ESB requires £16m to face competition

The ESB needs to generate an extra £16 million (20.3 million) in revenue from its domestic customers to face competition adequately in 2000, the company's chief executive has said. Mr Ken O'Hara, addressing the Oireachtas Joint Committee of Public Enterprise yesterday, said if the company did not get the money it could lose significant market share and the value of the ESB would be seriously reduced.

To generate the £16 million, it would be necessary to increase domestic prices by 2.5 per cent, or 3 per cent if future investment requirements were included.

Mr O'Hara said that industrial customers were currently subsidising domestic customers by between 10 and 12 per cent.

Increasing domestic prices would allow the ESB to offer lower industrial rates and compete with the new competition, which, from 2000, would be allowed offer electricity to 28 per cent of the market.

The Minister for Public Enterprise, Ms O'Rourke, has already refused to sanction a price rise. A spokeswoman for the Minister said last night this remained the position and that the ESB's current high profits meant a price rise would not be justified.

She added that requests for a price rise in the future would not be an issue for the Minister, but for Mr Tom Reeves, the new electricity regulator.

Mr O'Hara also said the ESB must build a new £250 million gas power plant by the end of 2001 or face the prospect of major supply problems.

Ms O'Rourke has said the ESB can proceed with the project - planned for Ringsend, Dublin - but authorisation to build and operate the new plant must be granted by Mr Reeves. Mr O'Hara stressed that to complete the plant in time, Mr Reeves would have to authorise it before the summer.

Mr O'Hara said that peak demand for electricity in the Republic was about 3,500 megawatts and experts agreed the company needed to have 30 per cent excess supply on top of this. Currently, the ESB has only 22 per cent above the peak.

When asked whether there would be widespread power cuts if the new station was not commissioned on time, Mr O'Hara said: "I think so, but it is hard to say at this stage."