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

cactus flower wrote:

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.

Taft's piece is good and adds to the point that the debate on the (unnecessary) increase in price is dominated by competition and market obsessives in the media. And that the price it is not determined, in the main, by wages.

see the link and quote below,

http://notesonthefront.typepad.com/politicaleconomy/2009/02/i-told-ya-open-season-on-public-sector-workers---the-media-is-full-of-it-commentary-vox-pops-interviews-that-pass-for-enl.html

Quote :

For me, I wonder what RTE interviewers, politicians and some economists are thinking. For they don't seem to have a clue.

First, the EB is not covered under the pubic sector wage deal for
the simple reason that it is not part of the public sector. They are
not paid out of the Exchequer. The recent negotiations that collapsed
were all about cutting public sector pay. So what did those
negotiations have to do with the ESB and all other enterprises outside
the public sector? Nothing. What would have been the purpose of the
Minister contacting the ESB board and asking them to 'hold off until the negotiations were completed''? Nothing.

Even had the Government taken Leo's and Fine Gael's advice - to
suspend the wage agreement last year - it would have had no impact on
the ESB or any other public/private enterprise because the Opposition
party was referring to the public sector.

Second, that ol' 'sending the wrong signals' argument:
let's try to deconstruct this. It sends out a wrong signal to grant a
pay increase that was agreed only a few months in an enterprise that is
profitable. Therefore, the right signal to send is for profitable
enterprises who have entered into an agreement with their workforce is
to, first, break that agreement and, second, freeze or even take back
pay increases even though they can afford it. Therefore, the logic is
that no one anywhere should get an increase - public or private,
profitable or not - regardless of any agreement they have signed up
to. Hmmm. That deflationary policy is just what we need at a time of
collapsing consumption and declining economic activity.

Third, if only we could slash ESB workers' wages we could have
cheaper electricity. This betrays a profound ignorance of how prices
are set in the electricity sector. They are not 'market-driven' - they
are set by bureaucratic dictat. Even Fine Gael has copped this. In their private members' motion debated this week they included the following line:

' - emphasises the fact that the regulator is required to set
prices at a level that will not only take account of the cost of
generation, transmission and supply but also at a level that will
encourage new entrants into the market in an effort to promote
competition and in doing so is keeping energy prices artificially high;'

Correct. The ESB unions have been trying to get this very simple
fact into the national debate for a long time - that electricity prices
here are artificially high as an inducement to private investors to
enter the market. The price we pay for electricity reflects a subsidy
to private electricity companies. How much of a subsidy? The ATGWU
(now UNITE) suggested two years ago that it was 30 percent. Recently, ESB management confirmed this figure.


The fact is that, given the Regulator's policy is to maintain high
artificial energy prices, the ESB could enslave it's entire staff and
force them to work for porridge and it would have no effect on energy
prices. But let's pretend that it would for a moment. What would a
'wage correction' (translation: wage cut) of 10 percent on prices
mean? 1.6 percent. A whole 1.6 percent. What insight - ignore the 30
percent and go for the 1.6 percent. ......

{my emphasis in bold}

Bord Gáis entered the market yesterday
http://www.rte.ie/news/2009/0218/bordgais.html

David Bunworth Managing Director just on Morning Ireland said they have already signed up over 2000 homes since yesterday. Looks like they're putting in some good kit and teaming up with Wind generators as well to furnish us with 'back up' stations when the wind dies down. It's not as complex to do this with gas than it is with coal I believe - the gas plant can fire up more quickly than coal-fired turbines.

BORD GÁIS will go head to head with the ESB from today and compete to supply electricity to domestic customers.

The company, which supplies gas to more than 630,000 homes, says it aims to become the second biggest energy player in Ireland, and plans to be the first “dual fuel” supplier in the Republic, offering gas and electricity to homes.

Bord Gáis chief executive John Mullins said that the company will be offering double digit discounts to customers who switch providers. Its prices could be up to 14 per cent below those which the ESB is obliged by the regulator to charge its customers.

...

Scottish Southern Energy’s Irish subsidiary, Airtricity, is planning to target domestic customers with a “dual fuel” offer this year.

The ESB pointed out yesterday that it cannot offer discounts on the domestic prices set by the Commission for Energy Regulation. “It is open to all competitors to charge what they like,” the company added.

Bord Gáis is also joining forces with Mountside Properties, a shareholder in the Tynagh Energy electricity venture in Galway, to build four specialised electricity generating plants at a cost of €250 million.

These facilities will follow the completion and firing up of its own €400 million electricity generating station in Whitegate, Co Cork. This is due to begin producing power next year and will have the capacity to supply electricity to 400,000 homes.

The Whitegate plant will produce up to 445 megawatts of electricity. The four plants in which Bord Gáis is investing with Mountside will produce another 400 megawatts, while renewable energy projects, in which it is investing €250 million, will bring its total capacity up to 1,000 megawatts.

