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Mr X and the Commission for Energy Regulation (FOI Act 2014)

Case No. 150370

Whether the CER has justified its refusal to fully release to the applicant the remainder of a record that outlines the terms of an agreement made between ESB Networks (ESBN) and a further party (the third party)

Conducted in accordance with section 22(2) of the FOI Act, by Elizabeth Dolan, Senior Investigator, who is authorised by the Information Commissioner to conduct this review

Background

The applicant's FOI request, dated 26 March 2015, sought various records, which I see no reason to list in this decision, relating to a particular report commissioned by the CER. The CER did not issue a decision within the statutory timeframe, effectively refusing the request. The applicant sought an internal review of this effective refusal on 24 April 2015.

Having consulted with EirGrid and ESBN, the CER's internal review decision of 22 May 2015 released seven of the eight records it considered relevant to the request. It partially released the eighth, and withheld the rest of that record under sections 35, 36 and 37 of the FOI Act. On 20 October 2015, the applicant made a request to this Office for a review of three aspects of the CER's decision (a decision to charge a "search and retrieval fee", the adequacy of the CER's search for records of relevance of the request, and the refusal to release the remainder of the eighth record (the record)).

The fee and "search" aspects of the review application were resolved during the review. This Office consulted with the CER and the parties whose interests would be affected by release of the record (ESBN and a third party, which is a representative group and is not part of the public sector). They all maintain that the details of the agreement should be withheld, a position the applicant does not accept.

I have now decided to conclude my review by way of binding decision. In carrying out my review, I have had regard to the above; to correspondence between this Office, the CER, ESBN, the third party, and the applicant, and to a full copy of the record, which was provided to this Office for the purposes of this review. I have had regard also to the provisions of the FOI Act.

Scope of the Review

Material released from the record says that it "describes recent approaches taken by [ESBN]" in relation to the development of Ireland's electricity infrastructure. The withheld details relate to an agreement, made with the third party, for dealing with landowners' claims for compensation due to the impact of new electricity infrastructure. As at the time of the application to this Office, the withheld details comprised the terms of agreement, the name of the third party, and the name of an individual who is involved with that organisation.

The third party says that it does not object to the disclosure of its name as a party to the agreement. The CER and ESBN have not expressed any concerns about the release of the third party's name in such circumstances. I am taking it that the relevant detail will be released by the CER and that I need not consider it further for the purposes of the review. The applicant is also aware that it has been taken, from comments made by him in the review, that he does not want me to review the CER's application of section 37 (the exemption applicable to personal information) to the name of the individual involved with the third party.

Accordingly, the only details at issue are the terms of the agreement, as outlined in the record. The review is confined to whether or not the CER has justified its refusal of the details concerned.

Findings

Preliminary Matters
Section 22(12)(b) of the FOI Act provides that a decision to refuse to grant a request shall be presumed not to have been justified unless the head of the decision making FOI body shows to my satisfaction that its decision was justified.

However, in a case such as this, potentially involving the interests of other parties, it is important that those parties are given an opportunity to make submissions and that any such submissions received are taken into account in the final decision on the case.

Although I am obliged to give reasons for my decision, section 25(3) requires all reasonable precautions to be taken in the course of a review to prevent disclosure of information contained in an exempt record. This means that the extent to which I can describe the withheld content is limited.

Finally, the release of a record under the FOI Act is understood to be equivalent to its release to the world at large.

Quality of Submissions
The CER's submission said that the arguments made by ESBN were "apposite and should be given primacy" by this Office. While ESBN may well be in a better position than the CER to comment on how release of details could impact on its commercial position, for instance, there is still an onus on the CER to justify its decision. I do not consider the CER to have met the requirements of section 22(12)(b) of the FOI Act in respect of the details at issue.

That said, I do not consider it appropriate to direct the release of information that clearly concerns other parties simply because of the CER's failure to meet the requirements of section 22(12)(b). Thus, I have given proper consideration to the arguments made by ESBN and the third party.

ESBN's arguments, in part, refer to the applicant's motives for making his request. Generally speaking, the FOI Act provides that any motive an applicant may have, or is suspected to have, for requesting records must be disregarded. However, motive may be considered when relying on the administrative provision in section 15 that enables the refusal of a request on the grounds that it is frivolous or vexatious. Be that as it may, the CER did not consider refusing the request on such grounds and in such circumstances, neither shall I.

Furthermore, it is not appropriate to direct that information should be withheld because, as also argued by ESBN, of the risk of it being misconstrued by the public.

Are the Parties to the Agreement FOI bodies?

The third party is not an FOI body.

I understand that electricity is transmitted from generating power plants to high voltage electrical substations (the transmission network), from where it is distributed to consumers (the distribution system). Both the transmission network and distribution system are owned by ESB, which I understand has designated an internal division of its business (ESBN) to carry out the relevant functions as owner of the network/system. ESB itself is listed in Part 2 of Schedule 1 to the FOI Act as an exempt agency. ESBN is, as I understand it, part of ESB, rather than a separate entity, and is therefore not an FOI body.

