[Poll] ESB - to invest 22 billion in renewables / Bord Gáis Enters Electricity Market 18/02/2009

Quote :

IBEC has said the decision by the ESB to pay a 3.5% increase to staff at a time when cutbacks are needed is disturbing.

Chief economist Danny McCoy was speaking outside Government Buildings where talks between the social partners on spending cuts are continuing.

He said the pay increase sends out the wrong signal at this time.

Meanwhile, ICTU General Secretary David Begg said if more companies followed the ESB example, there would be fewer workers struggling to make ends meet.

http://www.breakingnews.ie/ireland/mhsngbsnidgb/

Pax wrote:

Obsession with privatisation is the real cause of the energy struggle
http://www.tribune.ie/article/2006/may/21/obsession-with-privatisation-is-the-real-cause-of-/?q=obsession%20with%20privatisation

That looks like a fine article alright. Some excerpts below on the wages but further on we're told we that we pay an "investment levy" on the whole mechanism even though the grid is a vital national resource. We're fleecing ourselves (ESB workers get a discount on their electricity).

I'd love to know what the EU structures are for dealing with this kind of monopolistic abuse, if those structures exist at all.

Quote :

In their article of 7 May 2006, 'Power corrupts, state monopoly power corrupts absolutely', it was argued that the average ESB wage stood at 95,000 or "around" 43 per hour. Where this figure comes from is a mystery.

The CSO reports that the average wage in the energy sector is 25.36 per hour. Average wages and salaries, including management, are less than 60% of the figure used in the article.

http://www.stockholm-network.org/downloads/media/d41d8cd9-Erin%20Go%20Dark.pdf

Found this interesting article by Constantin Gurdgiev on how the ESB kept wind energy out and prices up. I don't understand all of it, so any explanations/elaborations are welcome. Gurdgiev is mainly interested in bashing public ownership, so he has nothing to say about prices being put up to ease the way to privatisation.

If half the stuff below is true then we've been screwed for half a dozen years or more now.

You might be getting confused by what "spill" means - sorry I can't help you as I don't know. Yet. I've found a CER document which I'll go through to see if it means anything. It's something to do with excess demand or excess supply - I don't believe they dump electricity but perhaps they do.

On the other stuff you can see that it is alleged that they may have purposefully jacked up their own costs so as to out-compete the neighbour, Airtricity ...

Yesterday ..

Energy prices may fall after Ryan orders review

Quote :

Electricity bills are set to come down by at least 10% after Energy Minister Eamon Ryan ordered a price review tonight.

The Green Party minister said he has also asked the energy regulator to look at ways of reducing gas prices for householders and businesses.

Mr Ryan told the Dail that he expects cuts in the cost of fuel globally to be passed on to consumers after the Commissioner for Energy Regulation review.

“To this end, I am tasking the energy regulator to undertake an immediate review of options to bring forward a reduction in electricity prices,” he said.

“Based on current trends I expect a double-digit cut in electricity and gas prices this year.”

http://www.eveningecho.ie/news/index.aspx?c=ireland&jp=mhsnqlojkfid

Quote :

Mr Ryan told the Dáil that he expects cuts in the cost of fuel globally to be passed on to consumers after the commission’s review.

“To this end, I am tasking the energy regulator to undertake an immediate review of options to bring forward a reduction in electricity prices,” he said. “Based on current trends I expect a double-digit cut in electricity and gas prices this year.”

“The Government has to maintain a secure and sustainable energy supply at competitive prices,” he said.

Mr Ryan accepted electricity prices remain relatively high in Ireland but said consumers must understand the reasons behind that. Please tell us Eamon. These included the global price of fossil fuels, particularly natural gas, and the fact that Ireland was 90 per cent dependent on imported fossil fuels.

“The single best action we can take for electricity prices in both the short and medium term is to develop Irish supplies of renewable energy,” he said.

He said investment in renewable energy could preserve and create thousands of jobs in th energy sector.

http://www.irishtimes.com/newspaper/breaking/2009/0203/breaking80.htm

http://www.eihp.hr/english/e_sustavi-an-eu.htm

ESB pay rises when nothing else is rising except tempers. It seems the electric machine men have the nation by the constitutionals.

Quote :

THE ESB was under increasing pressure last night over its 3.5pc pay rise to some of the best-paid workers in the public service.

Despite our energy prices being among the highest in Europe, the company defended its decision to pay out €8m under the national wage agreement.

Electricity prices were increased by 17pc last summer. The company was to impose another increase in November to meet the €18m cost of paying a 3.5pc increase to its workers.

That price increase did not materialise but the ESB claimed it had to meet the 3.5pc pay rise under the agreement as it was a profitable company.

