ESB paying exchequer €88m dividend a pointless exercise

Energy company should use sum to cut prices for families and employers

Photograph: iStock

Photograph: iStock

Your Web Browser may be out of date. If you are using Internet Explorer 9, 10 or 11 our Audio player will not work properly.
For a better experience use Google Chrome, Firefox or Microsoft Edge.

 

In yet another example of one part of the State shifting cash to another, Government-owned ESB plans to pay the exchequer an €88 million dividend from the €338 million profit that the electricity and natural gas supplier earned last year.

Whether it gets the dividend or not, the State has the cash anyway, either as the ESB’s shareholder or in the exchequer, so it really is a pointless exercise.

You could argue that like any commercial entity, the company should pay a dividend to its shareholders when it is prudent to do so. Many of its rivals in the energy market do the same.

Also, with or without coronavirus, the State needs money to continue running itself, to provide public services, build hospitals and homes, pay the national debt, and so on.

Profits

All that is true. However, the shareholders in ESB’s private sector competitors do not tax their customers’ incomes and profits. The ESB’s owner, the State, does tax the group’s customers, and presumably the energy group’s own profits and workers.

Another argument that might support a dividend payment to the State is that, as the ESB’s private sector rivals return cash to their owners, it would give the energy group an unfair advantage if it did not do the same.

That’s actually pretty weak. Private sector companies are not obliged to pay dividends. In fact, given the rate at which many are now suspending these payments, there are times when it is not in a company’s interest to do so.

ESB should use the €88 million to cut the prices that it charges families and employers for energy. In fairness, the company did this recently, but the cash would give it scope for more reductions.

This would leave extra money in its customers’ pockets while hopefully spurring further competition in the energy market. The State will benefit anyway as it will get a share when people and businesses spend the money saved on electricity bills elsewhere.

Otherwise, when ESB, or any State company, hands over profits earned from customers to the Government, it is double taxation, something that, as everyone knows, is doubly unfair on workers and employers.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.