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Cutting back ESB's responsibility -not a good policy?


Ultan Murphy

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Joined
May 9, 2007
Messages
128
A couple of years ago, ESB were asked to raise their prices to encourage competition in the Irish Market. For what?

Electricity prices were amongst the lowest in Europe, now were middle of the range in comparison to our European neighbours.

ESB also owned the networks until the creation of a new quango Eirgrid came along, the prospect of a decline in service to the customer increases.

I have a sense of unease with this whole process.

Supposing Ryanair was the ONLY semi state player in Ireland providing Air travel at a comparitively low cost, such as your €1 euro to Stanstead plus taxes etc, why would we need to break up Ryanair to encourage competition when Ryanair are the cheapest out there.


What we've ended up doing is breaking up a competent company to, what I've read, 40% of where it was, and, in the end, we pay more for it with a poorer service. Wait for the call outs. Get ready for: Oh no thats not our area, we look after such and such.

The ESBs power plants were efficiently run in my opinion with a turnover on equipment at a minimum. A low turnover on staff helps also although they are very well paid. At least we've never had powerouts because the demand couldn't be met.

In an Island with a market of 4million, the ESB did what was asked of it at the right price. Are we going down the road of competition for competition sake? Because we the customer will be the losers as there are no benefits.

We talk of keeping Ireland competitive, then we unnecessarily drive up the cost of energy.

What's it all for?

Thoughts anyone.
 

jerryp

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Jan 22, 2006
Messages
95
Not too familiar with the details, but there is an issue about the ESB recently looking to lower their prices and being refused permission by the regualator. You couldn't make it up !
 

Ultan Murphy

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May 9, 2007
Messages
128
jerryp said:
Not too familiar with the details, but there is an issue about the ESB recently looking to lower their prices and being refused permission by the regualator. You couldn't make it up !
You mentioned the regulator:

I heard him on Matt Coopers Last Word and I have to say, he sounded like a computer generated vocal.

If what you're saying is true, what's the story on competiton again? To drive down prices isnt it?
 

Kate P

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Joined
Jun 11, 2007
Messages
106
jerryp said:
Not too familiar with the details, but there is an issue about the ESB recently looking to lower their prices and being refused permission by the regualator. You couldn't make it up !
Yes there was.

Something about it being anti-competitive.
 

FutureTaoiseach

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Mar 20, 2005
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7,992
Website
greatdearleader.blogspot.com
I don't fully share your view Ultan. Even without the current regulatory-model, the ESB monopoly would prevent prices coming down. The salaries of most ESB workers are exceptionally generous. I accept that the model of regulation is flawed. Instead of selling off powerstations to private companies to reduce the ESB's share of the market and encourage price-competition, the govt seems to prefer forcing the ESB to raise prices so as to gradually allow new competitors to erode its market dominance by charging lower. Imho, this is a far slower and more painful route to competition. A better solution would be the report recommendations recently rejected by the govt to sell powerstations to the private-sector. That would negate the need for the regulator to insist on price-increases. At the same time, control of the transmission-grid needs to be taken off of ESB and given to Eirgrid as planned. This is needed because otherwise, the ESB will be able to use its control of this infrastructure to impede competitors entering the market. The status-quo also gives the unions too much power.
 

Paul R

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Joined
Aug 29, 2007
Messages
23
The problem with the system is that the ESB is a monopoly, hence can basically charge what it likes. It has ZERO incentive to try to be efficient - after what are its customers going to do? They have no alternative supplier to choose from.

The Government was supposed to open the market up to competition and allow you the consumer to choose electricity supplier. In theory, you have had that right since Mid 2005, but the Government screwed up the market liberalisation so badly that not one company has bothered to provide electricity to domestic users (This was the FF and "free market liberals" the PDs government screw up).

Apparently, eON - Europe's largest electricity supplier - said they wouldn't enter the market because they believed the Government was completely biased in favour of the ESB.
 

Ultan Murphy

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May 9, 2007
Messages
128
FutureTaoiseach said:
I don't fully share your view Ultan. Even without the current regulatory-model, the ESB monopoly would prevent prices coming down. The salaries of most ESB workers are exceptionally generous. I accept that the model of regulation is flawed. Instead of selling off powerstations to private companies to reduce the ESB's share of the market and encourage price-competition, the govt seems to prefer forcing the ESB to raise prices so as to gradually allow new competitors to erode its market dominance by charging lower. Imho, this is a far slower and more painful route to competition. A better solution would be the report recommendations recently rejected by the govt to sell powerstations to the private-sector. That would negate the need for the regulator to insist on price-increases. At the same time, control of the transmission-grid needs to be taken off of ESB and given to Eirgrid as planned. This is needed because otherwise, the ESB will be able to use its control of this infrastructure to impede competitors entering the market. The status-quo also gives the unions too much power.
What they earn shouldnt matter so long as we the end user get the best prices in Europe. We are trying to make it easy for companies to set up in Ireland and energy cost should be part of the package.

Why break up the ESB at all?

Look at the Euro average cost; tell the ESB to keep charges well below the EU average and the carrot would be that they won't be broken up.

