White paper on energy sparks ESB dispute and possible cuts

The ESB unions say this time management and the Government have got it wrong on the transfer of transmission ownership to Eirgrid, writes Barry O'Halloran.

Events look to have overtaken yesterday's Irish Congress of Trade Union's (Ictu) briefing paper on the Irish energy market.

Not that the document is irrelevant, but it was obviously produced before the most recent - and controversial - development in the energy market came to pass.

Its conclusion welcomes the publication of the Government's Green Paper on energy and looks forward to the publication of the White Paper.

Minister for Communications, Marine and Natural Resources Noel Dempsey published that White Paper last week. It met immediate opposition from the ESB unions.

A key issue for them is the proposal to transfer the ownership of the electricity transmission grid from the ESB, which built the network, to another State company, Eirgrid, which currently manages it.

The unions say that this is in breach of a three-way agreement struck between themselves, ESB management and the Government in 2000 that there would be no further changes to the State electricity generator's structure.

Mr Dempsey's spokeswoman says that this is not the case. "No such undertaking was given," she says. "What we did say was that the issue of rising energy costs has to be tackled, and this is what we're trying to do head on."

The unions do not believe the ownership transfer is feasible. Whether it is or not, they are dead set against it. Brendan Ogle, general secretary of the Amalgamage Transport and General Workers' Union says bluntly: "No further assets are going to be transferred from the ESB to another company."

Ogle and his colleagues, including David Naughton, his opposite number at the Technical, Electrical and Engineering Union, are holding talks among themselves.

On Monday, they will meet Mr Dempsey, who is on his way back from a State visit to the US. They will decide on their next step later in the week.

Ogle is adamant that this could involve industrial action which could lead to blackouts. He says his members are willing to take this step before the general election, due to take place in May at the latest.

Naughton is more circumspect, but still makes it clear that ESB workers could take some sort of action, which, at the very least, could hit electricity supplies to the company's customers.

One of the issues that cropped up at yesterday's Ictu briefing was the fact the unions believe that between 600 and 700 workers would be affected by the transfer, should it go ahead.

These are the technicians and engineers who manage and maintain the transmission grid.

Ictu chief David Begg said these people would be left in a "grey area" if the transfer was completed.

The department's spokeswoman told The Irish Times yesterday that any staff involved would have the option of transferring to Eirgrid.

This would simply mean a switch from one State company to another, so presumably, their pay, seniority and pension rights would be intact.

However, if they choose not to go, Dempsey has pledged that no jobs will be lost as a result of the proposals contained in the White Paper, so the obvious question is: what happens to them then?

The department believes that they can be redeployed within the ESB. The Minister has set the end of 2008 as the target date for the transfer to be completed, giving about 21 months for issues like this to be thrashed out between the Government, unions and ESB management.

However, there is a big gap between the unions and the Government over the actual number of workers who will be affected, should the White Paper proposals be implemented.

The figure quoted by the Ictu yesterday was between 600 and 700, but the Government says it would only affect about 25 staff, and says that the ESB has confirmed this.

Alongside that, there are two related issues. The first is that, as ESB workers own 5 per cent of the company through an employee share option scheme, they should be paid if the transmission grid is transferred to another entity.

Its value is estimated at €1 billion, thus the workers' share should be €50 million.

The department's spokeswoman however says this does not apply, as the grid is not being sold and no money is changing hands.

It is simply being moved from one State entity to another.

Other sources suggest that, as ESB workers who transferred to Eirgrid got €40,000, there is a predecent that has to be followed this time around. For 700 people, that comes to €28 million; for 25, it would be €1 million.

All of this is academic as far as the trade unions are concerned. Their position is that they are not for turning on this one.

They co-operated when Eirgrid was established in 2000, but they cannot see the need for this.

"We agreed to Eirgrid because we believed it was for the best," Ogle argues,"but nobody seems to have thought this one through at all."

So, just what is thinking of the Minister - and the Government? Their logic runs something like this. Transferring the transmission grid to Eirgrid will result in immediate administrative savings of €1 million to €2 million.

The Minister's spokeswoman says the move will send out a clear signal to external players that the market here is managed in an independent way, thus making it more attractive to those who want to invest in building power plants.

"That will result in more competition, which will result in lower prices eventually," she says.

Other measures - the freeing up of land on which new plants can be built and the limit on the profits that the ESB can earn from distribution - will boost this process, she adds.

The ESB's competitors need no convincing and at this stage, consumers and industry would be happy to see a fall in electricity prices, no matter how that comes about.

However the people who are going to take all the persuading are the unions, and while the Ictu might have looked a little slow off the mark yesterday, those of its constituents with members in the ESB have been anything but.

When the Minister gets back from the US, he's going to get some welcome.