Sunday, July 13, 2008

Stop the Lights another ESB price increase!

Friday was a bad day for consumers following the announcement that the Commission for Energy Regulation (CER) had sanctioned a 17.5% increase in electricity costs for domestic consumers. This is going to hit us all in the pockets as electricity is a cost most of us cannot do without, particularly as we face into the autumn and winter months. I know the increased cost may encourage some householders to cut back on unnecessary use of electricity, but in general we all need "the electric" to heat our homes and to use a range of modern conveniences. This increase will in particular hit those on low and fixed incomes, some will get support through the households benefits package but others will probably have to cut back and perhaps end up ill as the result of a lack of heating or will go into debt to meet these bills.

OK I acknowledge that utility prices were always likely to increase given the increase in oil and gas in recent months, but the manner and nature of the announcement were troubling from my perspective. It smacked of very co-ordinated news management between the regulator and regulated in my view and we were all softened up for the bad news well in advance. For months we have been "informed" that prices were going to increase massively, some figures of up to 30% were mentioned. A day before the announcement by CER, ESB held a news conference on their 2007 annual report were they pre-announced their decision to make a €300m rebate to relieve costs to consumers. Then a day later, CER comes out and says they are planning to sanction a 17.5% increase (although technically it the final decision will be made on July 18th) There was no consultation with CAI or other consumer bodies as far as I know and of course the timing of the decision on the day after the Oireachtas rose for the summer recess meant it would get less political scrutiny. Also the rationale and background available at present from CER for the price increase is paltry running to a page and a half.

One response to the price increase!

There is little we can do about this price increase now, however it does highlight a need to change the process so that the interests and voice of consumers is fully taken into account. More information is required as to how this price increase was sanctioned, a full public consultation process and a real examination of ESB costs to determine if they can achieve greater internal savings rather than just passing on costs to the consumer! The €300m once off rebate will do nothing to address the long term inefficiencies of ESB. We know that the wage bill in ESB is much higher than comparative providers in other European countries. And we need competition so that domestic consumers have the choice of switching providers for better value if want to, which domestic consumers cannot do now almost 10 years after supposed deregulation.

Of course like CIE the fact that the Government is both the owner and regulator (if indirectly) of ESB creates a conflict of interest. The Government got a significant rebate from ESB last year and given the current state of the public finances, it is unlikely that the Government would want to forego this. However the cost to individual households and to our competitveness should in my view take precedence over temporary funding streams....but don't hold your breath!