ESB may have to hand over some assets to Eirgrid

ANALYSIS:Yesterday's deal means the ESB will ultimately own both systems North and South

WHILE THE ESB was negotiating the nuts and bolts of the €1.25 billion deal to buy Northern Ireland Electricity (NIE) from its rival Viridian, another much more drawn-out process relating to its existing assets has been rumbling away in the background.

Since last year, Fergus Cahill, the former chief executive of another State energy company (the Irish National Petroluem Corporation), has been chairing the “Electricity Transmission Assets Analysis”. It may sound innocuous and unexciting, but for many people it is not. Its focus is the long-standing Government plan to transfer ownership of the national electricity grid from the ESB to another State company, Eirgrid, which is already managing it but does not own it.

The national grid carries electricity from generating plants to the distribution network, which delivers it from the network to customers.

This has been Government policy since 2007, but the level of opposition to this in some quarters, particularly from ESB staff and unions, last year led the Minister for Energy, Eamon Ryan, to set up the review chaired by Mr Cahill.

While this was going on, the ESB has gone and bought itself another grid, in Northern Ireland, which is already connected to the one south of the Border to allow electricity to flow in both directions.

Another interconnector is set to join the two networks in the future, although this proposal encountered a setback last week when Eirgrid had to withdraw an application to build the link after a mistake was discovered.

Yesterday’s deal means that the ESB will ultimately own both systems, while Eirgrid will manage both, as it bought its Northern Ireland equivalent last year. Given that we have been developing an all-Ireland electricity market since 2007, this is appropriate enough.

However, there is a chance that the ESB will have to hand over at least part of those assets to Eirgrid, and there’s a possibility that it could have to do the same in the North.

ESB chief executive Pádraig McManus said yesterday that even if this were to happen in both jurisdictions, it would amount to about 10-20 per cent of the networks business, and still leave it with the distribution element.

Part of the logic behind getting the ESB to transfer ownership of the Republic’s grid is that it should boost competition. Its rivals need access to the grid to supply power to their customers, but risk being discriminated against if their biggest competitor remains in control of it.

However, one source said yesterday that at least some of the ESB’s rivals are happy enough with the current system and have not found that they are at a disadvantage. But even at that, they are neutral about the whole question, and don’t necessarily support the ESB’s continued ownership.