ESB powersharing ensures market competition

I REFER to your editorial headlined ‘Public sector terms are not sustainable’ (October 10) which incorrectly describes ESB as a monopoly.

ESB is competing in a fully open market for electricity generation and supply.

In order to facilitate competition and allow room for competing plants, ESB agreed six years ago to reduce its share of all electricity generated in the State to below 60%.

This target has already been met and ESB’s market share will fall further to 40% in the new all-island single electricity market, which goes ‘live’ next month.

Additionally, ESB has provided power to competing electricity supply companies at discounted prices, allowing them to attract customers away from ESB.

It has also entered long-term offtake contracts with independent generators, including a large number of wind generators.

This has facilitated the construction of independent power stations and guaranteed competitors a return for their investments. In another move to stimulate competition, ESB agreed with the Commission for Energy Regulation and the Government to close/divest 1500mw of generation plant, thus creating the space for further competitive entry into the market.

Your editorial also infers a link between ESB salaries and electricity prices.

The regulator only allows benchmarked-efficient costs to be recovered in ESB prices.

If ESB costs are higher, the impact is on its profits — not on customer prices.

Furthermore, ESB prices to its 1.9 million domestic customers are in line with the EU average following the recently-announced price reduction.

ESB Customer Supply, the regulated retail division of the company, currently supplies less than 10% of electricity to large users.

Indeed, ESB Customer Supply has only approximately 50% of the overall retail electricity market. This is clearly not a monopoly position.

Competition in the large industrial market is embedded to such an extent that the regulator has stepped out of this sector allowing natural market forces to dictate prices.

The commercial reality of energy prices in Ireland is that we have a greater exposure to imported fossil fuels than our EU partners.

In spite of this fact, ESB has achieved sustainable cost savings over the past number of years that are benefiting customers.

To suggest, as your editorial does, that ESB remains a monopoly and has not faced up to commercial realities is simply wrong.

Maol Muire Tynan

Media/Corporate

Relations Manager

ESB

Fitzwilliam Street

Dublin 2