ESB is a world-class company and privatising it would be a disaster

THERE’S a famous conversation in one of the Sherlock Holmes short stories.

“Is there any other point to which you would wish to draw my attention?”, the policeman asked Holmes.

“To the curious incident of the dog in the night-time,” Holmes replied.

“The dog did nothing in the night-time,” said the policeman.

“That was the curious incident,” remarked Holmes.

Sometimes, what isn’t said is more telling than what is. When it comes to Government policy, that can be especially true. And that’s why, when you read the Government’s white paper on energy policy, it’s impossible to avoid the conclusion that they’re putting the privatisation of the ESB, or most of it, on the agenda.

Of course the white paper doesn’t say that. If it did, it would be a lot more controversial. But follow the clues, and the trail leads to only one place. To quote Holmes again, eliminate all other factors and the one which remains must be the truth.

When the Government privatised Telecom Éireann, it made a number of fundamental errors. The single biggest mistake it made was to include the land lines that carry telecommunications signals all over the country, and from house to house, in the privatisation.

Those lines, especially those that go from pole to house, are known as the local loop, and whoever controls them controls all development of telecommunications.

So the local loop is a strategic national asset. It should never have been put into private and totally unregulated ownership. Whoever owns the loop determines the pace of development.

And that mistake has had endless consequences. The rows that have taken place over the local loop have inhibited the growth of competition in services to homes and businesses. They have held back the development of broadband. They have made the entire sector difficult, almost impossible, to regulate.

In effect, the failure to protect the means of transmission meant that whatever business case there was for privatising Telecom Éireann was fatally undermined. At the time Telecom was privatised, the Government boasted that Ireland was on its way to becoming the e-commerce hub of Europe, if not the world.

You never hear that boast nowadays, do you? But the Government is not going to make the same mistake when it comes to the privatisation of the ESB. Here’s a key sentence from the Government press release last week when it published its white paper on energy: “The Government has firmly ruled out any privatisation of the transmission and distribution networks.” And in the white paper itself, it’s just as explicit: “We will keep the electricity and gas network infrastructures as strategic national assets in State ownership and these assets will never be privatised.”

That sentence actually appears three times in the white paper. And that’s the giveaway clue. What the Government is saying, in effect, is that it will take electricity transmission away from the ESB in order to ensure the networks can’t become a privately-owned monopoly after privatisation and thus can’t be used to stifle the liberalisation of the market.

Would you like some more clues? Introducing the white paper, the Minister for Communications, Marine and Natural Resources, Noel Dempsey, said one of his aims was to introduce “structural changes in the electricity sector that will create a more attractive investment climate for existing and new players”.

The white paper talks about the Government endorsing the case for “a process of structural change in the electricity sector” and delivering change, “starting now and progressively working with all stakeholders”. And the Government “intends to create a new impetus for choice and innovation in a lighter regulated environment …”

I could go on, but the meaning is pretty clear. As I said, the white paper tells you what won’t be privatised, not what will. But the message is clear. Sooner or later, the privatisation of the ESB will form the centrepiece of this new “lighter regulated” market.

NO doubt the ESB would be an attractive offer. Competition through privatisation would mean the company would be broken up and that the power stations, for example, could be sold off individually so that different companies could compete in the manufacture of electricity.

Big companies that used a lot of electricity could buy their own power stations and sell back any surplus they generated to the publicly-owned grid. You’d end up, perhaps, with half-a-dozen companies offering deals in the marketplace, and no doubt some of them would be cheaper than the ESB is now.

Would they be safer? Would they be more reliable? If there was a breakdown in your supply, would they work through the night to get it back? Well, I’m sure they would, as long as there was a profit in all those things. Of course, they could be forced to guarantee high standards of safety, reliability and service as part of the conditions for getting a chunk of the ESB in the first place. But I forgot — that wouldn’t be a lightly regulated market then, would it? The fact is, of course, that the day they decide to privatise the ESB we should all be worried. The only reason it would be done is to generate a quick buck for the State coffers. There’s no doubt it would do that because the ESB is a very valuable company with €2 billion a year in turnover, around 20 power stations and a dominant position in one of the fastest growing electricity markets in the world.

But it has something even more than that. The ESB has an enviable reputation, one of the very best in the world, as an efficient supplier, an innovative manufacturer, a safe operator, and a standard in customer service that is almost unparalleled.

Safe and reliable electricity is something we take for granted. It may not be cheap, but it’s affordable. And the company has never been known to punish people who are having difficulty meeting their bills.

What’s more, the ESB has been promoting and facilitating competition for years now. It’s obliged by law to do so, and it has long since separated the transmission networks from other aspects of the business. This separation has meant it has been possible for different electricity supply companies to enter the market, while ensuring that every customer, large or small, continues to enjoy the security the ESB has always offered — if the electricity breaks down, they’ll fix it. Electricity, as we know, breaks down most often in the worst possible weather. And it gets fixed by the ESB in the worst possible weather as well.

The ESB is 80 years old this year. From small beginnings it has become a highly sophisticated international company, operating at the leading edge of technology and making an enormous economic and social contribution. It’s not just a national asset, it’s a national treasure.

If anyone in government, is planning to dismantle and sell off the ESB, we should be told so openly, and not in carefully coded language. We’ve made awful mistakes in the privatisation process so far. Privatising the ESB would be the biggest one of all.