From Socialist Voice, August 2010

Attempts to break up the ESB continue


The Government is proposing to split the ESB and transfer ownership of the national grid—its electricity transmission network—to Eirgrid, the state body that manages the grid at present. The policy stems in large measure from the European Union, which wants member-states to separate the ownership or management of power generation and supply from national grids to “encourage competition.”
     However, the Government intends splitting up the ESB’s generating and transmission businesses altogether. Their support undoubtedly stems from the various independent operators, such as Viridian and Airtricity, which are competing with the ESB. The ESB’s rivals need access to the grid to supply power to their customers but are hindered in this, given that the ESB remains in control of it.
     Independent operators argue that allowing the ESB to keep ownership of the grid means there is a risk that they will be “discriminated against,” which in turn will “damage competition.” Much of this is couched in a discourse that undertaking such action will boost investment in the Irish energy market and help to cut electricity prices.
     Yet a recent study, undertaken by the British consultancy firm LECG, has found that by transferring the ownership of the assets of the country’s electricity transmission network from the ESB to Eirgrid would cost up to €150 million. The report found that there would be no positive reasons for making the change, and therefore that doing so would actually deter new investment—at least during the transition period. Furthermore, the present system, which allows the ESB to continue to own the grid, is independently managed and is unlikely to result in the state company’s competitors facing discrimination. Indeed international experience has found that this does not happen.
     Another argument against allowing the ESB to retain ownership of the grid is that it would influence investment in the asset itself. Yet in fact Eirgrid is already investing in developing the grid. The state company is building an interconnector linking Ireland with Wales, which will allow electricity to flow from one country to the other. Eirgrid plans to spend €4 billion redeveloping the national grid between now and 2025. Investment is therefore continuing, and, in addition, Eirgrid plans to spend €4 billion on redeveloping the grid between now and 2025.
     Noel Dempsey, as head of the Department of Communications, Energy and Natural Resources in 2007, admitted that the “fragmentation of the ESB . . . would not reduce prices but would in fact increase them and endanger our security of supply and competitiveness.” Yet Éamonn Ryan, as the incumbent minister, is now following such a course. Indeed the strategy of hiving off parts of the ESB flies in the face of agreements with workers at the company. Previous agreements were underpinned by a long-held understanding that the Government would not break up the ESB and would retain its “vertically integrated unit” (VIU) structure. Transferring ownership to Eirgrid—as opposed to the latter merely administering the transmission system, as it does at present—breaches this commitment.
     In assuming that the Government would not hold back on embarking on such a strategy, ESB workers have already co-operated with the sale of plant, reorganisation and voluntary redundancies at a number of plants. Yet in spite of this, Ryan intends to bulldoze through the break-up strategy, despite worker opposition.
     Although ostensibly providing unions with a voice in the matter, at a recent independent review body this body was hamstrung from the outset. At its first meeting “a roadmap of process finalisation” was produced, setting out a timetable for the transfer of ownership, effectually meaning that transfer was a fait accompli, rather than a matter for review.
     At present the ESB owns and runs close to twenty power stations throughout the country. It has a profitable international entity that has secured numerous international contracts, bringing much-needed cash into the ESB itself and thereby contributing to the development of the national infrastructure in Ireland.
     It makes no sense to break up the ESB. Rather it will drag us down the same route we have already gone with our telecommunications network, where an important national asset is in the hand of various venture capitalists.
[NC]

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