“That will give us a very significant position in Ireland’s future generation stock,” Mr Mullins said.

Bord Gáis will be the majority shareholder in the venture with Mountside and it plans to build four 100 megawatt peaking plants at four different locations, Cahir, Co Tipperary, Kilkenny, Athlone, Co Westmeath and Claremorris, Co Mayo.

Mr Mullins explained that peaking plants are used to back up wind generation when wind speeds fall off and to help plug gaps in areas where the national grid is weak.

http://www.irishtimes.com/newspaper/finance/2009/0218/1224241331838.html?via=rel







http://www.bordgais.ie/corporate/index.jsp

Pax wrote:

Quote :

Correct. The ESB unions have been trying to get this very simple
fact into the national debate for a long time - that electricity prices
here are artificially high as an inducement to private investors to
enter the market. The price we pay for electricity reflects a subsidy
to private electricity companies. How much of a subsidy? The ATGWU
(now UNITE) suggested two years ago that it was 30 percent. Recently, ESB management confirmed this figure.

{my emphasis in bold}

I hate to suggest it, but it is possible that both the ESB Unions and the ESB management have a vested interest in making these claims. Off-hand, monopolists don't actually tend to welcome competition. And with such juicy margins to private investors, you'd expect to have seen competitors rushing in to offer electricity to domestic consumers, the moment the domestic market was opened way back in 2005...

Bord Gáis engaged in a bit of spin on this though... on Morning Ireland yesterday they had a guy saying they will undercut by at least 10% for three years. When you go onto their website and read the terms and conditions it is actually 10% for 12 months and then 5% for the next 24.

What is the average electricity bill?

johnfás wrote:

Bord Gáis engaged in a bit of spin on this though... on Morning Ireland yesterday they had a guy saying they will undercut by at least 10% for three years. When you go onto their website and read the terms and conditions it is actually 10% for 12 months and then 5% for the next 24.

What is the average electricity bill?

On Pat Kenny now a rep said the same thing 10% 5% 5% - they'll lose for three years but they're building up their customer base until their plant opens after that in Whitegate Cork.

Airtricity are on as well saying that their offer is 10% for a year. The rep there (Kevin Greenhorn CEO) says he finds it bizarre that there are now two semi-states competing against each other ... ? Duopoly ?

Couldn't tell you what the avg. electricity bill is but I'll run a poll here to find out and see how it compares to the real thing when we find out.

Vote on our poll - it's free

It's anonymous

No tax implications

Vote now before the poll closes

Who says Machinists don't represent the full spectrum of Irish society? Look at the distribution of those poll results! The sample size could be a little bigger mind you ...

Paul R wrote:

Pax wrote:

Quote :

Correct. The ESB unions have been trying to get this very simple
fact into the national debate for a long time - that electricity prices
here are artificially high as an inducement to private investors to
enter the market. The price we pay for electricity reflects a subsidy
to private electricity companies. How much of a subsidy? The ATGWU
(now UNITE) suggested two years ago that it was 30 percent. Recently, ESB management confirmed this figure.

{my emphasis in bold}

I hate to suggest it, but it is possible that both the ESB Unions and the ESB management have a vested interest in making these claims. Off-hand, monopolists don't actually tend to welcome competition. And with such juicy margins to private investors, you'd expect to have seen competitors rushing in to offer electricity to domestic consumers, the moment the domestic market was opened way back in 2005...

Welll it's a fact that The Commission for Energy Regulation (CER) is doing this under the de-regulated regime. That people don't know it more openly is disgraceful and indicative of the lack of transparency in the regulatory system and the use of what should be banned, -- 'commerical confidentiality'.

I mean even FG are saying this!
Besides even bigger savings were seen in other countries when you compare before and after de-regulation/liberalisation (I have the refs and statistics if you like).
California Enron is the poster child of this inefficiency, but the increase in the base level of price is universal.

Of course if you have a larger bargaining power (like large industrials) in the market power pool, then you can bargain a cheaper price than the majority of domestic consumers. Poorer consumers are the worse affected by de-regulation and the market obsessives.

Having said that many industrial companies have decided not to invest in regions because of this increase in price. Despite their large bargaining power the price would not be as low as it was previously.

Bord Gais has been an electricity supplier for years. All that is happening is that the next phase has begun. Before now they supplied electricity only to the business sector and to a small number of apartment buildings as a trial.

Pax wrote:

Paul R wrote:

Pax wrote:

Quote :

Correct. The ESB unions have been trying to get this very simple
fact into the national debate for a long time - that electricity prices
here are artificially high as an inducement to private investors to
enter the market. The price we pay for electricity reflects a subsidy
to private electricity companies. How much of a subsidy? The ATGWU
(now UNITE) suggested two years ago that it was 30 percent. Recently, ESB management confirmed this figure.

