In many respects the results from the ESB could hardly be better; after a remarkable surge in demand profits for last year climbed beyond the company's own expectations to £151 million almost double the figure for the previous year. In other respects, the ESB's results might suggest that it is the very model of State enterprise; the overall debt burden has eased from £1.3 billion in 1987 to £825 million last year, while operating costs as a percentage of turnover have also declined appreciably.
The company has also completed an ambitious and sometimes painful rationalisation programme; staff numbers are being reduced by some 2,000 under the cost and competitiveness review (CCR) and there have been significant changes in work practices and overtime. All told, this cost cutting programme should yield savings of about £60 million per year for the company.
The company has certainly benefitted from the strong performance of the economy. The domestic load increased by over five per cent as 30,000 new homes were connected. Placing this in perspective, the company's chief executive, Mr Joe Moran, said that one would have to go back 40 years to the era of rural electrification in order to find a comparable surge in new business.
In many respects, these are the best of times for the ESB, with strong growth in the domestic market and no competition for business. The real challenge facing the company is to legislate now for a much changed commercial environment over the next five years in which a substantial chunk of the Irish market will be thrown open to competition from other EU electricity providers.
The task of reshaping a monopoly energy provider into a lean and competitive player that can hold its own in the EU energy market is a formidable one which should concentrate minds not just at the ESB - but also in Government. The Government has done well in securing some concessions from Brussels which will help to cushion the blow for the ESB. These will help in the short to medium term; but the most durable long term approach is to see the liberalisation of the EU energy sector as an opportunity - and not as a potential difficulty.
The disclosure that the ESB is in discussions with a leading international phone company believed to be British Telecom in order to maximise the potential of its telecommunications infrastructure is encouraging in this regard. Certainly, both parties have much to gain from a joint venture. The ESB has the second largest telecommunications infrastructures in the State: access to it would give BT a cost efficient means of greatly increasing its presence, notably in the corporate sector. More radical thinking of this kind is needed and the Government might usefully adopt some of the recommendations made by the recent report of the Joint Committee on State Sponsored Bodies on the ESB. These included the establishment of a new body independent of the ESB to mediate in the purchase of electricity from generators; the appointment of an interim independent regulator for the electricity sector and, critically, a determination, that the CCR is but one chapter in a continuing drive to cut costs.