ESB Group has insisted its massive €357m profits in the first half of the year cannot be used to stop its subsidiary Electric Ireland pushing up bills for households.
The profits have been described as “obscene” by an Opposition spokesperson.
The company says its generation and its supply business, known as Electric Ireland, are required to operate separately. This means increased profits from the generation of electricity cannot influence the prices charged to customers buying it from Electric Ireland.
The retail business, which was rebranded to Electric Ireland in 2012, currently supplies electricity, gas and energy services to over 1.2 million households and 95,000 businesses across the island of Ireland.
At the beginning of this month, the State-owned supplier announced that it would push up prices for consumers, its fifth price rise since the beginning of 2021.
Residential electricity bills will rise by 26.7pc from the start of next month, while residential gas bills will rise by 37.5pc.
This is expected to add €446 a year to the average household bill, with gas prices expected to increase by €516 as a result of the price hikes.
Commenting at the time, Electric Ireland said that there had been unprecedented increases in wholesale gas prices of over 700pc in the past year, adding that prices have risen by over 200pc since June this year alone.
For the first six months of this year, ESB reported operating profit before exceptional items of €357m for the six months ended 30 June.
This marked a decline of €6m from the first half of 2021.
ESB also recorded a profit after tax after exceptional items of €390m, up from €128m in the same period last year.
The semi-State attributed the decrease in operating profit to regulated network tariff changes, losses incurred in ESB’s Customer Solutions business and foreign exchange movements.
Geraldine Heavey, ESB’s chief financial officer, said: “Volatility and high wholesale market prices continue to be a feature of energy markets in 2022.”
ESB added that this reduction in profits was offset at a group level to a large extent by higher energy margins in its generation business.
It said that its generation and supply businesses are required to operate separately so increased profits from its generation business cannot be used to offset costs incurred by Electric Ireland.
Revenue and other operating income for the six months to June 30 was €3.68m, up from €2.15bn in the first half of 2021, according to interim results.
The company, which has around 8,000 employees, invested €532m in energy infrastructure in the first half of 2022.
“This provides the basis for continued strong investment in energy infrastructure to decarbonise electricity, improve resilience and empower customers in line with our 2040 Net Zero Strategy,” Ms Heavey added.
Sinn Féin climate spokesperson Darren O’Rourke ESB said that the “obscene” profits highlighted a need for total reform of the energy sector and accused Energy Minister Eamon Ryan of “sitting on his hands".
“Businesses are on the brink of closure and households are living in fear of the next bill, so people will be understandably livid to hear the ESB is making €2m profit per day, while also hiking prices at Electric Ireland,” the Meath East TD said.
“The government has a number of options to tackle the underlying issues contributing to the out-of-control electricity costs, but so far they have done nothing.
“In fact, when EU proposals to decouple gas from electricity prices came before the European Energy Council in October 2021, Minister Ryan actively opposed reform.”
He said that since then other countries had taken unilateral action, “but Minister Ryan seems to be just crossing his fingers that Europe comes up with a solution soon for him”.
Mr O’Rourke added: “Currently, the ESB is not permitted to use group profits to limit, freeze or decrease prices at Electric Ireland. Given the scale of the crisis this is something that must be urgently changed. The rule book was not designed for the current emergency.
“People are also rightly asking why renewable energy producers here are permitted to sell renewable generated electricity for the same price as gas-generated electricity.
“While renewable energy projects contracted under the Renewable Electricity Support Scheme are required to refund the excess price they are getting for their electricity via the PSO, this is not the case for the vast majority of renewables here.
“Most of our wind, solar, hydro and biogas projects are contracted under the older Renewable Energy Feed-in Tariff (REFIT) schemes, which allows these companies to keep the difference in the market price they are selling electricity for, versus the original price in their contract. This is resulting in huge profits for these energy companies.
“A legislative change could cap this price and ensure these renewable energy generators sell electricity at their actual affordable contracted rate.”
His party also called for a price cap on electricity ahead of the winter and a windfall tax on energy companies.
“The Minister clearly has a host of options at his disposal, so he needs to stop treating energy companies with kid gloves. He needs to stop sitting on his hands and take action now to help households and businesses,” Mr O’Rourke said.