ESB profits drop by €103m due to wage and fuel bill

Operating profits at the ESB fell by €103 million to €199 million last year due to higher fuel and wage costs. The fall was recorded despite a €146 million increase in revenues which rose in the period to €2.04 billion, breaking the €2 billion barrier for the first time.

Such figures reflect an 8.6 per cent increase in electricity prices in the final three months of 2001, which was the first since 1993. Last Friday the energy regulator, Mr Tom Reeves, granted an average increase of 9.85 per cent which will apply from next year.

The ESB's 2001 annual report has been seen for months in company, Government and union circles and will be lodged in the Oireachtas library.

It will not be formally published until September 24th, the day the company holds its first annual general meeting.

The meeting will be held because staff now hold a shareholding in the company. Last December the company paid €59.4 million to the employees' trust, which with a third party loan of €16.4 million was used to acquire 5 per cent of the company at a discount of €23.1 million.

While post-tax profits increased by €135 million to €165 million, the €30 million profit in 2000 was distorted by an exceptional restructuring charges and profits on the sale of investments in 2000. The company also gained a one-off tax credit of €5 million last year.

Some €1.75 billion of its revenues last year were derived from electricity supply, up from €1.61 billion in 2000. Turnover from retail, contract and other services rose to €289.5 million in 2001 from €282.7 million a year earlier.

Payroll costs rose by €61.97 million to €412.24 million in the period. This reflects the start of a 21 per cent pay package agreed in mid-2001 in return for productivity savings and the departure of about 2,000 workers by 2007 from a staff of 8,000.

The departure programme will cost €299.8 million, funded through an exceptional structuring charge made in 2000.

Fuel costs rose €171.52 million to €752.74 million in the period due in part to higher gas and coal prices. This also reflected higher dependence on oil rather than hydroelectric plants due to lower than expected rainfall and in place of gas due to its relative cost.

Capital expenditure rose to €547 million in 2001 from €121 million in a €4 billion project to renew electricity infrastructure.

The estimated tax bill was €16 million and the early adoption of the FRS 19 accounting standard on deferred tax resulted in a further charge of €24 million.

But the company received a €45 million refund after a Revenue statement of practice on the tax treatment of provisions, resulting in the credit.

The ESB paid no dividend to the Government in respect of last year's profit although discussions are under way on a dividend policy in respect of the business outside electricity supply.

The remuneration package earned last year by the company's chief executive, Mr Ken O'Hara, increased to €363,851 from €317,000 in 2000. Mr O'Hara retired last July.

The ESB chairman, Mr Tadhg O'Donoghue received fees of €62,631 while 10 non-executive board members shared €107,424.