It also said the Government was aware of the decision to meet the pay increase.

The simmering row broke as Energy Minister Eamon Ryan ordered the Commission for Energy Regulation to undertake an immediate review of the ESB and Bord Gais to see how a 10pc reduction in electricity and gas prices for householders and business could be delivered.

While the 5.8pc increase in electricity prices imposed in November was subsequently shelved due to the steep fall in oil and gas prices, the July increase is still in place -- despite the price of oil plummeting by around 70pc since its July peak.

Environment Minister John Gormley yesterday described the ESB decision to pay its staff the increase as 'entirely inappropriate'.

http://www.independent.ie/national-news/pressure-on-esb-over-pay-hike-1628244.html

David Naughton, Trade Union leader was on Morning Ireland this morning on this subject and I'll post a link later here. Interesting interview with Áine Lawlor.

Heard the interview. I read that the ESB workers are also shareholders. However at the end of the day they don't run the company: there is a management structure and a Board. Government are 95% shareholders but claim to have no control over what goes on. This is arrant nonsense and should be brought to an end.

What we have it seems is a private company with all the worst features of a private company and the worst features of a State owned company. Its a monopoly run by a quango. The Regulator seems to have no remit to consider value for money or national energy pricing needs.

Legislation should be passed imo to bring this back under full State control and electricity in Ireland then could be rationally planned from the point of view of price, sustainability and self-sufficiency.

Auditor #9 wrote:

David Naughton, Trade Union leader was on Morning Ireland this morning on this subject and I'll post a link later here. Interesting interview with Áine Lawlor.

Interesting in the sense that the trade unionist was dire. He came across as having an "I'm alright, Jack" attitude.
At the end he made some bizzare allegation that the planning process was leading to supply cuts in Galway. I'm in Galway and have heard of no such blackouts.

A bit of googling reveals that the ESB sought planning for a high voltage line in Connemara and were refused by An Bord Planala.
I don't see what the government can do about that.

He was an ignorant sounding man telling Gormley, a government minister to fu8* off and play with his planning toys elsewhere and stop interfering.

As cactus says above, there is a company structure heavily involving the State for the benefits of the state ... what's the justification for high prices ... ??? Don't tell me it's renewables because Airtricity want to install left right and centre and bizarrely the Arklow bank project was cut off early which would have supplied an enormous chunk of Dublin's energy ... Is it the cost of the Interconnector ???

More and more we need to appeal to Europe on these things surely - this crowd is a big tyrant in a small sandpit.

I thought the union guy's chirp that Gormley might be able to cajole Green Party Members but he wouldn't be able to cajole the ESB unions was overly smart-alecky. The ESB workers have made a strategically reckless decision on this.

With that said, this is a tricky one for the Government. If they interfere then the unions could use it as a touch paper for industrial unrest without having to make public sector workers step into the line of fire. In fact, the unions might feel they have no option but to react strongly to a unilateral breach of partnership.

If the Government don't get the ESB now then they'll get them later. All TDs from all parties will remember this.

He was horribly arrogant. My hackles rose.

The first thing would be to get the information together on how it works and what is wrong with the set up.

Getting them is not the issue.

FDI CEOs have been saying for years that lack of broadband and high energy costs were driving them out of the country. Also, lack of IT graduates, which has been a problem since 2001.

None of this is rocket science. The ESB is being used as a slush fund. Is it some kind of post colonial syndrome that makes us act like leeches and robbers in our own country, in emulation of the former colonial power ?

cactus flower wrote:

He was horribly arrogant. My hackles rose.

The first thing would be to get the information together on how it works and what is wrong with the set up.

And if someone is in breach of some law somewhere. It's desperate to know that the country is held to ransom like that - payrise or blackout.

This comes down to what machinery there is in the State - political, industrial and technical. The ESB have a "natural monopoly" and this must be broken up and the EU must be appealed to on the grounds of competition laws because the energy regulator like other regulators seem to be castrated.

I'm afraid that this is all a lot more critical than folks in the government and the media are making it out to be.

We see our bills constantly rising. Having said that I'm not against the pay rise. Wages don't seem to be the factor that constantly pushes the cost of bills upwards, at least not the front line employees.

We discussed this issue before on an other thread, but it bears repeating. The denial of planning permission in Connemara shows that the ESB are still living in the past with regard to building infrastructure. They're now at the point where someone is going to get a cap busted into his fat arse over costs and yet the whole of the infrastructure, practically all of it, needs replacing, not maintained, not repaired. The money is not there to even contemplate doing this. A ticking bomb.