{my emphasis in bold}

I hate to suggest it, but it is possible that both the ESB Unions and the ESB management have a vested interest in making these claims. Off-hand, monopolists don't actually tend to welcome competition. And with such juicy margins to private investors, you'd expect to have seen competitors rushing in to offer electricity to domestic consumers, the moment the domestic market was opened way back in 2005...

Welll it's a fact that The Commission for Energy Regulation (CER) is doing this under the de-regulated regime. That people don't know it more openly is disgraceful and indicative of the lack of transparency in the regulatory system and the use of what should be banned, -- 'commerical confidentiality'.

Is it really a fact though Pax? After all, with a 30% subsidy, private operators should have been rushing into the domestic electricity market here when it opened in 2005, yet this did not happen. It really is a bit surprising that they wasn't at least one Michael O'Leary type out there prepared to challenge them.Also, I'd a quick look at a press release from the CER for a proposed ESB price increase.

Quote :

The Commission for Energy Regulation (CER) has received an application from ESB
Customer Supply for an interim increase of 17.5% in electricity prices for households and
SMEs to apply from 1st August 2008.

You'll note that the text refers to the request for a price application as coming from ESB Customer Supply.You'd really expect the ESB to have foregone that price increase if they felt they were charging their customers too much, wouldn't you? Or alternatively, you'd expect to find press releases from the ESB on their website, where they condemn the CER for forcing them to increase their prices by so much in one go. Oddly, I couldn't find any like that...

Quote :

You'd really expect the ESB to have foregone that price increase if they felt they were charging their customers too much, wouldn't you?

I can think of two reasons why not.

1. they stil had a virtual monopoly
2. government and the ESB are both benefitting from ESB profits and will push them up as much as the market can bear.

Have you not voted in our poll yet at the top or on the side !??!

Hurry while stocks last !!!

cactus flower wrote:

Quote :

You'd really expect the ESB to have foregone that price increase if they felt they were charging their customers too much, wouldn't you?

I can think of two reasons why not.

1. they stil had a virtual monopoly
2. government and the ESB are both benefitting from ESB profits and will push them up as much as the market can bear.

State companies traditionally were not motivated by a profit motive. That was why a decade ago Irish electricity and gas prices were among the cheapest in Europe.

It was McCreevy and FF who decided that semi-states were to be motivated by profit accumulation. It was government policy to create "competition". But they judged that then prices were too low to bring new entrants to the market. So the instruction was given to increase prices, and increase them big, to make the market "competitive". In fact some companies were told to ask for increases far above what they wanted to ask for, and to their incredulity the massive increases they were told to ask for were then granted, or almost all of them. That is why Ireland went from having some of the cheapest gas and electricity in Europe to some of the highest. It was entirely government policy, a policy pushed heavily by the McCreevy-Harney axis. People in the sectors all know what happened and talk about it.

They were also told that special deals they had for some people - for example, BGES/BGN would pay the installation of new meters for old people if the meter was located in an inaccessible place or was dangerous - had to stop, and OAPs had to be charged the 'market price', ie many hundreds of pounds/euro, and if the old person couldn't pay the bill, the old meter had to be left there, even if it was in a dangerous location for an elderly customer. Apparently looking after old people, the ill, etc was no longer important in the McCreevy-Harney axis that demanded a 'free market'. It was thought that if the ESB or BGES/BGN actually looked after old people and stopped old ladies in their 80s having to balance on chairs to read old clock meters located in the top corner of a room, or under the stairs, or outside the house, that would be 'anti-competitive' and would discourage those customers from changing to the mythical new suppliers if any ever entered the market.

Under Harney and McCreevy, the market was the focus of everything. Cheap prices, looking after old customers, etc didn't matter any more. Of course the idiots forgot that because of the small size of Ireland and its market, even in the Celtic Tiger it was not really feasible for international gas and electricity companies to enter the Irish market. But to encourage it to happen, Bord Gais for example was split in two, with Bord Gais Energy Supply (BGES) and Bord Gais Networks (BGN) created, the former charging customers for usage, the latter building the network. It got so ridiculous that the regulator banned staff in BGES from transferring calls to BGN. Furious customers had to be told they had to hang up and ring the other company, even though BGES staff could easily have transferred the calls and at one stage BGES and BGN staff were sitting within feet of each other. That is the nonsense the government and the regulator introduced into the system, as well as sending bills through the roof (a 25% increase one year, a 33% increase the next) to put up the prices to get non-existent new entrants into the small Irish market.

Energy prices set to drop

http://www.rte.ie/news/2009/0303/energy.html

Quote :

Energy prices are set to drop from next month with electricity prices going down 10% and gas prices being reduced by 12%.

