ESB yet to pay even half of €1.1bn prof it back to State
Energy f irms criticised for raking in money during ‘dire year’ for customers
THE ESB has racked up a massive €1bn in profits in less than five years – but has paid back less than half of it to the State, the Irish Mail on Sunday has learned.
New figures reveal the State company recorded profits of €1.105bn since 2018.
However, the ESB has only paid €431m in dividends back to the State as consumers struggle to heat their homes due to soaring energy costs.
In the first six months of this year alone, the ESB recorded massive €390m profits as it benefited from rising energy prices brought on by the cost-of-living crisis and the war in Ukraine.
And as the State company’s profits soared, consumers have seen their annual ESB bills rise by an average of €2,000 over the last 12 months.
The stark figures were confirmed by Environment Minister Eamon Ryan in response to parliamentary queries from Social Democrats co-leader Catherine Murphy, who is also vice chair of the powerful Dáil Public Accounts Committee (PAC).
Ms Murphy said it is time some of the company’s profits are returned to taxpayers who are struggling to pay their monthly utility bills.
She told the MoS: ‘Electricity prices have gone up by more than 90% over the past 12 months, and energy prices are up by 80%.
‘This means workers and their families are paying up to an additional €2,000 on average this year on their energy bills.
‘It is also important to note the annual price increase did not come in one fell swoop. Companies have been steadily increasing their prices every three to six months in response to what they say are increases in wholesale energy costs.’
In recent months Ireland’s electricity and gas suppliers, Electric Ireland, Bord Gáis Energy, SSE Airtricity and Flogas, have all hiked their prices by 50%.
Ms Murphy said that these increases have been accompanied by an equally steep reduction in discounts for switching suppliers.
The Kildare North TD described the behaviour of energy companies as resemblling a ‘cartel’ that displays ‘no sense of responsibility to the lives of their hardpressed consumers’.
She told the MoS: ‘Energy companies in this country were quick to increase their prices for consumers when gas prices started to rise.
‘While prices have soared, the number of discounts available for customers has been slashed.
‘The discounts customers get for switching providers are now minuscule.
‘Switching was the mechanism for ensuring competition between suppliers.
‘Potential savings for switching have been cut from between 25% and 40% to barely 10% right across the board.
‘The result is that the energy market here is increasingly resembling a cartel, with almost no real choice for customers.’
The figures supplied by Minister Ryan reveal the ESB has enjoyed a stark rise in profits since 2017, when it recorded a loss of €32m. In 2018 the State company reported a profit of €60m, of which it gave more than half (€35m) back to the State in the form of dividends.
The following year this figure rose to €338m, but the ESB only paid just over a third (€122) of this back to the State. In 2020 its profits dropped to €126m, of which it paid €50m back to the exchequer.
Last year this figure rose to €191m, when it paid €81m in dividends to the State.
In the first six months of this year, in the midst of the cost-of-living crisis and soaring energy costs, the ESB has enjoyed mammoth profits of €390m – of which it has paid less than a third (€122m) back to the State.
But the ESB is not the only State energy company that has consistently earned huge profits.
National grid operator EirGrid recorded a profit of €187m in the same four-and-a-half period, returning €20m to the State in the form of dividends.
After recording a profit of €21m in 2021, Bord na Móna has seen this figure more than treble to €76m in the first six months of this year, of which it has paid €6m back to the exchequer.
Influential Government TD Barry Cowen, who has previously publicly criticised the ESB, said the huge profits enjoyed by State companies must be redistributed back to families.
The Laois-Offaly TD told the MoS: ‘Given the unique difficulties that the market for energy is experiencing, the social good is not served by the current level of profit taking.
‘Working families are experiencing an unprecedented series of pressures when it comes to mortgages, the cost of food of petrol and of heating.
‘The scenario where the ESB, after making €390m in the first six months of a dire year for working people, are now poised to make a profit of €800m in a single year is unacceptable.
‘There is such a thing, even today, as society. Critically this is a Stateowned company which is supposed to serve the people rather than some vulture fund.’
The influential former minister also questioned claims from the ESB that their bumper profits are being ‘reinvested’.
‘Of course, the ESB will say these profits are reinvested but to put things at their mildest some of their investment decisions are open to question,’ he added.
‘Some may cost the taxpayers hundreds of millions of euros.’
He was also scathing about the ESB’s decision to quit contracts to provide new sources of power.
And he said its failure to fulfil its obligation could cost the taxpayer in the region of €800m.
Mr Cowen added: ‘I estimate, based on consultations with those in the know, that the cost to the State in respect of that provision will be a further €800m. This would never have been necessary had the 450MW auctions materialised.’
And he warned: ‘This is not a year for excessive profit taking.
‘While prices soared, the discounts were slashed’
‘This is a State company not a vulture fund’
‘The ESB should acquire a sense of corporate responsibility and stand with rather than gouge the people.
‘That, after all, is what it was originally set up to do.’
In response to queries from the MoS, a spokesperson for the ESB said its profits ‘are used to invest in critical energy infrastructure, including new renewable generation and system services projects’. They added that these projects include ‘investing in safe, reliable electricity networks to support the continued transition to a low carbon future’, paying down debt previously raised for investment [ESB has over €5.8bn debt], and ‘paying dividends to Government’.
The spokesperson stated: ‘The ESB has invested €5.6bn in capital projects from 2017 to 2021. A financially strong ESB will continue to invest heavily to deliver our Driven to Make a Difference Net Zero by the 2040 Strategy.’ A spokesperson for EirGrid said ‘a significant amount of the accounting profits earned by the group in the past five years’ has already been returned to consumers.
They told the MoS: ‘Where the group over-recovers on its tariffs, these are returned to customers through a reduction in tariffs in future years.’