Tuesday 23 January 2018

ESB casts doubt over €100m in claims for flooding

Pat O'Doherty, Chief Executive of ESB. Photo: Damien Eagers
Pat O'Doherty, Chief Executive of ESB. Photo: Damien Eagers
John Mulligan

John Mulligan

More than 150 businesses and residents in Cork could be left empty-handed despite lodging claims against the ESB in connection to as much as €100m in flood damages.

The ESB said yesterday that it is confident that it will win an appeal next year against University College Cork and insurance firm Aviva after a High Court ruling last October that said the semi-state utility was 60pc liable for flood damage caused to the UCC campus in November 2009.

A successful appeal could all but invalidate other similar claims against the ESB.

UCC had sued the ESB behalf of Aviva, seeking recovery of €19m for property damage.

The university had argued in court that the manner in which the ESB had released water from two hydro-electric dams after heavy rainfall, had resulted in unnecessary additional flooding which caused substantial damage.

The High Court found that UCC was 40pc liable because it had failed to act over a number of years on mounting evidence that its properties were increasingly subject to a risk of flooding.

But the ESB subsequently said it would appeal the decision. Chief executive Pat O'Doherty said at the time that ESB staff had "worked tirelessly" on the night of the flooding to protect Cork from the worst of its impact.

However, the High Court decision in favour of UCC and Aviva led to a rush of claims against the ESB by 156 individuals and businesses in Cork whose premises had been flooded on the same night.

Insurance companies have already paid out tens of millions of euros in claims, and the proceedings raised the prospect of the utility company having to effectively pay the insurance bills.

But the ESB said it's confident it won't have to, and that it will win the appeal in relation to UCC.

"On the basis of the internal and external legal advice received, ESB believes that it is more probable than not that the appeal will be successful and accordingly, no provision has been made for such claims in the financial statements," it said in its accounts for 2015 that were published yesterday.

It confirmed that the appeal is likely to be heard in 2017.

It added that details of the amounts claimed in relation to the other 156 claims made against it have not yet been received, and that it is not therefore possible to make a reliable estimate of their cost if the Court of Appeal finds against the ESB.

"However, ESB does not anticipate that the total amount of damages awarded, if any, and related costs for all of the actions, including the Aviva/UCC action, would exceed its applicable insurance cover," it added.

The ESB yesterday reported a strong performance for 2015.

Its profit after interest and tax soared 33pc to €286m, despite its revenue edging just 2pc ahead to €3.36bn.

The company said it managed to deliver the increased profitability because of higher energy margins.

The ESB paid total dividends to the State of €273m last year, which included a special dividend of €214m. That was the final special dividend under a €400m special dividend programme for the ESB that was introduced during the downturn.

Irish Independent

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