Small businesses struggle to pay electricity bills amid Covid restrictions

ESB profits fell to €126m as State group absorbs €188m hit to value of power plant

ESB said on Friday that Covid-19 knocked €15 million off operating profits mainly due to bad debt.

ESB said on Friday that Covid-19 knocked €15 million off operating profits mainly due to bad debt.

 

Small businesses are struggling to pay electricity bills in the face of Covid-19 restrictions, figures from energy group ESB indicate.

Profits at State-owned ESB fell two-thirds last year to €126 million after providing for pandemic-related bad debts, a fall in the value of a power plant and other once-off charges.

The group set aside €15 million to deal with the bad debts stemming from customers having difficulty paying their energy bills.

Pat Fenlon, chief financial officer, explained that small- and medium-sized businesses accounted for most of this.

He noted that half this figure was based on what the group had seen so far, and the balance was the ESB’s estimate of the likely total once the crisis had played out.

“Hospitality and retail have been hit hardest,” Mr Fenlon said. “We will work with any customer in difficulty and we will come to an arrangement with most of them.”

Pubs, restaurants and “non-essential” shops closed at Christmas when the Government tightened restrictions on fears that new, faster spreading Covid strains would worsen the crisis.

Mr Fenlon said the bad debt provision was small in the context of ESB’s overall business.

Revenues last year were unchanged at €3.7 billion as increased household consumption covered much of a fall-off in demand from businesses.

Profit after tax slid 62 per cent in 2020 to €126 million from €338 million in 2019.

The group had once-off charges totalling €247 million, including a €188 million charge to cover a fall in the value of its gas-fired power plant in Carrington, Manchester in the UK.

Mr Fenlon said this amounted to one-third of the generator’s value on the ESB’s books.

Renewable energy

Increased use of renewable energy in Britain reduced demand for electricicty from plants such as Carrington.

This cut the profits it earned from selling electricity, prompting the ESB to reassess its value last year. Mr Fenlon said Carrington, built in 2016, remained profitable.

Excluding those costs, ESB’s after-tax profit was €357 million last year, about 15 per cent less than the €419 million it earned in 2019.

Before accounting for the charges, the company’s operations produced a profit of €616 million in 2020.

The group paid an €81 million dividend to the State. It has handed over €1.2 billion in such payments to the exchequer over the past decade.

ESB generates and sells electricity, and supplies natural gas, to homes and businesses across Ireland and has several operations in Britain.

The group also runs the networks that transmit electricity from national grids to customers north and south of the Border.

The company said electricity demand fell just 1 per cent last year. Mr Fenlon said in a statement that the results showed resilience in the face of Covid-19.

He added that ESB was “well positioned” to meet the pandemic’s ongoing challenges.

The State company invested €1.1 billion in its infrastructure and new renewable generators in 2020.

Mr Fenlon predicted that ESB would spend a similar sum annually for the next five years on renewable power plants, smart meters and to meet demand as electricity is increasingly used for transport and heating.

During the year, ESB commissioned its biggest wind farm at Grousemount, Co Kerry.

The plant can generate up to 114 mega watts of electricity, enough to supply up to 70,000 homes, farms and businesses, the group says.

ESB will be taking part in a consultation run by fellow State company, Eirgrid, on the future development of the national electricity grid in coming weeks.