperson of the Committee for Enterprise, Trade and Investment, I have the task of presenting the Committee's report to the Assembly. In the time allocated, I shall give a brief overview of the report, commenting on the key points and highlighting some of the major recommendations contained in it.

My colleagues on the Committee will comment on the finer details. I wish to take this opportunity to welcome back the Committee's Deputy Chairperson, Sean Neeson, after his recent illness, especially as it was he who primarily led us to embark on this inquiry.

11.45 am

When the Committee began its inquiry, it did not anticipate the sheer magnitude of the task. It was a lengthy and wide-ranging inquiry that took almost one year to complete. The Committee received 32 written submissions from organisations and individuals, and 29 oral evidence sessions were held with groups and individuals. Those sessions involved a wide range of bodies, including the Department of Enterprise, Trade and Investment, the energy regulator, energy producers and suppliers, business associations, district councils, academics and voluntary groups. They came from as far away as the USA and Venezuela. The Committee was overwhelmed by the volume and quality of the evidence received. Committee members wish to place on record our gratitude to all those who submitted evidence, both oral and written. That evidence helped to inform, to a large extent, the many important recommendations that are made in the report. I also wish to place on record members' gratitude to the Committee Clerk, her staff and the Assembly research staff for their invaluable help to the Committee throughout the inquiry and in the preparation of the report for publication.

It will be helpful to Members if I outline the background to the report. During the Committee's previous inquiry into 'Strategy 2010', many witnesses commented on the high cost of electricity in the North and how that affects the competitiveness of local businesses. The Committee wanted to examine the causes of high electricity prices and what could be done to make electricity cheaper for consumers. In addition, proposals had been floated that a new combined-cycle gas-turbine power plant should be built at Coolkeeragh. However, that proposal would require a natural gas pipeline to be constructed from the Greater Belfast area to the north-west. The Committee wanted to assess that proposal, and examine how natural gas could bring social benefits to our communities, not least in tackling fuel poverty. The signing of the Kyoto protocol has committed us to the reduction of greenhouse gas emissions. To achieve that, renewable sources of energy must be developed, which in turn have great employment potential. The Committee wanted to examine the issue and assess the potential growth of that sector.

I shall now address some of the key issues that were identified by the Committee during the inquiry. The high cost of electricity for consumers is primarily a direct result of contracts that were made at the time of privatisation in 1992. Those fixed inflation-proofed contracts will remain with us until 2012 and have brought significant profits for the generation companies and for Viridian/NIE. Any efficiencies made by those companies have not been passed on to the consumer, but instead have gone to shareholders as profits. The buying-out of the contracts has been the subject of much debate and discussion in the Committee. The idea that the contracts should be bought out by a consumer bond has its attractions. However, that would simply replace one long-term contract with another. It would mean an immediate reduction in electricity prices, but it could result in the long-term price being higher than if the market were allowed to dictate prices after 2012. I shall return to that issue later.

The extension of natural gas provision to the north- west was identified by the Committee as a key issue for the future of electricity generation at Coolkeeragh, as well as for the eradication of fuel poverty in the towns along the route of the pipeline. The Committee considered the eradication of fuel poverty as a high priority for the Executive to tackle.

A total of 170,000 households in the North are considered to be fuel poor. That equates to a scandalous 28% of homes in which existing conditions mean that more than 10% of the income is spent on fuel. The Committee fully endorses the Assembly's earlier decision to raise the energy efficiency levy to an average of £5 per customer. The revenue raised - £3·25 million a year - will go towards introducing measures to eradicate fuel poverty within 14 years.

Another key issue for the Committee is to improve energy efficiency. That includes: the need to upgrade building regulations; better awareness for consumers in the use of energy efficient appliances; the development of combined heat and power plants - including consideration of the use of domestic waste as a fuel source; incentives for industry to introduce greater efficiency measures; and the promotion of more energy efficient transport.

The development of renewable energy sources is another key issue identified by the Committee. Renewable energy comes from various sources - from the heat and light of the sun to the use of agricultural waste in the biogas process. The Committee is concerned that present pricing regimes and structures militate against the development of renewable energy. OFREG is looking at the issue. The Committee made a total of 45 recommendations under five headings. I shall concentrate on the main recommendations.