The ESB wins and the customer wins.

Where's the problem with that.
 

Ard-Taoiseach

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Aug 11, 2007
Messages
746
jerryp said:
Ard-Taoiseach said:
ESB's Mr Murphy!
? :roll:
The responsibility is the ESB's, therefore an apostrophe is needed in the subject line for grammatical integrity.

As for the pricing structure of the ESB, and any other electricity provider, there should be flexibility built into the system. Some posters here suggest a regulatory regime in which the CER only set maximum prices. That sounds like a good idea, perhaps our Minister for Energy might consider it.
 

Ultan Murphy

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Joined
May 9, 2007
Messages
128
Ard-Taoiseach said:
jerryp said:
[quote="Ard-Taoiseach":yn90de1r]ESB's Mr Murphy!
? :roll:
The responsibility is the ESB's, therefore an apostrophe is needed in the subject line for grammatical integrity.

As for the pricing structure of the ESB, and any other electricity provider, there should be flexibility built into the system. Some posters here suggest a regulatory regime in which the CER only set maximum prices. That sounds like a good idea, perhaps our Minister for Energy might consider it.[/quote:yn90de1r]

I corrected my error for you Ard Taoiseach. Due respect to one as punctilious as thee. I beseech thee for forgivness, Ard Taoiseach, for I wrote with inappropriate haste.
 

Ard-Taoiseach

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Joined
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Messages
746
Ultan Murphy said:
[quote="Ard-Taoiseach":1vl9fe7t]
jerryp said:
[quote="Ard-Taoiseach":1vl9fe7t]ESB's Mr Murphy!
? :roll:
The responsibility is the ESB's, therefore an apostrophe is needed in the subject line for grammatical integrity.

As for the pricing structure of the ESB, and any other electricity provider, there should be flexibility built into the system. Some posters here suggest a regulatory regime in which the CER only set maximum prices. That sounds like a good idea, perhaps our Minister for Energy might consider it.[/quote:1vl9fe7t]

I corrected my error for you Ard Taoiseach. Due respect to one as punctilious as thee. I beseech thee for forgivness, Ard Taoiseach, for I wrote with inappropriate haste.[/quote:1vl9fe7t]

Kiss thee the royal hand and go in peace, my loyal subject.
 

FutureTaoiseach

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Joined
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Messages
7,992
Website
greatdearleader.blogspot.com
Ultan Murphy said:
FutureTaoiseach said:
I don't fully share your view Ultan. Even without the current regulatory-model, the ESB monopoly would prevent prices coming down. The salaries of most ESB workers are exceptionally generous. I accept that the model of regulation is flawed. Instead of selling off powerstations to private companies to reduce the ESB's share of the market and encourage price-competition, the govt seems to prefer forcing the ESB to raise prices so as to gradually allow new competitors to erode its market dominance by charging lower. Imho, this is a far slower and more painful route to competition. A better solution would be the report recommendations recently rejected by the govt to sell powerstations to the private-sector. That would negate the need for the regulator to insist on price-increases. At the same time, control of the transmission-grid needs to be taken off of ESB and given to Eirgrid as planned. This is needed because otherwise, the ESB will be able to use its control of this infrastructure to impede competitors entering the market. The status-quo also gives the unions too much power.
What they earn shouldnt matter so long as we the end user get the best prices in Europe. We are trying to make it easy for companies to set up in Ireland and energy cost should be part of the package.

Why break up the ESB at all?

Look at the Euro average cost; tell the ESB to keep charges well below the EU average and the carrot would be that they won't be broken up.

The ESB wins and the customer wins.

Where's the problem with that.
Ultan, if you believe the ESB will cut prices out of the goodness of its heart without outside impetus you are deluding yourself. Only a true free-market approach, in which rivals are allowed to compete with the ESB, and in which consumers are free to choose their supplier - and in which the regulator stops imposing minimum-prices - will ultimately bring down prices in a sustainable way. I know a lot of FFers have a sentimental attachment to the monopolies Dev landed us with, but like so much of what he stood for (leaving aside the welcome return of the ports and the furthering of our national independence in the 1937 constitution), they are past their sell-by date. And regarding pay, I think considering the amount of powercuts in this country we are entitled to ask questions.
 

Watcher

Member
Joined
Sep 14, 2007
Messages
64
Ultan Murphy said:
jerryp said:
Not too familiar with the details, but there is an issue about the ESB recently looking to lower their prices and being refused permission by the regualator. You couldn't make it up !
You mentioned the regulator:

I heard him on Matt Coopers Last Word and I have to say, he sounded like a computer generated vocal.

If what you're saying is true, what's the story on competiton again? To drive down prices isnt it?
The ESB was effectively forced to raise prices once the regulator was appointed. The reason for this was to encourage private interests into the market because it was not attractive enough at the then current prices. I think this is one area that should not be privatised and should be kept in state ownership, although it should be properly run to avoid employees holding the country to ransom when the company tries to implement new structures/practices/policies. We are now forced to pay high prices just so some vested interests can establish themselves here, as if we didn't have enough. Perhaps the politicians were seeing their brown envelops diminish and needed new blood :shock2:

Anyway, I'm not sure if Brussels forced the liberalisation of the electricity market. I'll let someone better informed than I to advise on that one.
 

meriwether

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Joined
Dec 1, 2004
Messages
12,604
The PD policy of breaking up the ESB is right-wing economics gone mad.
So blinded are they by ideology, that common sense and pragmatism is jettisoned, on an altar of 'competition' and 'free market' cliches.

