The prospect of the ESB being allowed to increase its domestic charges suffered a fresh setback yesterday after comments by the Minister for Public Enterprise, Ms O'Rourke, at the committee stage of the Electricity Regulation Bill.
Ms O'Rourke said she would be giving the incoming regulator for the sector, Mr Tom Reeves, a clear "policy direction" preventing the ESB from "re-balancing" its tariffs.
The ESB was hoping to submit its application for a price rise to Mr Reeves in the summer and was expecting he would have discretion in the matter. However, Ms O'Rourke, in response to comments by Mr Emmet Stagg TD, a Labour Party member on the Oireachtas Joint Committee on Public Enterprise and Transport, said she would be laying down "firm policy" for Mr Reeves in the area.
Under the Electricity Regulation Bill, Ms O'Rourke is entitled to give policy direction to Mr Reeves.
Ms O'Rourke said she had "fought a long battle" with the ESB over the issue of prices and said the company was "obsessed" with the issue. Under electricity deregulation, she said, prices would not necessarily have to go up and could even come down for domestic and industrial customers.
In contrast to this position, the ESB has consistently argued that it needs to "re-balance" its tariffs in order to compete against new market entrants. It claims industrial customers are subsidising domestic customers at present and that, in order to bring industrial prices down, it must increase domestic charges.
In another significant development, the Fine Gael spokesman on public enterprise, Mr Ivan Yates TD, told the committee that the market could be opened further by adjusting the criteria used to define "eligible customers" (those allowed to choose between electricity suppliers from next year).
He said the Bill as it stood allowed "premises" using more than four giga-watts of power per year to choose their own supplier. However, he questioned whether companies that owned several premises could combine all the power they used to exceed the four giga-watts per year requirement.
He said that, while one hospital might not use four giga-watts a year, a group of hospitals might do so, meaning there could be significant savings for them if they were able to move to a new supplier offering lower prices than the ESB.
Ms O'Rourke said she accepted the point about hospitals, but said that to allow companies to "accumulate" the power they used for each premises would "make things very difficult for the regulator". "I could see it giving rise to lots of disputes," she said.
Mr Yates said the current provisions would only allow multinationals to benefit from the opening up of the market. "It might add another 100 customers. It won't change the world, although the ESB probably thinks it will," he said.
Mr Yates said he would table an amendment to this section of the Bill at report stage, and Ms O'Rourke said she would look at the issue.
Mr Stagg, who is Labour Party public enterprise spokesman, said that if this section was changed, the market would be opened considerably beyond 28 per cent. "We could well go towards 50 per cent, which is not the object of the exercise," he said. "We have a State company here, which needs to be eased into the market," he added.