Identifying the reasons for high electricity costs was relatively straightforward. How to address them was an altogether different story. The Committee acknowledges that its recommendations will not have an immediate effect on electricity prices, but it is confident that, in time, they will make a significant difference.

I shall mention two recommendations. The first involves the buying-out of the long-term generation contracts. Almost every submission that was made to the Committee mentioned the need to take action on those contracts, which are the primary reason for high electricity costs in the North. The Committee considered the issue at length, especially the idea that contracts should be bought out by consumer bonds financed over a long period. The advantage is that electricity costs would be reduced almost immediately, subject to Government legislation. The main difficulty is that the scheme would replace one long-term contract with another lasting for 10 years, 30 years or 40 years. Prices would fall after 2012 when the current contracts expire and many critics argue that the bonds effectively charge the consumer twice for the same thing.

After much debate, the Committee decided that as the Department of Enterprise, Trade and Investment was about to embark on a consultation exercise on its energy strategy, we would await the outcome of that exercise before making a final decision. The Committee acknowledged that the bonds issue would require a more detailed examination than Committee resources would allow; for example, the production of a full economic appraisal. The Department should, therefore, take the lead in addressing that crucial issue. The Committee is keen that it is resolved one way or another as quickly as possible.

The second recommendation relates to the setting up of a cross-departmental ministerial task force to develop a strategy to tackle the scourge of fuel poverty in our society. It is a scandal that in the twenty-first century, 170,000 homes in the North are considered fuel poor. The Committee strongly believes that the Executive must tackle that issue. It is cross-cutting, because social and economic development, health, housing, equality of opportunity and employability issues are all connected to fuel poverty. We ask the Executive to examine that high priority matter.

The Committee agreed that energy efficiency is an important aspect of energy matters. It covers a wide range of related topics from building regulations to electrical appliances and from the disposal of domestic waste to efficient electricity generation. The Committee made several recommendations, which, if adopted, would help to reduce energy waste and, therefore, contribute to the reduction of greenhouse gases. In addition, the use of domestic waste as a fuel source would also contribute to a reduction in the problems associated with landfill sites.

Perhaps the most exciting aspect of energy is the potential created by the development of renewable energy sources, although that is fraught with difficulties. There are many technical problems to be overcome, but the most serious is that of the public perception of renewables, especially wind turbines. Renewable energy is an exciting area, because it is at a relatively early stage of development here. It offers plenty of opportunities, not least in the creation of jobs and the regeneration of rural communities. There is much yet to be done, and, to assist the development of that fuel source, the Committee recommends a target of 35% of electricity generation from renewable sources by 2020, with an interim target of 15% by 2010.

Several other recommendations were specifically designed to stimulate and enhance renewable energy provision. A key recommendation involves the raising of public awareness of issues surrounding "green" electricity, which would assist in increasing public demand for renewable energy.

The Committee also recommended that the establishment of a renewable energy agency be considered. Although the Committee is reluctant to add more bureaucracy to the Administration, it felt strongly that there is merit in having a statutory body to co-ordinate the Government's strategy for the development of renewables. The creation of such an agency would send clear signals to the industry and the public that the Government are serious about their declared commitment to the environmental issues of the Kyoto protocol and subsequent targets for the reduction of greenhouse gas emissions.

On employment, there are job opportunities in research and development, and in the construction, installation and maintenance of machinery. In rural communities, biogas technology offers real possibilities for job creation and crop diversification for farmers growing willow coppice. Gasification may also assist to solve the problem of the disposal of animal waste. All relevant Government bodies must open their eyes to the potential of that aspect of renewable energy for rural communities and adopt a co-ordinated approach to realise that potential.

The extension of the natural gas network beyond Greater Belfast has been discussed for some time. Although the extension of the pipeline to the north-west has been linked to the development of a new electricity plant at Coolkeeragh, the Committee agreed that there is a strong social need to bring gas to more homes. That would be a major factor in eradicating fuel poverty in many homes along the route of the pipeline. To make extensions to the pipeline viable, the Committee agreed that postalisation of electricity and gas costs is required and must be borne equally by commercial and domestic consumers to ensure that all consumers pay the same tariff, irrespective of their location.