They are forcing the ESB to raise prices, in order to increase competition. So the ESB are currently operating at a pricing level that that no competitor can undercut. So, there is no need for competition.

Words fail me.
 

Auditor #9

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Joined
May 31, 2007
Messages
237
Website
www.*******.com
Ultan Murphy said:
FutureTaoiseach said:
I don't fully share your view Ultan. Even without the current regulatory-model, the ESB monopoly would prevent prices coming down. The salaries of most ESB workers are exceptionally generous. I accept that the model of regulation is flawed. Instead of selling off powerstations to private companies to reduce the ESB's share of the market and encourage price-competition, the govt seems to prefer forcing the ESB to raise prices so as to gradually allow new competitors to erode its market dominance by charging lower. Imho, this is a far slower and more painful route to competition. A better solution would be the report recommendations recently rejected by the govt to sell powerstations to the private-sector. That would negate the need for the regulator to insist on price-increases. At the same time, control of the transmission-grid needs to be taken off of ESB and given to Eirgrid as planned. This is needed because otherwise, the ESB will be able to use its control of this infrastructure to impede competitors entering the market. The status-quo also gives the unions too much power.
What they earn shouldnt matter so long as we the end user get the best prices in Europe. We are trying to make it easy for companies to set up in Ireland and energy cost should be part of the package.

Why break up the ESB at all?

Look at the Euro average cost; tell the ESB to keep charges well below the EU average and the carrot would be that they won't be broken up.

The ESB wins and the customer wins.

Where's the problem with that.
Two models above: free market v. semi-state?

For the free market model to get a chance in Ireland, the ESB needs to be seperated into Grid and Supplier as Ryan is doing. At the moment there is one company controlling both and competing against itself which calls for regulators instead of self-regulation via the market. The free market approach sounds like it would be a useful way of getting prices to drop and a sustainable supply but the model in my opinion would get corrupted if nuclear was allowed in on any significant scale. Duopoly would result. Aggressive marketing by companies using local resources to generate electricity in a distributed system would suit Ireland instead. Not to mention promotion of micro-generation and self-sufficiency (Gormley SBP this Sunday). This is the direction Ryan is trying to take the country in.

The semi-state is fraught with the problems FT is rightly highlighting - union control, inefficiency in admin, self-serving infrastructure (exactly like Eircom's monopoly at the moment which however is easing slightly only with the threat of rival technologies and local loop unbundling). The semi-state model (it's communist really, lets be honest) was useful when electricity was a lot more expensive to create on a national scale but the costs have dropped because of intermediate technologies coming on stream (generally wind turbines). Turbines are your wireless Broadband to ESB electricity.

Your last point, Ultan, is interesting about regulation through comparison of pan-european prices or even prices internationally which would be an even better average and using this as a benchmark. I think you're bringing up something which could be useful in other areas like the health service as well as the electricity market. How it would pan out as a means of controlling prices and production methods is food for thought.
 

theyshootPDsdontthey

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May 21, 2007
Messages
103
meriwether said:
The PD policy of breaking up the ESB is right-wing economics gone mad.
So blinded are they by ideology, that common sense and pragmatism is jettisoned, on an altar of 'competition' and 'free market' cliches.

They are forcing the ESB to raise prices, in order to increase competition. So the ESB are currently operating at a pricing level that that no competitor can undercut. So, there is no need for competition.

Words fail me.
I thinks the expression is "We had to destroy the village in order to save it"
 

riven

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Joined
Oct 4, 2007
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2,183
I would suggest that people read Greg Palast. Some interesting problems about the American market being privatised. I suspect a similar process will happen here. Prices will rise. I cannot see how such a small market can support a number of companies without this happening.
 

Auditor #9

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theyshootPDsdontthey said:
meriwether said:
The PD policy of breaking up the ESB is right-wing economics gone mad.
So blinded are they by ideology, that common sense and pragmatism is jettisoned, on an altar of 'competition' and 'free market' cliches.

They are forcing the ESB to raise prices, in order to increase competition. So the ESB are currently operating at a pricing level that that no competitor can undercut. So, there is no need for competition.

Words fail me.
I thinks the expression is "We had to destroy the village in order to save it"
In fairness there is a case for keeping the status quo and watching them like hawks. How would price be determined though? Cost-cutting is harder in the semi-state, isn't it? And letting the consumer decide is not such a bad structure, surely...

Do ye think the country is just too small for the free-market framework? Because really it depends on the size of the generating stations which can be handy sizes now.
 
Joined
Mar 11, 2007
Messages
69
Progressive Fáil's idea of competition is competition over who can charge the most. So the consumer will have a choice about which company rips them off.
 
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