A recently announced review of the ESB's profitability is also to focus on the controversial area of payroll costs at the State-owned company, it has emerged.

The Commission for Energy Regulation (CER), has hired PA Consulting to carry out a review of the ESB's profitability and its return on capital. Part of this exercise will involve examining the general heading of pay, which some observers argue is out of line with other utilities.

According to the company's own figures the average salary per head (including pension contribution) in 2003 was over €67,000. The company currently employs 9,587 staff.

The consultants are due to begin a major benchmarking exercise in the coming months on behalf of the CER. The ESB's costs, income and capital expenditure will be examined as part of the review. The results will have a major bearing on what profit the ESB is allow to make in the period between 2006 and 2010.

The average salary at the ESB will be compared to the average salary per head in other European electricity companies, sources said over the weekend.

However the individual salaries of staff will not be examined.

The move is likely to be welcomed by the ESB's competitors, but the company itself, and particularly the unions, are likely to view the idea with suspicion. The CER has no power to force the ESB to reduce its employee costs, but it does have the power to disallow certain expenditure.

Several parts of the ESB's operations are effectively monopolies. One of these monopolies, ESB Networks, brings in its highest level of profit.

The ESB is also facing a second review of its operations by the Minister for Communications, Mr Dempsey. He announced a wider review of the whole energy sector a few weeks ago and said it would look at the future structure of the ESB.

He refused to rule out the prospect of ESB being broken up. He also said it was possible certain parts of the ESB could be sold-off to the private sector.