Recent increases in the capacity of interconnection between Northern Ireland Electricity (NIE) and the Electricity Supply Board (ESB) in the South means that the NIE system no longer works in isolation. There will soon be 940 megawatts of interconnection between the two systems. The gas networks will also be joined in the future, with a planned gas connection between Gormanstown and Belfast. The Committee welcomes those developments, as a larger all-island network with connections to GB and Europe will open up electricity and gas markets to greater competition.


More interconnection must be developed. That needs to be done in tandem with common approaches to application, fiscal regimes, chartering policies, effective regulations and strong consumer protection. A single transmission system operator across the all-Ireland market would have clear benefits. Active consideration must be given to that recommendation.

Although there are no nuclear power installations on the island of Ireland, we are much affected by the environmental impact of nuclear plants on the west coast of Britain. The Committee was unanimous in its recommendation that Ireland remain a nuclear-free zone and in the call for the closure of those plants in GB that have a great impact on people in Ireland. It seems inappropriate that such vast sums of money are spent by the UK Government to support the nuclear industry when a cleaner, greener form of energy is available. The sum spent on the development of renewable energy is paltry when compared with that spent on nuclear energy. The Committee, therefore, also recommends that Government subsidies to the nuclear industry should be redirected to renewable energy.

The complex issues that the Committee dealt with in its inquiry, and its subsequent recommendations, require careful consideration by Members, the Minister, the Department for Enterprise, Trade and Investment and others who are affected directly by the report. Global issues, such as global warming, require global solutions. Everyone must play his or her part in the protection of the environment for future generations. In doing so, we can redevelop the agriculture industry and rural communities, creating employment opportunities for thousands of people and position ourselves as a world leader in those technologies.

Energy is an issue that touches all our lives. We owe it to our constituents to ensure that affordable electricity and heating is available at home and in the commercial world. The report can make a difference in bringing down electricity prices, eradicating fuel poverty and contributing to the reduction of greenhouse gas emissions.

I have outlined the main points arising from the inquiry, and I commend the report to the House.

Mr Speaker:

The Business Committee has allocated three hours for the debate. If Members, on average, restrict themselves to 10 minutes or so, almost everyone who has put his or her name down so far will have a chance to speak. I hesitate to set a time limit, because some Members may be able to be more concise than that, and others may need a little more time. However, I remind the House that if Members do take more time, with the result that others do not get to contribute, they can speak to their party Colleagues who spoke for too long.

The Deputy Chairperson of the Committee for Enterprise, Trade and Investment (Mr Neeson):

First, I want to thank the Chairperson for his kind remarks. I also want to thank all the Members who contacted me recently with regard to my illness. I am pleased to say that I am on the road to recovery.

Some Members:

Hear, hear.

Mr Neeson:

I could not resist the opportunity to be in the House today to contribute to the debate on the presentation of the report. I have been interested in energy for many years. I am delighted that the Committee has spent a long time in dealing with such an important and complex subject.

I thank the Committee Clerk and her staff for their help, the Assembly's research staff, and the Committee's Special Adviser.

This report is long overdue. During the years of direct rule, energy was not given the attention that many of us thought it deserved. Hence, we are now dealing with issues and problems that would not have arisen had there been greater scrutiny, especially on the part of public representatives.

In 1999, before power was formally devolved to the Assembly, I organised an all-party group of Assembly Members to meet the then Industry Minister, Adam Ingram, to discuss the extension of the natural gas pipeline to the north-west. The cross-party group came into being because Assembly Member Bradley had raised the issue of the pipeline in the Assembly. The then Minister was impressed that Assembly Members were uniting on a cross-party basis to deal with a specific issue of importance to them and their constituents. We discussed extending the natural gas pipeline to the north-west and also to the canal corridor, Craigavon and so forth. The Department took those issues on board.

I welcome the recent decision to grant licences to extend the natural gas pipeline from Carrickfergus to Derry, and also to the south-east of the Province. That is an important commitment to extend the gas pipelines to areas of the Province that have been unable to avail of natural gas. The fact that an extra 32-35% of the Northern Ireland population could be provided with natural gas is to be welcomed.

The Committee would have preferred that the gas pipeline be extended North/South. A series of meetings on that issue were held. Although the outcome will not be reached as speedily as we would have liked, particularly the provision of natural gas to the south-east, an important commitment remains.

