Unions oppose government plan to transfer electrical transmission assets

A government plan to transfer the transmission assets of the state-owned Electricity Supply Board (ESB) to another state-owned company has met with strong resistance from the trade unions. The plan has been proposed by the government in a bid to boost competition in the electricity sector.

All trade unions representing employees of the state-owned Electricity Supply Board (ESB) have vehemently opposed a government plan which envisages the transfer of the ESB’s transmission assets to EirGrid. The latter company currently administers the transmission system and is a stand-alone entity, independent of the ESB, with a different board, shareholders and its own staff. Details of the plan emerged in a recent government White Paper on energy policy – Delivering a sustainable energy future for Ireland (555Kb PDF) – launched in March 2007.

The trade unions suggest that the move is linked to the forthcoming Irish general election, scheduled for 24 May 2007, with the government seeking to increase its popularity by appearing to take actions that might reduce electricity prices. In an unprecedented statement, the Chief Executive of the ESB, Padraig McManus, who ultimately answers to the government, expressed his disappointment in relation to the proposed plan. Mr McManus was also sceptical that the move would lead to lower prices.

Nonetheless, the trade unions are pleased that the government has ruled out any possibility of privatising the ESB. The policy of the Irish Congress of Trade Unions (ICTU) is to oppose the privatisation of state companies.

Government position

The Minister for Communications, Marine and Natural Resources, Noel Dempsey, has outlined that the government wants to introduce structural changes in the electricity sector that will create a more attractive investment climate for existing and new players in the market. More specifically, the changes are aimed at delivering increased competition, reducing the cost of electricity and offering greater choice to consumers. Minister Dempsey also referred to an earlier announcement regarding the creation of a ‘land bank’ of ESB-owned power generation sites to facilitate new independent generation, along with the reduction of the ESB’s power generation market share, as key steps towards achieving this goal.

The minister’s announcement came as something of a surprise, particularly in light of comments he made late last year stating that: ‘The government does not in any circumstances favour the fragmentation of the ESB. We believe such a move would not reduce prices, but could in fact increase them and endanger our security of supply and competitiveness’.

A critical issue for the government is whether the industrial relations issues raised by the plan can be managed successfully. Sources in the industry are sceptical that the plan will actually be implemented, given the hostility of the trade union reaction.

Trade union opposition

The ESB trade unions insist that they will not cooperate with moves to implement Minister Dempsey’s plan. A number of industrial relations issues would arise in the event of this plan’s implementation. For example, there is the issue of how to deal with the 2,200 network technicians who currently work on the ESB’s transmission and distribution networks. The trade unions have suggested that a transfer of undertakings situation could arise, but this has been denied by EirGrid.

Moreover, there is the question of how the ESB would deal with the decline in the nominal value of shares held by its 6,000 workers under the current 5% employee share ownership plan (ESOP). The current nominal value of these shares would decrease as the transmission assets have been financed by the ESB. These assets would be transferred to the new state company, leaving the ESB to deal with the burden of repaying money borrowed in recent years to fund the current €3.5 billion refurbishment programme of the entire transmission and distribution system.

The trade unions have agreed on the ICTU’s appointment of the facilitator Tom Crean to front their team to oppose the plan. Mr Crean stated that they would engage in a policy of ‘non-cooperation’ if the government proceeds with implementing the plan. He claimed that, for the transfer of the assets to EirGrid to take place, the support of the workers involved would be needed. However, a Technical Electrical and Engineering Union (TEEU) official, Davy Naughton, pointed out that ‘if the minister does nothing, we’ll have nothing to respond to’.

ICTU General Secretary, David Begg, and Amicus General Secretary, Jerry Shanahan, conceded that, as two million Irish workers were dependent on the ESB, industrial action was inconceivable. However, the Amalgamated Transport and General Workers Union (ATGWU) official Brendan Ogle, whose union represents key workers in the power plants, declared that his union was undecided on the issue of what tactics to adopt in opposing the plan.

The trade unions have made reference to the two successive tripartite deals – namely, the Cost and Competitiveness Review (CCR) and the Programme to Achieve Competitiveness and Transformation (PACT) – which committed the government to the retention of the ESB as a vertically integrated unit (VIU) or stand-alone company. The unions also refer to the 10-year national social partnership agreement – [Towards 2016 (2.86Mb PDF)](http://www.taoiseach.gov.ie/attached_files/Pdf files/Towards2016PartnershipAgreement.pdf) – which commits the government to formal consultations on the future of semi-state companies before taking any decisions in this respect.

The trade unions active in the ESB believe that all of these commitments would provide a platform for a formal industrial dispute. Nevertheless, they are conscious of the fact that any action they may take should not be interpreted as part of a political campaign against a government decision.

Brian Sheehan, IRN Publishing