From Socialist Voice, May 2011

Shadow over the future of the ESB

Under the heading “New era: A 21st-century smart grid,” the Programme for Government states: “Beginning with the handover of ESB’s Transmission Assets to Eirgrid, we will create a new ‘Smart Grid’ company with ultimate full ownership and responsibility for the development of Ireland’s electricity and gas networks.”
     The transmission assets are at present owned by the ESB but managed by another state company, Eirgrid. It was the policy of the last Government to transfer the assets to Eirgrid; however, ESB unions got an agreement from the then minister to commission a review of this policy. The outcome of the review favoured the continued ownership of the assets by the ESB, as the transfer could cost up to €150 million.
     The review suggested that Ireland had a relatively strong case for derogation under article 9 (9) of the EU Electricity Directive and for maintaining the present arrangements. This is the position favoured by the ESB Group of Unions, which always argued that there is no need to transfer the transmission assets in order to comply with the EU directives.
     The electricity industry has changed beyond recognition over recent years. This change has been brought about by EU directives, introduced with the aim of creating a so-called competitive market in the industry.
     It is not that long ago since the ESB generated 98 per cent of electricity supplied in the Republic. This has been reduced to about 40 per cent of the all-Ireland market.
     ESB Supply, which is now rebranded Electric Ireland, has lost about a million domestic customers to its competitors, which represents about 53 per cent of market share. The ESB’s market share is now below the 60 per cent threshold placed on the ESB by the Commission for Energy Regulation.
     Accordingly, the CER has ended the regulation of electricity prices for domestic customers. This price deregulation will enable Electric Ireland (ESB) to set its own electricity prices for domestic customers, which heretofore were set by the regulator, unlike the price charged by its competitors.
     The ESB is still a vertically integrated utility, with generation, transmission, distribution network, and electricity supply business. The proposal in the Programme for Government to break up the ESB will undermine its financial position and affect its ability to raise capital for future investment. It makes no business sense whatsoever.
     However, the part of the proposal contained in the Programme for Government, i.e. to create a new company with ultimate full ownership and responsibility for the company’s electricity and gas networks, is, unlike the transfer of the transmission assets to Eirgrid, a new proposal that has never been raised before or contained in any of the Government parties’ election manifestos.
     If the proposal to amalgamate the gas and electricity network was never raised in the past by either the outgoing or the current Government parties one would wonder from where the proposal emerged.
     With the economic mess in which the country finds itself, with its loss of sovereignty and beholden as it is to the International Monetary Fund and European Central Bank, it is reasonable to assume that this proposal was the brainchild of the IMF and ECB.
     If this is the case, and given the record of the IMF in this regard, it is also reasonable to assume that this company, when set up, will be ripe for privatisation. It will be sold off to one of the giant utility companies in Europe as part of the Government policy of selling off state assets.
     There would appear to be a view in the Department of Energy that the electricity transmission lines are a strategic state asset and are a natural state monopoly. However, all the other component parts are up for grabs: generation, networks distribution, and electricity supply.
     This situation presents challenges to the trade unions in the company, to protect their members’ terms and conditions of employment, to the wider trade union movement, and to all those in political life who support the concept of maintaining strategic state assets in public ownership.
     The trade union movement’s defence of public enterprises against privatisation and deregulation has been unsuccessful because of its inability to mobilise sufficient industrial, public or political support in defence of public ownership.
     A campaign must begin now, gathering the support of the workers in the state companies, the wider trade union movement, and the political left in Dáil Éireann, to fight against the selling off of important state assets and strategic infrastructure to global profiteers, which is not in the interests of the country, the consumer, or the workers in the industries.

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