ESOP News and Publications

The ESB ESOP welcomes today's statement by Eamon Ryan, TD, Minister for Communications, Energy and Natural Resources setting out a series of measures aiming at delivering a sustainable, secure and competitive electricity sector in Ireland.

The ESOP had a constructive meeting with the Minister last month. As a shareholder in the ESB, the ESOP looks forward to working closely with the Minister, his officials and the government in realising the ESB's full potential.

The ESOP will also engage closely with the independent analysis study proposed by the Minister to consider the transmission issue and to ensure the ESB continues to be positioned so as to meet the many challenges the sector faces in the years ahead. The ESOP agrees with the Minister that the urgent development of interconnection is necessary to deliver on the targets for renewable energy and will enable the ESB to compete on the international stage.

The ESOP especially welcomes the Minister's focus on the future. The development of a strong, competitive and vibrant ESB both at home and abroad is in the interests of all the company's stakeholders.

13th March 2008

Statement by Minister Eamon Ryan on the future of Ireland's electricity sector

Energy Minister Eamon Ryan today announced a number of measures delivering on the Government's objectives of a sustainable, secure and competitive electricity sector in Ireland.
The Minister announced:
- Publication tomorrow of legislation to enable EirGrid to ensure the urgent delivery of the East-West interconnector by 2012
- Regulations establishing the ESB Subsidiary to undertake the Distribution System Operator Role of ESB Networks
- An ambitious, innovative corporate strategy being progressed by the ESB
- A Transmission Development Strategy to 2025 being finalised by EirGrid
In this context, independent analysis is to be carried out on the issue of transmission unbundling with full engagement and input from the direct key stakeholders. A senior independent Chairperson will be appointed by the Minister to oversee this analysis.

Minister's Statement

1. The Energy Policy White Paper published in March 2007 and the Programme for Government of June 2007 set out a range of policy objectives to achieve environmental and energy sustainability in the context of maintaining security of supply and competitiveness.
In the intervening period, it has become increasingly clear both at EU and national level, that the climate change agenda and energy security are becoming increasingly urgent. This is especially true of the electricity sector, which in November of last year entered a new era with the establishment of the all-island Single Electricity Market.

2. I regard the achievement of targets we have set for emissions reduction, renewables and energy efficiency improvement as absolute priorities for this sector. ESB and EirGrid have key roles to play in developing plans for their delivery, working closely with CER and my Department and securing their approval where appropriate.

3. The recently published All-Island Grid Study shows the possibility of over 40% of electricity to be provided from renewable generation by 2020. This poses significant technical challenges in terms of the operation of the National Transmission System, which I am confident, can be addressed and resolved by EirGrid.

4. It also requires a whole new approach to the design and operation of the transmission system, one requiring significant development and investment. I look forward to the early publication of EirGrid's Transmission Development Strategy 2025 to support renewable energy generation making this level of contribution to Ireland's electricity needs. It is clear that there are enormous challenges building transmission lines across the country and my Department has a separate review underway on these challenges.

5. The future of EirGrid is as a strong independent State company and, in that context, I am continuing to give priority to bringing forward the legislation which will underpin the development by EirGrid of the East-West Interconnector by 2012 at the latest. EirGrid will also be delivering on its statutory responsibility for the operation, planning and development of the Transmission System, and ensuring full independence in the operation of the Single Electricity Market in cooperation with SONI, their Northern Ireland equivalent. Security of Supply and Generation Adequacy are also fundamental national imperatives where EirGrid plays a central role together with the Energy Regulator.

6. I look forward to an ambitious, innovative new corporate plan from the ESB Board detailing significant investment at home and abroad that prioritises the sustainability agenda particularly in the areas of emissions reductions, renewables, energy efficiency and smart metering.

7. Government Energy Policy envisages a programme of prioritised change to the electricity industry aimed at enhancing competitiveness, sustainability and market operations. I am taking the following steps to help achieve our objectives in this area:

a. While I recognise the difficult challenges in addressing ESB's dominance in generation, I believe they can be positively addressed within the Company's partnership model. I have asked the management of ESB to engage with the Group of Unions on the closure and/or divestment of Power Stations as agreed in the CER-ESB Asset Strategy. This measure will have the effect of reducing ESB's market share of the generation market to under 40% on an All-Island basis and thus ensure the development of a competitive electricity market across the island of Ireland.

b. I will be immediately introducing regulations, as required under EU law, establishing the independent ESB Subsidiary to undertake the Distribution System Operator role of ESB Networks, which will further strengthen the open and transparent use of the networks by all parties. The Board of this Subsidiary will have two independent Directors approved by me.

c. To further encourage the renewable energy industry, I propose extending contestability of network connections for generators down to the Distribution Network level of 38,000 Volt. This will give developers of smaller renewable projects the option to build the connecting network, subject to ESB Networks/CER approved standards.

