ESB planning to cut payroll bill by €140m

THE ESB intends to cut about €140 million from its wage bill as it attempts to soften the impact of losing 800,000 customers to an increased number of rivals over the last two years.

The State energy company has told staff it is seeking a 20 per cent reduction in its €700 million payroll costs over the next four to five years to slash costs, which it says will enable it compete in an increasingly deregulated market.

The ESB has already had talks with the group of unions.

A spokesman yesterday said that everything, including pay rates, overtime, allowances, subsistence and possibly job numbers, would be on the table.

Since first Bord Gáis and then the Scottish Southern Energyowned Airtricity began competing with the State-owned company in the consumer electricity and gas markets over the last two years, the company has been losing customers in this market.

The Commission for Energy Regulation (CER) set the prices the ESB could charge households and small businesses. Its competitors were allowed to undercut these prices.

This resulted in large numbers of such customers opting to move to its competitors.

Rivals have also been making inroads into its business and industrial client base. Overall, the company estimates it has lost 800,000 customers.

The result is that the CER has deregulated the entire electricity market.

The ESB’s spokesman said that the company has “to get fit” to deal with competition.

Meanwhile, it has emerged that outgoing chief executive Pádraig McManus last year took a 35 per cent cut in the value of his overall pay packet.

The company paid him €750,000 in 2009, which included a bonus and a special payment associated with the end of his original contract, which began in 2002. He took a 15 per cent cut in basic pay and requested not to be paid any bonuses.

His overall pay for 2010 was in the region of €500,000.

The ESB will no longer be obliged to charge a regulated price to households from next month and the company is gearing up to recover some of the business it has lost.

Its spokesman said it would announce details of its new offers in early April. He indicated that as well as seeking to win new business, customers who have remained loyal could also benefit. “We are going to be competing for all customers,” he said.

The CER ceased regulating household electricity prices once the ESB’s market share fell below 60 per cent. However, it is likely to keep monitoring the situation as the State company begins to take on its rivals in this and its other businesses.