Cantillon: Lack of fines shows energy regulator needs more fuel

The Commission for Energy Regulation (CER) took out ads in newspapers yesterday to highlight that Gas Networks Ireland (GNI) had breached its licence conditions more than a decade ago. One of its commissioners, Aoife MacEvilly, also took to the airwaves to state what a serious breach it was when some of GNI's senior staff covered up a €522,000 cost overrun on a pipe project in the west.

Instead, they funnelled the costs to other GNI projects in Northern Ireland without telling its board. A former staff member blew the whistle two years ago. But far from showing how powerful the CER is, the publicity merely served to demonstrate how hamstrung it is by its inability to dole out sanctions. The affair made the regulator look a tad lightweight.

Perhaps that was the point.

GNI is facing a fine of about £500,000 over the issue in Northern Ireland, where customers ultimately faced a minuscule extra charge on their bills to pay for the overruns on a southern project.

CER has no authority to mete out financial penalties for breaching licences, notwithstanding the fact that no real material harm was done to consumers in this country. Nevertheless, it is never a good thing for senior staff in any regulated company to cook the books.

CER is in talks with the Government to obtain the power to penalise the big companies it regulates. Perhaps the contrast between the punishment (or lack thereof) for GNI on both sides of the Border will help focus minds among the relevant civil servants.

GNI, for its part, is being careful to appear contrite and apologetic over the incident. It said last night six employees – at “junior engineer to senior project management level” – were involved. None has been sacked, although two have since left the company in the ordinary course of events.

All were subject to some sort of disciplinary measure, ranging from “verbal warnings to suspension and demotion”.

More worrying than the ramifications of incident itself is the notion that the staff involved thought they would get away with it. How often did this sort of thing happen? Was it the norm? It is to be hoped that Ervia, parent company of GNI (and, incidentally, of Irish Water) has rooted out any sense among senior staff that they can cook the books and get away with it.