The £30 million budgeted by the Executive, plus £8 million from the Irish Exchequer, towards the gas pipelines represents an important commitment to the projects and the extension of the availability of natural gas. However, I am slightly concerned at how the projects have been clouded by the so-called "investment appraisal" that was mentioned in the House. That issue must be clarified, but the important point is that we are creating a level playing field for consumers in Northern Ireland. It is only right that both domestic and commercial consumers should benefit from natural gas. The Committee and I are committed to the principle of postalisation. If that is to be done, the costs should be borne by commercial and domestic consumers.

The aim is to develop a high-efficiency gas power station that will not only serve the north-west, but can become part of the island energy strategy, which the Committee and the Department fully support, and which comprises east-west dimension also.

It is ironic that almost 20 years ago, in the last Assembly, I rose, close to this spot, to support the proposal to extend the natural gas pipeline from Kinsale to Northern Ireland. I was barracked and heckled at Northern Ireland's readiness to burn anything from the Irish Republic except the "green" gas. We now have an opportunity to burn "blue" gas from Scotland - how times have changed.

A major customer is essential to the success of the natural gas pipeline to the north-west. I welcome Coolkeeragh's involvement as a major customer and the fact that, in addition to the public commitment of £38 million, we have the prospect of a contribution of more than £200 million from the private sector. That will lift the pressure that affects electricity prices throughout Northern Ireland.

I am pleased also, because much activity related to Northern Ireland's energy is concentrated in my East Antrim constituency. In addition to Ballylumford and Kilroot, a new gas-fired power station is under construction, there is a new gas interconnector in the area and the Moyle interconnector recently came on-stream.

Committee members had planned to visit the Moyle interconnector on 6 March, but unfortunately other Assembly commitments will prevent us from doing that. However, we hope to visit the site soon because some issues must still be dealt with, most of which are environmental. The Department of the Environment and Northern Ireland Electricity have attempted to deal with them. Cheaper electricity from Scotland should, primarily, be for the benefit of Northern Ireland consumers. Currently, several customers for power from the Moyle interconnector are based in the Republic of Ireland, but it is important that benefits are also felt in the North.

One of the more contentious issues dealt with by the Committee was whether, given its location, Kilroot should use Orimulsion to generate electricity. Members had concerns for the environment, but as part of our study we visited an Orimulsion-fired power station in Denmark and were very impressed by its standards of environmental protection. As someone with a power station in his own backyard, I am committed to using Orimulsion if the stringent guidelines of the AES Corporation are applied. That would lead to a reduction in Northern Ireland's electricity prices.

It is important that the Assembly has oversight of the guidelines for environmental protection, but Carrickfergus Borough Council will also be responsible.

Mr Wells:

Can the hon Member confirm that Carrickfergus Borough Council members visited the Orimulsion- burning plant in Denmark and that they too returned with the view that it is an optional means of electricity generation at Kilroot?

12.15 pm

Mr Neeson:

I agree. We should seriously consider that option. We do not want to put all our eggs in one basket, as we did in the 1970s and 1980s, and if we were to depend totally on the use of natural gas to fire power stations, we would fall into the same trap. There are other options for generating electricity. Mr Speaker, I hope that you will bear with me. I have missed a few weeks in the Chamber. I would like -

Mr Speaker:

Undoubtedly, that is the case, but the Member must understand that there is no leeway from the Business Committee on the amount of time available for the debate. Therefore, I urge the Member to take that into account and to try to bring his remarks to a close in order to enable all other Members who wish to contribute to do so.

Mr Neeson:

Our problems were inherited as a result of the privatisation that went ahead with little political consultation with the parties in Northern Ireland. At the time, I made a submission on behalf of my party. I have serious concerns about the suggestion of using consumer bonds as an easy fix. Although there may be short-term benefits, the consumer will have to pay in the long term. We must address ways to deal with the problems, while ensuring that the full burden is not placed on consumers.

I hope that the Assembly supports the report. The Department has issued a consultation paper, and I hope that the Minister and the Department pay heed to the issues that the Committee is raising today.

Dr Birnie:

I welcome the report and congratulate the Committee on its production. It is a complex report, and, as someone who is not a member of the Committee, I have reservations and a certain amount of timidity about discussing it. In order to be "beyond reproach" like Caesar's wife, I should declare a small interest, which is stated in the Register of Members' Interests. I own a few hundred shares in Viridian, but I assure the House that that will not affect my conclusions.

