Several large multinationals including Green Isle Foods and Wellman International have warned that energy price rises agreed by the energy regulator could lead to the closure or relocation of their operations and large-scale job losses.
Wellman, which makes fibres at its plant in Co Meath, said the rises could force it into liquidation with the potential loss of 300 jobs. In a letter to Tom Reeves, the energy regulator, the company's managing director states: "I do not exaggerate when I say that the increases in electricity costs currently foreseen for 2007 could be sufficient of themselves to force this company [ employing 300 people] into liquidation."
Mr Reeves has confirmed that electricity prices will increase by 19.7 per cent in the new year.
This decision has also angered CRH, one of Ireland's largest companies. In its letter to Mr Reeves, it says there is no effective competition and it cannot get a quote for its electricity account. "We only have two independent electricity suppliers and neither is prepared to quote for the CRH requirement due to lack of capacity."
It says its electricity prices have increased by more than 90 per cent in the last four years. The company claims that ESB, as public electricity supplier, made bad purchasing decisions and this is why its fuel bill is increasing by €150 million. This figure is to be included in the 2007 price tariff.
Another company which has written to Mr Reeves in recent weeks is Green Isle Foods, which is part of Northern Foods, a listed UK food company. In its submission, Green Isle says energy costs are 20 per cent lower in the UK. It says it is operating in a low-margin sector and added energy costs are a major problem.
"We operate in the low-margin food business and come under intense pressure every year from retailers in both the UK and Ireland to cut our costs in order to maintain business. The already high costs associated with manufacturing in Ireland forced us earlier this year to close one of our six plants in Ireland and transfer the production to the UK with the loss of 78 jobs," it says in its letter to the regulator. It warns that it may need to relocate more of its business if the energy costs keep rising. "Your proposals, which will mean an estimated 29 per cent increase in our electricity costs, will force us to review our remaining manufacturing plants with more than 1,000 people employed and consider transferring more production to the UK where energy costs are more than 20 per cent lower."
The company then makes a general plea on behalf of the food sector. "Green Isle Foods ask you in the strongest possible terms to reduce the proposed electricity tariff to current market prices, and allow us the flexibility to manage fuel purchasing with the energy providers to minimise any price increases through better purchasing. Failure to act in this manner is likely to result in the loss of a considerable number of jobs in the food industry."
The Commission for Energy Regulation, led by Mr Reeves, said this week that despite recent falls in oil prices there could be no change in its decision. It said the recent decreases in prices would only remove €9 million out of the fuel bill facing the ESB.