8. Both the Energy White Paper and The Programme for Government state Government policy that Transmission Assets be transferred to EirGrid. Transmission unbundling involves the resolution of complex technical, financial and operational issues at a time when both ESB and EirGrid are also faced with immediate very significant national challenges across a range of industry and business issues. For that reason, I propose progressing the matter as follows:

§ ESB and EirGrid will prioritise the development and delivery of the wider sectoral challenges which I have outlined The delivery of the power generation asset strategy, the establishment of an independent network subsidiary, the delivery of the East-West interconnector, the Transmission Development Strategy, and a new collective focus on sustainability are clear and urgent priorities.

§ At the same time this will provide an opportunity to carry out an independent analysis (including costs, benefits, regulatory impact assessment, etc.) of the transmission issue in the context of EU developments and the very recent all island single electricity market.

§ Input to this study will be sought from the direct key stakeholders: ESB and EirGrid managements, ESB and EirGrid unions, ESB ESOP, CER and the Department of Finance.
The Terms of Reference for this analysis will be drafted in such a way that guarantees that all views will be taken into account in a fully transparent way.

§ I will shortly appoint a senior independent figure to chair this examination. The Chairperson will appoint independent consultants to carry out the technical and economic analysis.

§ Acknowledging the Tripartite Agreement of 2000, I will be asking the Group of Unions to engage in the process outlined earlier and to address the outcome with ESB management using their partnership model. This model has been a successful vehicle for change and transformation of ESB and the evolution of competition in generation and supply markets are testament to its success.

9. I believe this process offers a way forward for all parties. It is designed to maintain the integrity of key stakeholders and deliver a result that will be acceptable to all.

Eamon Ryan TD
Minister for Communications, Energy and Natural Resources

Statement by the ESB ESOP

Friday 15th February 2008

ESB ESOP meets Minister to express serious concerns about Government's flawed energy plans

The ESB ESOP met with the Minister for Communications, Energy and Natural Resources, Eamon Ryan TD this afternoon (Friday 15 th February) to discuss a number of issues of concern to the ESOP and its members. The ESOP welcomed the opportunity to meet with the Minister, the first meeting between the ESOP and the Minister since his appointment last year. The ESOP is a 5% stockholder in the ESB.

The ESOP vigorously expressed its concerns to the Minister and his senior officials that the Government's proposed break-up of the ESB this year through "unbundling" and taking away its transmission assets is deeply flawed. The ESOP pointed out to the Minister that his proposed policy, inherited from his predecessors in Government, is now increasingly at variance with current changes in energy policy at EU level.

Recognising the significant achievements of the Minister in the energy sphere since his appointment, particularly on renewable energy, the ESOP reminded him that a well regulated European energy market needs strong companies from both large and small member states competing vigorously in a fair market. If the Irish government presses ahead with its flawed policy it will weaken the ESB where through the all-island market place and the planned East-West interconnector the company already competes with giant utilities from the largest EU member states. The ESOP expressed it concerns that the many issues that this dismemberment would raise would impact on the timely delivery of his agenda of security of supply and sustainability.

Within the EU an alliance of large and small member states is now of the view that the old unbundling policy is now accepted as fatally weakening electricity companies, especially those in smaller markets, leaving them unable to compete and open to takeovers,. In the face of strong and predatory competition from inside and outside the EU there is a growing acceptance that forcing electricity companies to dispose of their grids or transmission networks does not always increase competition or lower costs, but only weakens strong companies like the ESB which are already operating in a vibrant local competitive marketplace where they have demonstrated their ability to reduce prices to consumers as they did three months ago.

The ESOP reminded the Minister that his Department and the then Government was party to a tripartite agreement signed in 2000 with the ESB and its group of unions that no divestment of the transmission assets would take place.

The ESOP also took the opportunity at the meeting to urge the Minister to finalise agreement with his colleague the Minister for Finance on the creation of a sustainable and fair internal market for ESB stock amongst the ESOP's beneficiaries.

In concluding the meeting, the Minister said he recognised the legitimate needs and concerns of the ESOP and that he will engage with the ESOP and other interested parties as a matter of urgency in the coming months.