The drop in gas prices will also extend to small and medium enterprises.
..
Labour party TD Liz McManus described Minister Ryan's announcement as too little and too late.

Deputy McManus said the system of electricity regulation needed to be over-hauled and she was not convinced that Minister Ryan was capable of delivering it.
..
Fine Gael's Simon Coveney said while the price reduction was welcome, prices could actually have dropped by up to 20% if real competition existed.

The deputy said the 'shackles' needed to be taken off the ESB so that prices could be driven far lower.

Bord Gáis has confirmed that its offer of undercutting ESB prices by as much as 14% remains in place, despite today's announcement.

It means that customers who switch to Bord Gáis could see their prices drop by as much as 24%.

Airtricity has also confirmed that its prices will remain 13% lower than the ESB, despite today's announcment of a 10% reduction.

A company spokesman said the offer was guaranteed until January of next year.

This means that ESB customers who switch to Airtricity will see a 23% reduction in their bills from next month.

Time to switch to Airtricity ...

Papal_knight Two wrote:

cactus flower wrote:

Quote :

You'd really expect the ESB to have foregone that price increase if they felt they were charging their customers too much, wouldn't you?

I can think of two reasons why not.

1. they stil had a virtual monopoly
2. government and the ESB are both benefitting from ESB profits and will push them up as much as the market can bear.

State companies traditionally were not motivated by a profit motive. That was why a decade ago Irish electricity and gas prices were among the cheapest in Europe.

It was McCreevy and FF who decided that semi-states were to be motivated by profit accumulation. It was government policy to create "competition". But they judged that then prices were too low to bring new entrants to the market. So the instruction was given to increase prices, and increase them big, to make the market "competitive". In fact some companies were told to ask for increases far above what they wanted to ask for, and to their incredulity the massive increases they were told to ask for were then granted, or almost all of them. That is why Ireland went from having some of the cheapest gas and electricity in Europe to some of the highest. It was entirely government policy, a policy pushed heavily by the McCreevy-Harney axis. People in the sectors all know what happened and talk about it.

They were also told that special deals they had for some people - for example, BGES/BGN would pay the installation of new meters for old people if the meter was located in an inaccessible place or was dangerous - had to stop, and OAPs had to be charged the 'market price', ie many hundreds of pounds/euro, and if the old person couldn't pay the bill, the old meter had to be left there, even if it was in a dangerous location for an elderly customer. Apparently looking after old people, the ill, etc was no longer important in the McCreevy-Harney axis that demanded a 'free market'. It was thought that if the ESB or BGES/BGN actually looked after old people and stopped old ladies in their 80s having to balance on chairs to read old clock meters located in the top corner of a room, or under the stairs, or outside the house, that would be 'anti-competitive' and would discourage those customers from changing to the mythical new suppliers if any ever entered the market.

Under Harney and McCreevy, the market was the focus of everything. Cheap prices, looking after old customers, etc didn't matter any more. Of course the idiots forgot that because of the small size of Ireland and its market, even in the Celtic Tiger it was not really feasible for international gas and electricity companies to enter the Irish market. But to encourage it to happen, Bord Gais for example was split in two, with Bord Gais Energy Supply (BGES) and Bord Gais Networks (BGN) created, the former charging customers for usage, the latter building the network. It got so ridiculous that the regulator banned staff in BGES from transferring calls to BGN. Furious customers had to be told they had to hang up and ring the other company, even though BGES staff could easily have transferred the calls and at one stage BGES and BGN staff were sitting within feet of each other. That is the nonsense the government and the regulator introduced into the system, as well as sending bills through the roof (a 25% increase one year, a 33% increase the next) to put up the prices to get non-existent new entrants into the small Irish market.

Very good post, Papal Knight. The same thing happened with telecoms - we still are lagging disastrously in high speed broadband capacity as a result of depending on mythical private firms who were going to compete in our tiny market. Eircom was left with the loop in a vice like grip and it took five years for Waterford Port to get broadband, just for one example. We had to pay over a thousand euros recently to move a few internal phone lines around - the telecoms companies won't come inside a building now. Changing from one building to another was a nightmare as we had to deal with a non eircom broadband service and eircom phone lines - the process was as obstructive as it could be. Eircom is now being sold off at a loss. The whole thing, supposedly pro capitalist, is a nightmare for anyone trying to run a business. The whole system is designed to benefit cartels, not to provide services.

Imo we should renationalise Eircom while there is still something left worth having, and take charge again of all our basic energy networks and infrastructure.






Energy price was one of the main things that Dell said drove them out of Ireland.

I couldn't care about Eircom as a provider but get the network back anyway. Selling off the network is like selling off the M50... oh wait we did that and had to buy it back...

Both SF and the GP were making noise about nationalising banks, Eircom and the Energy Grid in the last election so I voted for both of them.