Government puts break-up of ESB on hold for cost and impact study

GOVERNMENT PLANS to break up the ESB so that ownership of the national electricity grid passes to Eirgrid have been deferred until an independent study on the costs, benefits and impact of the transfer is completed.

Minister for Communications, Energy and Natural Resources Éamon Ryan is to appoint a "senior independent figure" to chair the study in the coming weeks.

Representatives of ESB workers, who own shares in the company, have welcomed the move by Mr Ryan and said they would "engage closely" with the study.

David Beattie, chairman of the ESB employee share ownership plan, said the immediate prospect of separating the transmission of electricity from its generation appeared to have receded, but he added that his group would not "prejudge" the outcome of the independent study.

A spokeswoman for the Minister said it remained government policy to transfer ownership of electricity transmission to EirGrid. Legislation that allows EirGrid to own an electricity interconnector was published yesterday, facilitating EirGrid's "urgent" delivery of the east-west interconnector between Ireland and Britain by 2012.

On Thursday, Mr Ryan said the ESB and EirGrid would "prioritise the development and delivery of the wider sectoral challenges", which include the delivery of the east-west interconnector, the setting up of an independent network subsidiary and the generation of renewable energy as part of a "collective focus" on sustainability.

The statement appeared to suggest the timing was not right for the Government to go ahead with its policy to break up the ESB, citing an "increasingly urgent" climate change agenda and the need for energy security.

"Transmission unbundling involves the resolution of complex technical, financial and operational issues at a time when both ESB and EirGrid are also faced with immediate, very significant national challenges across a range of industry and business issues," Mr Ryan said.

Since early last year the Government has been planning to transfer ownership of the national grid, which transmits power from generating plants to the distribution network and ultimately to customers, to EirGrid, which is a separate semi-State company. The ESB still owns the grid, but Eirgrid manages it.

Mr Beattie said Mr Ryan's statement "recognises for the first time the role that the ESB will have to play in the delivery of commitment on security of supply and the generation of renewable energy".

The employee share ownership plan owns 5 per cent of ESB and is against a break-up, arguing that competition can be achieved by opening up a bigger market. "Our view for a long time has been that rather than emasculating ESB by cutting it down, we should let the market grow through interconnection," he said.