TDs criticise energy regulator

Fears of major electricity price rises increased yesterday when it emerged that an important review of the ESB's highly profitable networks division is not likely to lead to lower charges.

The review is being carried out by the Commission for Energy Regulation (CER). It will look at the return on capital ESB is allowed to receive from the networks division. According to the ESB's 2003 report, this division made a pretax and interest profit of €216 million on turnover of €849 million.

Speaking to the Oireachtas Joint Committee on Communications, Michael Tutty, one of the CER's three commissioners said he was finalising the results of the review, but at this point it looked like returns from this area would not be falling.

He said a modest increase in the cost of transmission and distribution of electricity was likely, although the review was not yet completed.

His colleague, Tom Reeves, said the networks business represented 40 per cent of the end user price of electricity. He said the networks division was effectively "a natural monopoly".

Throughout the meeting, Mr Reeves was heavily criticised by members, who said he had not done enough to encourage competition and had sanctioned a range of price increases over the last five years.

Mr Reeves strongly rejected the criticism and said he had no choice but to pass on the cost of international fuel prices.

He said he strongly doubted that prices would go up in September by as much as 36 per cent, but he said he was not going to speculate on what they might be. He said the ESB had a range of fuels, not just oil, and it had also hedged several of its fuel contracts.

Mr Reeves said a recent report he circulated, which mentioned the figure of 36 per cent, was a reference to the price of electricity produced by the most efficient plants. He said this price, known as the best new entrant price, was a wholesale price, not a retail price.

However, members remained deeply unhappy about recent increases. Michael Finucane TD said the public was "getting sickened" by increases.

Chairman Noel O'Flynn told Mr Reeves to write to the Minister for Communications, Noel Dempsey, about public service obligations (PSOs), which Mr Reeves said were "anti-competitive". Mr O'Flynn said if Mr Reeves felt so strongly about the issue, he should write to Mr Dempsey as soon as possible.

A major energy consultancy has suggested energy prices in Ireland could rise by as much as 50 per cent. Energy Information Centre, a UK-owned energy consultancy, said large energy users could face increases of up to 50 per cent. It said in previous years, customers ended up having to pay almost twice the best new entrant price.