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Energy Bill 2016 [Seanad]: Second Stage (Continued)

Thursday, 2 June 2016

Dáil Éireann Debate
Vol. 911 No. 3

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  1 o’clock

(Speaker Continuing)

[Deputy Denis Naughten: Information on Denis Naughten Zoom on Denis Naughten] Currently, the CER possesses a range of enforcement powers, including powers to issue directions, determinations, fines in certain limited circumstances and to revoke licences. However, it is missing an effective range of administrative sanctions below the ultimate measure of licence revocation. The Bill provides the CER with enhanced powers of investigation and specifically permits the imposition of administrative sanctions, including financial penalties, in respect of defined "improper conduct" by energy undertakings. It sets out a defined and structured process, both for the investigation of such improper conduct and for the imposition of sanctions. I will elaborate on this regime further when setting out the provisions of the Bill section by section.

  The second main element of the Bill is the change to the existing statutory definition of the all-island wholesale electricity market, also known as the single electricity market or SEM. This change will facilitate the North-South regulators' market re-design project which will bring the SEM into full EU compliance. Compliance with the new EU cross-border trading electricity codes to enable closer integration with European electricity markets is the responsibility of the Governments of the Republic of Ireland and Northern Ireland. As current SEM rules are not compatible with the new EU trading codes, both Governments have tasked the SEM committee with developing new market arrangements for the single electricity market. The I-SEM project is well under way and the new market is expected to be completed by the end of 2017.

  The third main element of the Bill concerns provisions to ensure the requisite legal certainty in respect of rights of access along the route of the telecommunications duct alongside the Galway-Mayo gas pipeline. The Department funded the installation of a telecommunications duct alongside the Galway-Mayo gas pipeline and the intention is to place fibre optic cable in the duct to bring broadband infrastructure to the west. Gas Networks Ireland has taken grants of easement by deeds executed by landowners on the route. The Bill includes provision to ensure the requisite legal certainty in respect of rights of access along the route of the telecommunications duct. Additional legislation in respect of the telecommunications duct is being drafted and will be introduced on Committee Stage. During the briefing on the Bill, we explained to the Members opposite the need for that. I do not have the amendments as of yet, but we are quite happy to update Members on progress if they require it. As soon as we have the amendments, we will let the Members opposite have copies.

  The fourth and last element of the Bill is the proposed change of name of the CER. As its remit now includes the economic regulation of water, it is appropriate and timely to change its name from the Commission for Energy Regulation to the commission for the regulation of utilities, or the CRU.

  I propose now to outline the provisions of the Bill. The Bill consists of 31 sections. Section 1 of Part 1 contains standard provisions concerning the Short Title and commencement. Section 2 is also a standard provision which provides for a number of definitions for ease of reference. Section 3 provides for the repeal of a small number of redundant legislative provisions including the repeal of the Intoxicating Liquor Act 1946, which is now obsolete. Section 3 also provides for the repeal of section 27 of the Electricity Regulation Act 1999 and section 13(5) of the Gas Act 2002, which provisions are deemed obsolete. Section 4 of Part 2 provides for the renaming of the CER as previously explained.

  Section 5 of Part 3 amends the Electricity Regulation Act 1999 to allow for the imposition of administrative sanctions on energy undertakings for improper conduct as follows. A new section 55 provides for a range of definitions including a definition of "improper conduct". A new section 56 provides for the appointment of inspectors to carry out investigations on behalf of the CER. A new section 57 provides that the CER can carry out an investigation for the purpose of the performance of any of the functions conferred on it by the Electricity Regulation Act 1999 Act or by any other Act of the Oireachtas. The commission may cause such investigations as it thinks fit to be carried out in order to identify any improper conduct by an energy undertaking. It also provides for the terms of the appointment of an inspector to carry out any such investigation. A new section 58 sets out the powers of an inspector to enter and search premises and vehicles, carry out examinations or inquiries and require the production of documents. If necessary, an inspector may be accompanied by a garda and seek a warrant from the District Court to enable entry to a relevant premises or private dwelling. An inspector may conduct an oral hearing on his or her own initiative or if requested to do so by the energy undertaking.

  A new section 59 sets out the actions to be taken by an inspector on completion of an investigation, including the drafting of a report. An inspector cannot make any recommendation as to any sanction to be imposed. A new section 60 sets out the actions to be taken by the commission on receipt of the inspector's final report into the relevant improper conduct. The commission must review and evaluate the report and the level of sanction to be imposed is a matter for the commission not the inspector. If it is satisfied on reasonable grounds that improper conduct is occurring or has occurred, the commission may impose either a major or a minor sanction. It may also request the inspector either to carry out a further investigation or to take no further action. Before making a decision, the commission may conduct an oral hearing or invite the energy undertaking to make submissions on the report.

  Any financial penalty imposed by the commission is subject to confirmation by the High Court, which can confirm it, reject it or impose a different sanction. Sections 61 to 65, inclusive, deal with court procedures in respect of sanctions imposed by the commission. A new section 61 provides that a decision by the commission to impose a major sanction will not take effect unless the decision is confirmed by the High Court. Section 62 provides that a specified body may appeal a major sanction to the High Court which may confirm or cancel the commission's decision or replace it with such decision as it considers appropriate. Section 63 provides that if the specified body does not appeal the decision of the commission to impose a sanction within the period allowed for such appeal, the commission must apply to the High Court to have its decision confirmed. Section 64 provides for an appeal by the commission or the specified body to the Court of Appeal on a point of law and sets out that any financial penalties shall be paid into or disposed of for the benefit of the Exchequer. The commission may recover its costs as a simple contract debt in any court. Section 65 includes a list of matters that must be considered by the commission or the court prior to the confirmation of a major sanction. Section 66 provides that the commission's power to impose administrative sanctions is without prejudice to any other powers of the commission under this or any other Act. Section 67 sets out the provisions relating to the holding of oral hearings by both an inspector and the commission.

  Part 4 provides for further amendments to the Electricity Regulation Act 1999 in relation to the SEM element I have previously explained. The SEM is the single electricity market with which sections 7 and 8 of Part 4 deal. These sections refer to the arrangements in this State and in Northern Ireland, signed by both Governments in 2006, relating to the establishment and operation of a single, competitive wholesale electricity market. This is referred to as the "gross mandatory pool". Sections 7 and 8 provide for an amendment to the existing definition of the wholesale electricity arrangements in section 2 of the 1999 Act.

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