Any attempt to put off this ticking bomb, by privatising the ESB would be disastrous. Anyone investigating the company with a view to purchasing it (I'm completey against privatisation - this merely serves to illustrate my point) would immediately see the state of affairs. You wouldn't be able to give it away.

Gormley and Ryan would want to pull their fingers out on this one and start to zoom out to see the forest here.

Hermes wrote:

I'm afraid that this is all a lot more critical than folks in the government and the media are making it out to be.

We see our bills constantly rising. Having said that I'm not against the pay rise. Wages don't seem to be the factor that constantly pushes the cost of bills upwards, at least not the front line employees.

We discussed this issue before on an other thread, but it bears repeating. The denial of planning permission in Connemara shows that the ESB are still living in the past with regard to building infrastructure. They're now at the point where someone is going to get a cap busted into his fat arse over costs and yet the whole of the infrastructure, practically all of it, needs replacing, not maintained, not repaired. The money is not there to even contemplate doing this. A ticking bomb.

Any attempt to put off this ticking bomb, by privatising the ESB would be disastrous. Anyone investigating the company with a view to purchasing it (I'm completey against privatisation - this merely serves to illustrate my point) would immediately see the state of affairs. You wouldn't be able to give it away.

Gormley and Ryan would want to pull their fingers out on this one and start to zoom out to see the forest here.

I wonder if the report is sitting on a shelf somewhere with a survey in it on the state of the infrastructure and a cost on it? Wasn't the price increase in part supposed to be to make it viable for private companies to run.

The collapse of employment is ironically giving us a bit of leeway, as electricity useage must be going right down. Also the plan for interconnection is progressive if it leads to much greater wind energy use, with Ireland as a net energy contributor. My suspicion is that Government is relying on cheap nuclear from Britain via the interconnector. Have I got proof? No. It could just be intertia and line of least resistance.

I also suspect that the faux "privatisation" of the ESB allows them to say that information can't be given due to commercial sensitivity.

We need to take back our energy resources and networks, Auditor #9 - not give them away to pirates.

A small contribution to the thread - it is an article by Bill Prasifka - the Head of the Competition Authority - on the current ESB/Eirgrid situation. Click here.

Also - and this is probably going to upset some people - but a quick glance at the second diagram on P.17 of the report here (Sorry I can't link to the diagram itself), shows that current electricity market in Ireland needs radical reform.

Essentially, the without taxes price for a "Household" consumers (where the ESB still had an effective monopoly) is the highest in the EU and is TWICE the EU average (the average includes member states with liberalised markets). By way of contrast, for "Industry" consumers (where the ESB does face competition), prices in Ireland - while still above the EU average - are merely 10-15% higher than the average which means they are "merely" in the top third.

And we wonder how we managed to lose cost competitiveness...

Just got an ESB bill. It is as big as all our other household expenses put together.

That's a useful post Paul R. Prasfika writes from an agenda and doesn't look at the thing objectively imo.

We were told that privatising eircom would be the best thing since sliced bread and we got a total mess that has also strangled business by restricting access to broadband capacity.
The theory was that there would be competition between private firms to provide broadband and indeed there were a good number of expressions of interest. They all fell away as the Irish market was simply too small to be attractive.

Saying privatisation is great elsewhere doesn't mean (even if true) it would work in Ireland or that the separate grid proposal makes any sense. The same principle when applied to rail in the Uk has been another disaster.

Providing electricity is not like selling sweets - there is massive infrastructural investment required and crucial choices to be made that have environmental as well as cost implications. If we use carbon fuels, that is going to cost us in EU penalties. Is that costed in?
Someone can't build a massive bank of wind turbines on the off chance of winning a tender. Competition means a profit has to be taken out of it - almost certainly not by an Irish company.

For Ireland as a country with the best conditions for wind energy in the EU and the prospect of an interconnector, it is crucial that we put in place a plan to maximise that in terms of local use and export: that has implications for the interconnector agreement and also for the Grid. I have been unable to find out after repeatedly writing to Government what if any are the current constraints in the Grid and what is planned for it. Any information anyone?

I have read that the ESB committed to carbon fuel on the basis of "first offer" - niether price nor environment was mentioned. Do you know how long we are tied in to current deals?
I also heard on the radio that there are cost problems with the gas interconnector in that we have to pay for it even if we don't use it - not clear about that - does anyone know?

Btw - the article says Ireland is the second most expensive in the EU for businesses. Dell's CEO cited energy costs as a reason to leave 6 months ago and nothing was done about it. Is it the same for Waterford Glass I wonder?