The local electricity distribution system is operated by ESB Networks Limited (ESBNL) as Distribution System Operator (DSO). Although a wholly owned subsidiary of ESB, ESBNL is a separate legal entity. It holds the DSO licence from CER in its own right, rather than as an agent of ESB. Part 1 of Schedule 1 to the FOI Act lists ESBNL as a FOI body in respect of its distribution system operator licence. This means that some, but not all, aspects of ESBNL's operations are subject to FOI.

The third party contends that they made an agreement only with the ESB. ESBN's submission to this Office of 8 January 2016 refers to both ESBN and ESBNL in this regard. Regardless of the confusion, I do not intend to go behind what is stated in the record at issue, which, as already noted, "describes recent approaches taken by [ESBN]" in relation to the development of Ireland's electricity infrastructure. I am taking it, thus, that ESBN, which is not an FOI body, is the relevant party to the agreement.

Section 36(1)(c)
Having considered the submissions made in this case, I consider section 36(1)(c) to be the most appropriate exemption to consider in relation to the details at issue. Pursuant to this provision of the Act, access to a record must be refused where the disclosure of information contained in the record could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates. The conduct and the outcome of negotiations are separate matters.

The standard of proof required to meet this exemption is relatively low in the sense that the test is not whether prejudice or harm is certain to materialise but whether it might do so. Having said that, the Commissioner expects that a person seeking to rely on this exemption would be able to show that contractual or other negotiations were in train or were reasonably foreseen which might be affected by the disclosure, and explain how exactly the disclosure could prejudice the conduct or the outcome of such negotiations.

ESBN says that "the Agreement has not been published or disseminated beyond a 'need to know' basis among senior management in the parties' respective organisations". The third party says that the details of the agreement are not made known by it to those it represents. Accordingly, I have no reason to believe that details of the agreement are known to the general public, or are in the public domain. The applicant has not disputed this.

I do not consider the third party's submissions, of themselves, to be sufficient to justify a decision upholding the refusal of the details under section 36(1)(c) (or any of the other exemptions it relied on in this regard). For instance, it claims that release of the details at issue under FOI will impact on its own ability to negotiate other deals for compensation with ESB/ESBN, and that sections 36(1)(b) and (c) of the FOI Act apply accordingly. However, it has not explained how such an outcome could arise.

ESBN claims that release of the details at issue would create a market for compensation payments among landowners, impact on its bargaining power in respect of claims made by other landowners generally, and result in higher compensation payments being made. It is claimed that this, in turn, could reasonably be expected to result in a material financial loss to the ESB.

The applicant argues that even if release of the details caused landowners to look for more compensation than they might otherwise have, the ESB/ESBN does not have to yield to such demands because claims can be referred to the independent statutory property arbitrator for determination. He argues that landowners have a statutory right to claim, and be paid, compensation "for the damage and loss caused by the carrying out of electricity development on their land". It is the applicant's view that there is no basis for any contention that release of the details at issue would render landowners entitled to a higher amount of compensation than might otherwise be the case, or that release would lead to a compensation culture.

According to ESBN, however, claims are referred to arbitration only if agreement as to appropriate compensation cannot be reached. At present, the vast majority of claims are settled without any recourse to arbitration. The relevant legislation does not set out actual amounts of compensation that are payable to a landowner. Rather, the amount of compensation must be negotiated in the first instance with the landowner, and then put to the arbitrator for determination if agreement cannot be reached. ESBN describes arbitration as a very expensive, time consuming and resource intensive process. It maintains that it is not in the public interest to have protracted negotiations (and, presumably the ensuing arbitration process) with landowners or their representatives due to the impact on resources and the likely delays in infrastructure matters that would ensue. It also says that the arbitrator has previously indicated that he will not have any regard to payments that ESB may have made to landowners further to any agreement with representative organisations. Thus, it maintains that landowners could possibly refer a claim to arbitration and receive compensation for the same loss a second time.

I accept some, but not all, of ESBN's arguments. It is reasonable to say that a settlement negotiated and agreed by two parties to a dispute is preferable than having to go to arbitration, for reasons of the additional resources that would be involved alone. However, it has not been explained how disclosure of the details at issue would increase the current likelihood of matters proceeding to arbitration. It has not been explained why a landowner who receives compensation further to the agreement cannot take the matter to the arbitrator even as matters stand. Accordingly, I see no reason to attach any weight to ESBN's arguments about the possibility of it having to make compensation payments on the double, simply because of release of the details at issue.

However, it seems to me that ESBN engages, on an ongoing basis, with compensation claims made not only by landowners represented by the third party, but by other landowners generally. It is an advantage to any claimant to know what positions a party, from which he or she is seeking compensation, took in similar circumstances. Thus, it is reasonable to accept that disclosure of the details at issue could prompt landowners not represented by the third party to seek compensation on similar lines to those who are so represented, which may be higher than they would have otherwise demanded. It seems to me that the applicant has effectively acknowledged this, by suggesting that it is open to ESBN to refer claims in such cases to arbitration. I accept that this could prejudice the conduct of negotiations with such landowners. Furthermore, I also accept that the outcome of such negotiations may be prejudiced, in that ESBN might pay these landowners the amounts they are seeking to minimise the risk of arbitration, or at least higher amounts than might otherwise have been the case without landowners knowing the details at issue.

