New report boosts argument for keeping ESB intact

A NEW report paves the way for the Government to do a U-turn on its policy to break up the State’s biggest energy company, the ESB.

The Government has been considering transferring ownership of the ESB’s national grid, which transmits electricity from generating plants to the networks that deliver it to customers, to a new State agency, Eirgrid, which already manages the system.

EU directives designed to foster competition in energy markets require the company’s break-up.

The ESB’s unions are opposed to the plan and its management has also expressed concern at the implications of such a move.

According to the draft conclusions of an inquiry into the proposal, Ireland could be exempt from the directive. The report states that the Government would have a strong case for a derogation if it were to apply to the European Commission for one.

The report is the result of a consultation carried out by Fergus Cahill, a former Irish National Petroleum Corporation chief executive, who heard submissions from various interest groups, including Eirgrid, the ESB and its competitors.

The Cabinet discussed the draft findings yesterday. Mr Cahill is due to seek submissions on his findings from the other parties involved, following which Minister for Energy Eamon Ryan is likely to make a decision.

The report examined a number of scenarios and found that virtually all of them would require the State to invest more money in Eirgrid or face the prospect of adversely affecting the financial position of both that company and the ESB, and possibly hinder their investment plans.

ESB unions and the workers’ share-ownership trust are likely to welcome Mr Cahill’s conclusions on the grounds that they strengthen the argument for keeping the company intact.

Earlier this year group of unions leader Brendan Ogle warned that workers would take industrial action if the Government were to go ahead with the plan.

The ESB’s competitors, including Energia and Airtricity, originally supported the plan to break up the company, but there were some indications earlier this year that this stance had softened, although they may not necessarily support the company’s continued ownership of the grid.

The proposal to split the company has been on the table since early 2007, when it became policy under the then minister for energy Noel Dempsey following the findings of a report produced a year earlier.

When he took over the role later that year, Mr Ryan said he supported the plan and argued that it was the logical conclusion of the existing situation whereby Eirgrid managed the grid independently of the ESB, which owns it. Last year he asked Mr Cahill to chair the consultation, which would look at all possible scenarios.

Mr Ryan did not comment on the draft conclusions yesterday as the document has not yet been published.

Since he took over the role in 2007, energy markets North and South have been unified. Earlier this year, the ESB bought the North’s national grid from Viridian. Eirgrid bought the grid manager, meaning that both companies own and manage both of Ireland’s electricity grids.