ESB customers could be facing 10% price rise

ESB customers could be facing a price increase of almost 10 per cent plus a doubling of the ESB connection fee, the company indicated yesterday after announcing its 2004 results.

While the chief executive of the company, Padraig McManus,refused to speculate on the scale of the price increase, the ESB chairman Tadhg O'Donoghue said he was hopeful it would not be a double digit increase. But he said the rising cost of fuel on world markets was putting upward pressure on electricity costs.

The increase is due to be considered in September and will come into effect in the new year.

He said fuel accounted for over 55 per cent of all energy generation costs and 30 per cent of the overall cost of supplying customers. He said a decision on price was ultimately one for the energy regulator, Tom Reeves.

At present, customers connecting up to the electricity system for the first time are charged €1,150, but Mr O'Donoghue said ESB wanted this doubled, so it was more cost reflective.

He said the ESB was connecting up all new homes even though householders could choose any electricity supplier they wanted. He said the ESB had told the regulator Mr Reeves it wanted the charge doubled. "We are pushing, we are pushing," was how Mr O'Donoghue described the negotiations.

The company's results were in line with earlier reports, with pretax profits up from €302 million to €314 million and turnover rising from €2.4 billion to €2.6 million. The company expects results in 2005 to be broadly similar. ESB is paying out a dividend of €77 million, a new record, to the Government for 2004.

Operating costs at ESB continued to rise in 2004, with payroll up €14 million to €495 million, fuel costs up €74 million to €806 million and repair and maintenance costs up €36 million to €110 million.

Chief executive Padraig McManus said because of surging demand the ESB had little time in the past to overhaul any of its 19 power plants, but this was now possible and the company was aiming to have 83 per cent of its stations available to generate power at any one time.

Mr O'Donoghue also surprised observers by launching a strong attack on the contracts set up between ESB and the two new electricity operators - Aughinish Alumina and Tynagh Energy. He said these two companies were guaranteed a price for their output for more than 10 years. He said ESB was taking all the risk in these transactions and getting "very little benefit". However, he acknowledged the contracts were in the national interest.

Last night, reaction to the potential price increases was extremely negative. ISME, the small firms lobby group, said it was shocked that a rise of almost 10 per cent could be sanctioned.

ISME chief executive Mark Fielding said: "It is almost beyond belief that on the day the ESB announced significant profits of €267 million, they had the audacity to seek an increase which would effectively hike electricity costs by more than 55 per cent over the past four years, over five times the rate of inflation."

"This is a company that can afford to pay one of the highest average wages and still produce profits of the magnitude announced today," he added.

Fine Gael's spokesman on communications, Bernard Durkan, said the regulator and the Minister should tell the ESB that such a request was not acceptable.

"Over the past few years, "Rip Off Ireland" has seen stealth tax after stealth tax, increase after increase. They have eroded our competitiveness, put pressure on wages and stretched consumers' hard-earned cash," he said.