The report states that major consideration on the options available to reduce prices will be delayed until the Department of Enterprise, Trade and Investment produces its paper. As the previous two Members who spoke said, the Committee's report fully explains the workings of consumer bonds. If those could be made to work, they would reduce prices for the rest of the decade. However, thereafter prices would be higher than in the absence of the bonds.

Therefore, should we opt for consumer bonds? From a political viewpoint, they have some attraction. Prices would fall in the near future, and, as Members know, future generations cannot vote in the 2003 election. However, in principle, the issues are more complex than that. In any case, given the current state of the financial markets, could a sufficient number of consumer bonds be sold? Many hundreds of millions would have to be sold to generate a sufficient income stream.

There is much to be welcomed in the report. Paragraph 3.3 refers to the issue of tightening building regulations so that energy efficiency is stressed more than in the past.

For example, recommendation 4 states that domestic consumers should not cross-subsidise large-scale, predominantly industrial users of electricity as they have done in the past. Recommendation 15 states that the existing five-year derogation for natural gas from the climate change levy should be lengthened to 10 years.

I doubt that the report has established that a cost efficiency would necessarily be achieved, by having a single transmission operator for both the Northern Ireland and the Republic of Ireland markets, as suggested in recommendation 43. However, I would have liked the report to develop another aspect of the all-island energy market: I would like the Minister of Enterprise, Trade and Investment, with his Southern counterparts, probably through the North/South Ministerial Council, to attempt to ensure that Northern Ireland firms are increasingly able to either build or take over power stations in the Republic of Ireland. The market in the Republic of Ireland has been booming and is nearing capacity. It therefore needs to build more power stations, or, should we have a surplus in production, to buy electricity from Northern Ireland.

With regard to the liberalisation of ownership of generation capacity on both sides of the Irish border, one problem is that the Irish generator, the Electricity Supply Board (ESB), is still state-owned, and therefore does not compete on a level playing field with its Northern Ireland counterparts. I like the suggestion in the report that, as far as possible, we should copy the Nord Pool idea, which is how the small Scandinavian economies have managed to link their energy markets. We should make the most of the increasing number of electricity and gas connectors, across the border and across the Irish Sea. For the first time, it is possible for Northern Ireland to tap into the wider United Kingdom and European Union energy networks.

In general, the report's 45 recommendations are supported by good evidence, and I commend the Committee for that. The apparent exception, which the Chairperson of the Committee mentioned, is the first recommendation, which concerns nuclear power. If I have interpreted it correctly, the recommendation in effect calls for, among other things, the eventual closure of the nuclear industry in Great Britain. I am no fan of nuclear power, and it is likely that, since the 1950s, the nuclear industry in Great Britain has not been economically viable. If operators had been forced to pay the full costs of the production of the electricity, particularly the decommissioning costs of power stations, they would not have balanced the books.

However, the issue of when the UK should withdraw from nuclear power generation is a complex one. The report has not addressed that properly despite this prominent recommendation. The report does not consider the impact of rapidly squeezing nuclear electricity production in meeting the Kyoto target. The Kyoto target relates to carbon dioxide production from fossil fuels. Furthermore, the report does not consider the fact that the production of fossil fuels is not an entirely safe option. Regrettably, people die in the production of coal, gas and oil. It is often argued that the nuclear industry is not safe, but those industries are not perfectly safe either.

In general, I congratulate the Committee for Enterprise, Trade and Investment on the report, and I support the motion.

Mr Speaker:

At this stage, rather than call a Member who is likely to be interrupted, I suggest that the House, by leave, suspend until 2.00 pm, when we will complete this three-hour debate.

The sitting was suspended at 12.25 pm.

On resuming (Mr Deputy Speaker [Mr McClelland] in the Chair) -

2.00 pm

Dr McDonnell:

Many issues have already been covered, and one of the disadvantages of being the fourth or fifth Member to speak is that some of the best points have already been made. However, much more remains to be said than could ever be covered in one debate.

