Rabbitte pulls plug on ESB break-up

THE GOVERNMENT has accepted a recommendation by Minister for Energy Pat Rabbitte against the break-up of the ESB.

Ownership of the electricity transmission assets will remain with the ESB and the operation and development of the transmission system will continue to be the responsibility of EirGrid.

The decision is a reversal of Government policy and follows a recommendation of the Cahill report on the energy company’s future.

The programme for government pledged to create a new “smart grid” company with full ownership and responsibility for the development of the electricity and gas networks, “beginning with the handover of ESB’s transmission assets to Eirgrid”.

It also goes against the McCarthy review group report which recommended that the transmission grid be transferred to EirGrid and retained in public ownership as a regulated monopoly.

Mr Rabbitte said yesterday, however, that “to break it up in the times that we live in would be the wrong decision. The proposed transfer of transmission assets out of the ESB into Eirgrid will not take place. So the unity of the ESB will be retained going forward.”

He accepted that the decision maintained the “status quo” but “you’re dealing with a leading Irish indigenous multinational engineering company that has a considerable reputation outside Ireland in terms of ESB International”.

The 180-page report on the future of the ESB was prepared by Frontier Economics, under the chairmanship of Fergus Cahill.

“It came down against the break-up of the ESB and the Government approved that position yesterday” at Cabinet, Mr Rabbitte said. The report, commissioned by former minister for energy Eamon Ryan, was published last night on the department’s website.

The report suggests that the core benefits from “unbundling” transmission assets would be about €74 million with further potential benefits of €65 million to €70 million. But it estimates that the cost of separation could be €187 million-€202 million.

The McCarthy review group, however, did not accept that “a transfer of regulated assets between two State enterprises runs any material risk of financial cost to the owner of these assets, since no net disposal is involved”.

A spokesman for EirGrid said last night that “we’re disappointed at this decision. We have believed and continue to believe that the unbundling of transmission assets would lead to benefits for consumers, for competition and for the connection of renewable energy in a timely fashion.”

The Minister said, however, the original proposal at EU level on energy competition went back up to eight years ago. “But in fact we have considerable competition already in the electricity market. The most obvious example was the campaign by Bord Gáis to win clients from the ESB.”

Ireland, Greece and Latvia are the only three EU states not to break up their transmission assets.