Tuesday 20 February 2018

Price cuts demanded after ESB sees profits hit €635m

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

Charlie Weston Personal Finance Editor

The ESB has come in for strong criticism for not passing on more cuts to customers after it recorded huge profits.

The State-owned company made operating profits of €635m last year, an increase of €83m from the previous year.

The ESB cut electricity prices by just 4pc for households in the past year, despite collapses in the cost of wholesale gas and oil.

This has delivered savings of €29 in a year on standard rates, according to the regulator, the Commission for Energy Regulation. Consumer groups accused the ESB, which calls its retail operation Electric Ireland, of exploiting its customers.

Some 1.2 million households get their electricity from Electric Ireland, with another 100,000 businesses supplied by it. It also has gas customers.

Dermott Jewell of the Consumers' Association lobby group called for regulators to probe all the operators in the market. He said the ESB was dictating prices charged by its rivals in the electricity and gas markets.

Mr Jewell questioned claims that the ESB needed to be so profitable to pay big dividends to the government and to cover its borrowings.

"If such a significant reinvestment is necessitated, surely there is a case for government to revisit what are, clearly, unrealistic demands for a high return," he said.

The ESB said that €273m in dividends was paid during 2015, mainly to the government.

Net debt rose to €5bn from €4.6bn a year earlier due to continued capital investment, finance costs, the weakening of the euro and dividend payments.

The group, which has 7,000 staff, is facing demands from its workers for pay rises.

After-tax profits were 33pc higher at €286m, up from €215m in 2014.

Simon Moynihan, of price comparison site Bonkers.ie, said Electric Ireland's prices were too high.

"ESB's announcement of a 33pc increase in profits is extraordinary and will certainly raise questions with customers," he said.

He pointed out that despite increased revenues and lower wholesale prices, the Electric Ireland division had seen a fall in profits which could be due to fierce competition amongst suppliers.


But Mr Moynihan added: "Still, the fact remains that gas and electricity are too expensive for most customers and there should certainly be scope for further price cuts by Electric Ireland and all suppliers, especially given the falls we've seen in wholesale prices."

Wholesale prices are down by as much as 44pc when compared with a year ago.

Mr Moynihan advised householders to switch suppliers to take advantage of price discounts offered to new customers.

The ESB insisted that all wholesale price decreases achieved by Electric Ireland had been passed on to customers. It said it would continue to monitor energy markets and was actively looking for opportunities to further reduce customer prices.

The company denied it was making super profits, pointing out it needed a healthy return to pay off its borrowings, pay tax and meet dividend payments.

Irish Independent

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