Quote :

The National Competitiveness Council’s Annual Report noted that Irish industrial electricity costs are the second highest in the EU-25, with prices having increased by 70 per cent between January 2000 and January 2007. Eurostat figures show that Irish industrial customers pay 13 per cent more for electricity than in the UK, 27 per cent more than in Poland and 53 per cent more than in France.

The way electricity production is managed in Ireland needs to be pulled apart and put back together again, and if legislation needs to be changed to do it, fine.

Auditor #9 wrote:

Pax wrote:

Obsession with privatisation is the real cause of the energy struggle
http://www.tribune.ie/article/2006/may/21/obsession-with-privatisation-is-the-real-cause-of-/?q=obsession%20with%20privatisation

That looks like a fine article alright. Some excerpts below on the wages but further on we're told we that we pay an "investment levy" on the whole mechanism even though the grid is a vital national resource. We're fleecing ourselves (ESB workers get a discount on their electricity).

I'd love to know what the EU structures are for dealing with this kind of monopolistic abuse, if those structures exist at all.

Quote :

In their article of 7 May 2006, 'Power corrupts, state monopoly power corrupts absolutely', it was argued that the average ESB wage stood at 95,000 or "around" 43 per hour. Where this figure comes from is a mystery.

The CSO reports that the average wage in the energy sector is 25.36 per hour. Average wages and salaries, including management, are less than 60% of the figure used in the article.

Oh absolutely, well absolutely in terms of being " a fine article alright. "
It clearly blows out of the water, the ex tuter Nolan and Gurdgiev's market fundamentalist nonsense (as it was in response to their original article)

Although in this case monopolistic abuse is not really appropriate, as large scale is what is needed in the electricity sector -- in conjunction with proper regulation.

as the article says ,

"But the article painted a backward-looking landscape of competing
private companies wholly owning the generation plants. That was tried
in Ireland and failed so completely that the government of the time had
to establish ESB."

We need large scale renewables provided efficiently and cheaply.

What increases the price is such a market of for-profit private operators engaging in an unregulated fashion where the market dictates the price.



One important point about price is that it is not related to employee wages in utilities. For instance in the US electricity workers were amongst the most unionised industrial sector and the highest paid.

And yet...at the same time, you also had much lower prices during the regulated non-market era than the Thatcherised market deregulated era. The same is the case during the nationalised public companies era here.

The obvious conclusion is that the market, competition and the introduction of profit increases the price. It also increases the damage to the environment and decreases the effort and fight against climate change.

Paul R

thanks for linking to that Quarterly report - this is something we can link to each quarter from now on so ? There will be another one due soon ? I posted the page 17 graphs you refer to above which shows electricity flows over time and over borders. I don't know what your reasoning is for pointing out that it is the second graph which indicates that the electricity sector here needs radical reform. Ireland isn't featured on that graph as far as I can see .... is that your point ? We're not under their radar at all ...


Pax

Airtricity assert they landed in a market where the price was suddenly changed arbitrarily and they were quoted higher and random "spill" prices than they expected - do you know what is meant by "spill" ? Please don't tell me it's the dumping of electricity at night when no one's using it ????? It seems it is something to do with electricity at peak demand and could mean 'wholesale' electricity.

Airtricity say they were at times quoted 181% of the EU spill average and the ESB justified this by saying it was related to their most-expensive plant ....

What's not monopolistic about that ? And what do you see as a solution ? "Big scale" (natural monopoly) which is necessary as you say, coupled with severe regulation.... I can't help thinking of the shafting we're getting from Eircom with broadband which is essentially the same model.

Paul R's page 17 graphs

The graphs Paul R was referring to are these, not the ones above. For the graph-challenged could you say what it means and how you see that Ireland needs reform?

There are good posts on the Cedar Lounge Revolution and on Michael Taft's blog on this - sorry don't have time to link them. I made a comment on MT's blog.

Padraig McManus, ESB CEO on the Áine Lawlor show now (he just took a 10% paycut) and he's saying domestics prices are at the European avg. but industrial prices are higher. Intel uses 40MW apparently... and complained that their costs were so high..

For all prices to be lowered, McManus says the ESB will have to be hooked up to a larger market....

Has anyone here had an excruciating electricity Bill in January ?? The bills here are normally for 60€ for two months, perhaps upto €80 in Dec.Jan. This year it was €127 for January. There weren't THAT many Christmas lights on this year

Just on Joe Duffy now people are saying (and have been saying since Monday) that their Jan. bills are crippling compared to last year. One man who has solar panels and other stuff and is conscientious about unplugging standby stuff and all noticed his bill was massive in January this year compared to last....

Are we getting ripped off wholesale?

€420.93

15 November to 19 January.

That's abnormal by my standards but is it abnormal by your own?

Anyone else for a discrepancy in the Winter Bill?