That was the clear message from ESB unions, one that has forced a Government cave-in and will keep electricity prices high. Outlined below is an expose what has happened to lock consumers out of a crucial and imminent Government decision to reverse it's previous decision to transfer the ownership of the grid from the ESB to Eirgrid, the grid operator. It is happening by stealth. Attached are the supporting documents. There's some coverage in the Star tomorrow.

This is happening purely on foot of threatened strikes by ESB unions and runs contrary to the EU Energy Directive to unbundle grids from electricity suppliers. The attempt to seek an exemption under the Directive, required by March 3rd , is at risk of failure since the EU Commission will have to be convinced that split responsibility between the ESB who continue to own the grid but are an electricity supply competitors and, Eirgid, makes sense. This is a classic case of government- by- pressure group, to the detriment of consumers and the economy. This week I expect the Government to leak its intention to seek an EU exemption –at least that's its plan.

Mine is to be a fly in the ointment.

Government Set to Disadvantage Electricity Consumers

The Government may be on the verge of collapsing to ESB unions and the ESB ESOP pressure to seek an exemption from the EU by March 3rd that prevents the Irish electricity market from finally becoming properly functioning and, competitive. In coming to this conclusion the Government's review process, overseen by Minister Eamon Ryan, failed to consult with the statutory body responsible for consumer affairs, the National Consumer Agency. The inevitable result will be higher electricity prices, a less competitive economy and further delay in developing the grid - by continuing the daft split in responsibility between two state companies, ESB and Eirgrid.

The imminent decision by Government threatens the speed of the €4 billion upgrade of the grid by 2025 - required to transmit alternative energy from the west to the populous east, at a time when oil prices race past $100 a barrel and the world comes face to face with extreme energy costs.

These documents attached indicate that, under a threat of strikes from ESB unions, the Terms of Reference dealing with the transfer of ownership of the grid to Eirgrid, were altered. As a result the market is set to be stitched up by sectional interests, with the interests of consumers unrepresented and ignored - especially vulnerable low income families at risk to fuel poverty. Such a Government decision would make Ireland a laughing stock in Europe since the first thing we will do after the recent bailout is to plead to be excluded from unbundling grid ownership from electricity generation.

The Story So Far

• EU Directive 2009/72/EC came into law on Sept 3rd 2009 requiring member states to unbundle electricity grids from electricity suppliers and to bring this into law by March 3rd next – coincidentally, the crunch month in Irish political life. The law allows for the possibility of an exemption if Ireland can prove that it already had unbundled its electricity market by Sept 2009. But Ireland cannot qualify since Eirgrid still does not own the electricity grid and while responsible for grid planning, Eirgrid is not responsible for grid maintenance or development - which continues under ESB Networks.
• In 2007, the Government, in a white paper set out that the grid, estimated to be worth €1.5 billion was to transfer to Eirgrid and in June 2009 Minister Eamon Ryan appointed a Chairperson to overview the transaction process. A meeting was arranged in Farmleigh on July 17th 2009 to include the Minister, the Chairman Fergus Cahill, Eirgrid, its unions and the ESB, ESB ESOP and its Unions. Neither the NCA, the Competition Authority or the energy regulator CER was invited. In advance the terms of reference of the work to be done by the Chairman were circulated. (  view the pdf document ) These original terms of reference were clearly designed to give effect to the Government decision and were to deal purely with the transactional, legal and financial issues surrounding it.
• Immediately on commencement of the July meeting the ESB unions walked out, objecting to the terms of reference. There followed a period of months where the Chairman was required to coax the unions back into the process by changing the terms of reference to allow the study to revisit the Government decision and examine seeking an EU exemption. The revised terms specifically includes reference to successive Partnership Agreements but with no equivalent balancing comments about what is best for the consumer.(  view the pdf document )
• In December 2010, a confidential one and a half page brief by the firm appointed in March 2010 was circulated to stakeholders including The Cabinet. (  view the pdf document ) . This document is from Frontier Economics appointed to complete the review under the adjusted terms of reference. It refers to the benefits of unbundling the grid such as the hot issue of faster renewable connections, improved capacity of the regulator to apply incentives, better results for interconnection and more scope for competition and customer service but, despite guidelines from the Dept for Finance on studies of this type, no monetary value is attached to these substantial benefits. Instead the brief relies on a value of between €1 million and €16 million in net benefits despite Eirgrid's calculation of €600 million in added value by 2025. It ends by suggesting that Ireland could apply for an exemption from unbundling under Article 9(9) provided the regulator, CER supported it and it was also supported by the EU Commission.

What Ireland Must Do

Minister Eamon Ryan instigated a shambolic process – one that is reminiscent of some of the classic episodes from the BBC Yes Minister TV series – except it isn't funny. It is clear that union muscle has already been allowed to interfere to the detriment of consumers who have been ignored. It is also clear why the EU wants European grids to separate from electricity suppliers - it's called competition. Not only is unbundling better for lower prices, it gives one company the sole task of developing the grid without looking over its shoulders at competitors, new technologies or vested interests.

The best way forward, but one not examined by the review, is to sell off ESB generation assets in bulk to a new competitor or station by station, thereby generating badly needed funds for the State. Fine Gael has confirmed that this is the route it proposes to follow if elected. That would leave ESB Networks as an arm's length grid operator merging with Eirgrid to generate efficiencies.

But if the Cabinet seeks an exemption to maintain the status quo, Irish consumers and business have a right to feel outraged by the Government's cowardice. The timing, to comply with the EU deadline of March 3rd makes the grid decision a hot election issue and is the crucial test of Ireland's Green-washed Government and its legacy in the energy sector.

For a summary of the benefits of transferring the grid to Eirgrid (  view the pdf document )