When the Committee began its inquiry, it expected it to last six to eight weeks. It found some interesting aspects under every stone it upturned. The underlying motivation for all the Committee's questions and actions was its quest for a good reliable energy supply at a reasonable price. From the outset, the Committee was pushed towards the inquiry by a steady chorus of complaints from industry and commerce, and from energy users in general, about the punitive price of electricity.

I make no apology for repeating core points that have already been made by other Members, because the Assembly will be forced to revisit the energy supply issue, probably once a year, for the next 10 years, until matters are sorted out. It will take 10 years to get to grips with the fallout from the pseudo-privatisation of 1992.

For far too long, we have neglected the issues that surround our electricity supply and related energy-efficiency issues. We are now paying a high price for that. If we continue to neglect those serious issues, the price may become even higher. The crucial issue that underpins the debate is the scandalously incoherent contracts that were handed out to the generators in 1992 by the then Department of Economic Development. In effect, the new and private owners of the power stations received a licence to print money. In plain man's language, those contracts have ensured that, in most cases, electricity prices are double what they should be, especially for domestic users, who are the most vulnerable.

It is no exaggeration to say that power station owners were given a licence to print money. As I understand it, contractual arrangements were put in place so that the generating stations would be overpaid for producing electricity. They are also generously paid for standing by in case they are needed to produce electricity and for any increase in fuel costs. They only thing that they do not get paid extra for is scratching themselves occasionally, should the need arise. They appear to have the contracts so well tied up that there is little opportunity to unpick them.

We await the imminent publication of the Department's paper, entitled 'Towards a new energy market strategy for Northern Ireland'. I welcome guidance from the Department on how we should get to grips with cutting energy costs.

Sooner or later we have to decide whether to buy out the overgenerous parts of the generating contracts or hang on in until 2012. I have great difficulty with both options, because with each we lose out. Bonds have been suggested as a financial mechanism, a type of mortgage that would reduce prices in the short term by approximately 25%. However, that would create a debt that would have to be paid off between 2010 and 2030.

I resent having to consider buying out parts of those contracts and giving the generators a second golden handshake to the highly profitable contracts they already have. However, it might be penny wise and politically foolish not to do something like that. In California, some generating stations just pulled the plug and stopped working when they did not make a profit. Our old and efficient overpaid power-generating stations might hang on to their licences to print money until 2012 at the high prices of today and then, when forced to meet the real world and market prices, they might just crash out, collapse and dissolve themselves, and we would not want that.

There are several issues that I would like to deal with, but that is not possible in the time afforded to me, so I shall pick just a few. There is serious concern that domestic users are subsidising large industrial users and that as the market partially opens - it is 30% or 35% at present - large users can buy electricity in a relatively free or semi-free market, while domestic users are lumbered with the bulk of the penalties or charges for the guarantees that have been made to the generating stations. If our generating stations have received contractual promises that guarantee them a licence to print money for the next 10 years and the heaviest industrial users are allowed to buy their electricity on a more open market, the bulk of the burden falls to domestic users. That is unfair, and many pensioners live in fuel poverty as a result.

There are also the long-term contracts. No future Government, or anybody else, should let contracts that will tie us for 20 years without any allowance for changing circumstances. Mistakes were made in 1992, and the length of the contracts ties us to those mistakes. If the contracts had been for 10 years, or had been renegotiated every five years, we would have had a get-out clause.

In the medium to long term we must separate power procurement and transmission. I am not unduly critical of NIE, but if we are to pretend that we have an open market, we need an open market. We cannot have a consortium that appears to be privatised yet still has a monopoly.

During the 1990-92 privatising period, we went from a state monopoly to a privately-owned monopoly, with many guarantees underwritten by the state and Government. We shall continue to pay for those for many years to come.

When considering opening the market and liberalising the electricity market, another fundamental point is that we cannot have an open market if we do not have a market. Without interconnection, we shall not have a market at all.

Mr Deputy Speaker:

Dr McDonnell, please draw your remarks to a close.

Dr McDonnell:

We need a massive increase in interconnection with the Irish Republic and Scotland. We should also explore interest in an interconnector between the Republic of Ireland, perhaps in Dublin, and Wales. That market cannot be opened without access for the electricity flow.

Mr Deputy Speaker:

The Speaker has not imposed a time limit, but if I am to include everyone who has expressed a wish to speak, I must advise Members to keep their comments to 10 minutes.


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