Section 36 is normally applied to protect the interests of private sector operations rather than State bodies or FOI bodies. However, the provision does not exclude such bodies and accordingly, I am satisfied that it is appropriate to consider in the present case. In the circumstances outlined above, I accept that section 36(1)(c) applies to the withheld details in so far as ESBN is concerned.

Section 36(2)
There are some circumstances, provided for at section 36(2), in which the exemptions at section 36(1) does not apply.

Having examined the withheld details, I am satisfied that none of the circumstances identified at section 36(2) arise in this case. That is to say, (a) that parties to which the information relates have not consented to the release of the details concerned; (b) that the information is not of a kind that is available to the general public; (c) that the details concerned do not relate only to the applicant; (d) that the information at issue does not belong to a class of information which would or might be made available to the general public; and (e) that the disclosure of the information is not necessary to avoid a serious and imminent danger to the life or health of an individual or to the environment.

Section 36(3)
Section 36(3)) provides that a record, which is otherwise exempt under section 36(1), may be released if, on balance, the public interest that the request should be granted outweighs the public interest that the request should be refused.

The July 2011 Supreme Court judgment, in the case of The Governors and Guardians of the Hospital for the Relief of Poor Lying-In Women v The Information Commissioner,[2011] 1 I.R. 729, [2011] IESC 26), ("The Rotunda case") outlined the approach that the Commissioner should take when balancing the public interest in granting access to personal information with the public interest in upholding the right to privacy of the individual(s) to whom that information relates. Although concerned with a different provision of the FOI Act (section 37), I nonetheless consider that judgment to give useful guidance as to how the public interest balancing test should be approached generally.

Thus, in considering section 36(3), I must distinguish private interests from "true public interest[s] recognised by means of a well-known and established policy, adopted by the Oireachtas, or by law." In this regard, the applicant maintains that there is a significant public interest in electricity consumers understanding how the monies collected within their electricity bills are used. However, I consider this to be a private rather than public, interest. While the country's many electricity consumers may wish to know exactly how the monies they pay are used, I am not aware of any policy or law that recognises this as a "true public interest".

The FOI Act, both in its long title and in its individual provisions, recognises a significant public interest in FOI bodies being open and accountable, in respect of matters such as the expenditure of public funds, and the use of public property and public assets. Section 11(3) of the Act provides that FOI bodies shall, in performing any function under the Act, have regard to a number of matters including the need to achieve greater openness in the activities of FOI bodies and to promote adherence by them to the principles of transparency in government and public affairs.

The Commissioner recognises that section 36(1) itself reflects the public interest in the protection of commercially sensitive information. In that regard, the Commissioner accepts that there is a legitimate public interest in third parties being able to conduct commercial transactions with FOI bodies without fear of suffering commercially as a result. The Commissioner distinguishes between the public interest in disclosing information which relates purely to the financial business of the third party and information which relates to the activities of the FOI body, e.g. the exercise of its regulatory function. In such cases, the Commissioner takes the view that the FOI Act was designed to increase openness and transparency in the way in which FOI bodies conduct their operations and, generally speaking was not designed as a means by which the operations of private enterprises were to be opened up to scrutiny.

The Commissioner takes the view that, in attempting to strike the balance between openness on the one hand and the need to protect commercially sensitive information on the other, it is legitimate to consider two things: the positive public interest which is served by disclosure, and the harm that might be caused by disclosure.

It is important to note that the FOI request was made in this case to the CER. There is a public interest in ensuring openness and accountability regarding how the CER exercises its regulatory function, which has been served to some extent by the other material released. However, the CER is not a party to the agreement the details of which are at issue. I note that the applicant maintains that the agreement outlined in the withheld material has been "approved" by the CER, by virtue of the fact that it was part of the material considered by the CER in its transmission system price review. I accept ESBN's position that there has been no express approval of the agreement by the CER, but rather that the CER is simply aware of its existence. On balance, I do not consider that the public interest in ensuring openness and accountability regarding how the CER exercises its regulatory function would be served to any extent by release of the details at issue.

Furthermore, I am satisfied that the details of the agreement at issue concern two parties (ESBN and the third party), neither of which is an FOI body. There is a legitimate public interest in State bodies, such as ESBN, being able to engage in commercial transactions without fear of suffering undue cost as a result. In this case, I recognise that there is a public interest in ESBN being able to continue to settle compensation claims without being exposed to higher demands than might otherwise have been the case.

In the circumstances, I consider the public interest to weigh in favour of withholding the details at issue.

Decision

Having carried out a review under section 22(2) of the FOI Act, I hereby uphold the CER's refusal of the details at issue under section 36(1)(c) of the FOI Act.

Right of Appeal

Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal


Elizabeth Dolan
Senior Investigator