ESB wins five-year US contract worth €750m

 

The ESB has won a €750 million contract to operate an electricity network comprising 10 per cent of the US market.

The company is the preferred bidder for a five-year contract to operate the electricity distribution network in the south east of the US.

The area involved includes states such as Georgia, Alabama and Louisiana, and parts of Mississippi, Arkansas, South Carolina, Texas and Florida.

Some 10 other groups were in the race to run the SeTrans Regional Transmission Organisation, whose assets are worth more than €9 billion.

The ESB and the independent network operator, EirGrid, will establish a dedicated firm in the US to serve as an independent system operator in the region with their joint-venture partner Accenture, the former Anderson Consulting.

The project will have a capital base of up to €200 million and will employ some 250 staff.

Annual revenues from the contract will be worth in the region of €150 million to the State company.

ESB's sales topped €2 billion for the first time last year.

While the Irish group will not generate electricity in the US, it will be responsible for the management of more than 85,000 kms of transmission lines and more than 73,000 megawatts of power capacity.

This contrasts with the 4,500-megawatt capacity of the system in the Republic.

According to the ESB chief executive, Mr Pádraig McManus, the selection was a "huge vote of confidence" in the company.

The chief executive said: "The US Federal Energy Regulatory Commission is strongly promoting the establishment of regional transmission organisations to promote competitiveness in electricity markets.

"The SeTrans regional transmission organisation is the first to select an independent entity from an open international competition."

Mr McManus continued by saying: "I have already put on record that, as a company, we see our international policy as key to company expansion and profitability and this new contract is testimony to that."

The outcome of the process is seen as a coup for the ESB because its attempt to purchase a cluster of eight supply companies in Poland was blocked by the Government last year within hours of the deadline for a binding bid.

The company's international division has some 800 staff and has annual revenues of more than €127 million derived from operations throughout Europe, Asia, Africa and Canada.

The ESB and EirGrid already operate the electricity system in Alberta, Canada, and the joint venture they operate in Alberta is seen as the template for the latest contract.

While the ESB owns the domestic electricity system, EirGrid operates it, which includes scheduling the operation of power stations to feed electricity into the network.

EirGrid is being established as an independent company to ensure the fair operation of the domestic grid as competition is introduced into the industry.

However, at the moment, EirGrid remains as a ring-fenced business unit within the ESB.