STATE POWER supplier, the ESB, will make a €300 million contribution to help offset electricity price rises that could hit 30 per cent next year.
Announcing that it made profits of €432 million in 2007 yesterday, the company also revealed that after paying a €123 million dividend to the Government, it will use €300 million to ease the impact of rising energy prices.
The Commission for Energy Regulation (CER) sets household electricity prices every year and is due to rule shortly on what should be paid in 2008.
The final figure will not be known until the CER publishes its findings, but increases in Britain, which has a similar energy market to that in the Republic, have been running close to 30 per cent. ESB chairman Lochlann Quinn would not comment on the likely scale of increases in the Republic. If they were to equal those in Britain, the ESB's contribution would keep it to between 20 per cent and 22 per cent.
The average household bill is around €132, so an increase at this level would bring this close to €160.
Rising oil, coal and gas prices have driven up the cost of generating electricity, which accounts for 70 per cent of the ESB's total spending in a given year.
The price of gas, on which the State company particularly relies, has risen 70 per cent this year alone to around £1 a unit in London, where much of the fuel is traded. Chief executive Pádraig McManus said yesterday that the company had agreed the contribution with the CER. "We had a number of meetings with the regulator to see what could be done about what's been happening with energy prices," he said.
Mr McManus added that Government approval was also needed for the measure.
The €300 million will be used to cut the price increases faced by all electricity users in the Republic, which means that it will also apply to customers of the ESB's competitors, such as Energia and Airtricity.
The CER will put a system in place to ensure that increases charged by all operators reflect the €300 million contribution.
EU rules on State aid and competition require that such a measure would apply equally to everyone involved in the market.
According to the ESB's group finance director, Bernard Byrne, the group will account for the contribution by taking a once-off charge on its accounts for next year.Its revenues last year were €3.5 billion and profits hit €432 million. The company will pay a €123 million dividend to the Government.
In 2007 it signed up 94,400 new customers, largely made up of householders, as currently the ESB is the only company supplying the Republic's 1.7 million households. However, Scottish and Southern Energy is set to enter the domestic market this year through its Irish subsidiary, Airtricity.
