FIANNA FÁIL TD Barry Cowen suggested in the Dáil today that the ESB may have “orchestrated” the current energy crisis for its own benefit.
The Offaly TD questioned whether the department is doing enough to ensure that there’s adequate measures being enforced to enhance competition in the energy sector.
Speaking in the Dáil chamber this afternoon, he asked if a “cosy arrangement” between national grid operator EirGrid and the energy supplier is giving the ESB an unfair advantage over other firms.
He called on the Minister of State Ossian Smyth to clarify how the energy crisis has escalated to a stage where emergency generators are required urgently in Dublin.
Cowen said deregulation of electricity generation started in the early 2000s with the aim of liberalising the market.
“It should be explained why, despite no longer proceeding because of a recent legal challenge, ESB North Wall was initially selected by EirGrid, with support from the Department, to provide 200 MW of emergency generation without due process,” he said, asking the minister to clarify whether there was any payment or advance made by EirGrid to the ESB associated with the emergency generation.
Cowen claimed EirGrid is running a tender process for energy supply which “has a strong bias” towards an ESB power station in Dublin.
“Since that controversy, it has come to my attention that EirGrid is now running a new tender process that has a strong bias towards the ESB North Wall site. I have learned that the technical criteria and timelines swing very much in favour of the ESB.
“One example is the six-month delivery timeframe between the contract’s award in March 2022 and the commencement of service provision by quarter 3 of that year.
“Another example is the suggestion by EirGrid that fast-tracked planning should be considered because the standard planning process is unlikely to be open to being utilised for the successful delivery,” Cowen said.
However, he said the fast-track process was amended in June, and only appears to be available to the ESB, as it is described as a “statutory undertaker”.
‘Cosy relationship’
“Is there a cosy relationship between the ESB and EirGrid that is enabling the former to get what is undoubtedly an unfair advantage?’ he asked.
Cowen claimed that earlier this year, the ESB withdrew significant generation capacity and paid penalties to the tune of approximately €4 million in respect of 400 MW of generation that was due to become operational next October as part of the capacity market auction.
“Last December, it shut down West Offaly power station and the Lough Ree power station in the Midlands, removing 228 MW of generation capacity. This makes for a total of 628 MW. When the ESB’s media spin is filtered out, one can see that it has abandoned the midlands, having profited from the region for decades,” he said.
He called for an explanation as to why the ESB, a semi-State, is being rewarded “handsomely despite exacerbating the supply shortage”.
“Could the ESB have orchestrated this crisis by exercising its market power knowing that it would be rewarded as I have outlined?’ he said.
Cowen told the Dáil:
I am led to believe that the amount paid by EirGrid to ESB, approved with the sanction of the Minister [Eamon Ryan], was €10 million and that that €10 million was a down payment on a €110 million contract. That is highly unusual, I would say.
“It was sanctioned and paid in the midst of a process that could not subsequently be defended in the courts and was, therefore, withdrawn.
“I ask the Minister of State to respectfully find out if this money has been repaid, who is responsible, who is culpable and who is paying for this failure of EirGrid and the CRU to provide the sort of competition that was and is necessary to have lower prices in the energy sector?” he said.
“I do not enjoy exposing these matters. I am a Government Deputy. I am intent on playing my part in implementing the programme for Government, especially having worked hard on behalf of my party to present it to our members and to the Dáil.
“However, when I see and recognise wrongdoing, and I see lethargy at this level and to this extent, it is my duty to highlight it. The Minister for the Environment, Climate and Communications, Deputy Ryan, is accountable in relation to this issue. He must quickly respond to the issues I have raised,” Cowen added.
In response, Smyth said responsibility for the regulation of electricity and gas markets is solely a matter for the Commission for Regulation of Utilities, CRU, the independent energy regulator.
In line with long-standing policy on deregulating price setting, CRU ended its regulation of retail prices in the electricity market in 2011 and in the gas market in 2014, he said, stating that retail prices are no longer regulated, and are set by all suppliers.
‘Very serious’ allegations
Smyth said the allegations that Cowen was placing on the record of the Dáil were “serious things to say”.
“I invite the Deputy to substantiate them with more information. I will talk the Minister, Deputy Ryan, about it as well. His office, and my office, are open to the Deputy if he wants to come forward with more information or if he wants to have the matter investigated further. As I said, they are very serious things to say,” he said.
Fine Gael TD Fergus O’Dowd also raised concerns about the role of the ESB in the energy crisis, telling the Dáil that the “monolith called the ESB is partly to blame” for the rising energy prices.
“It is time the ESB was broken up because its dominant position in the market is actively working against the interests of consumers and the industry. It is time for it to be stripped of its ownership of our electricity grid, comprising the network of overhead lines and underground cables supplying power to homes and businesses, and to allow new competition into the market.
“New firms with new ideas must be allowed to build new power stations, which will force the ESB companies to cut their costs and result in lower bills for all of us,” he said.
Competition
Speaking in the Dáil chamber, O’Dowd said he is not the first person to make this case, stating that the Competition and Consumer Protection Commission, previously known as the Competition Authority, said as much as far back as 2006.
The proposal to restructure the ESB should be looked at again, he said.
“The current situation must not be allowed to continue. Regulatory reform is one thing and regulatory capture is another.
“I believe the ESB has captured the system and is controlling it. We must, at the very least, request that the Competition and Consumer Protection Commission look again at its previous report and produce a new analysis of how we can reduce costs in Ireland by breaking up the ESB, making it cheaper for companies to compete with it and addressing the reality of that body as a totally vertically controlled entity,” he said.
In a statement to The Journal, the ESB said it “wholly rejects” Cowen’s assertions.
ESB wholly rejects the assertions made in the Dáil this morning in relation to ESB and its generation capacity. ESB also wholly rejects the comments made in respect of its relationship with EirGrid in the provision of emergency generation.
“As has been well documented, ESB sought to extend the life of its two Midland stations and was disappointed that planning permission was refused by An Bord Pleanála.
“Despite this, ESB remains committed to the Midlands region,” it said.
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