In late 1999, it is apparent that peat-burning power stations operated by the state-run electricity company, the Electricity Supply Board (ESB), in Ireland's midland counties could close if the European Commission decides that they cannot be governed by "public service obligation" (PSO) rules, which allow some exemption from EU competition rules limiting state aid. If the Commission rules that investment in these plants must be treated as state aid, rendering planned investment and refurbishment redundant, this would make them totally uneconomic. It would be cheaper for the company to shut down the plants and pay expensive redundancy lump sums to the employees rather than absorb the cost of maintaining them. For example, the company has confirmed that if the IEP 17 million needed to refurbish the outdated Ferbane plant in County Offaly, was invested in modernisation, the total cost to ESB could be of the order of IEP 90 million over the expected 15-year lifespan of such a remodeled plant. This would be multiplied if planned investment in other uneconomic stations in the midlands were to proceed.
Industrial relations at Ireland's state electricity company, ESB, have been somewhat difficult in 1999, with a workforce ballot on industrial action narrowly averted in November 1999. The situation is complicated by the fact that critical decisions on the future of ESB's peat-burning power stations - and their employees - hinge on the outcome of EU-level decisions over whether they should be covered by "public service obligation" measures.
In late 1999, it is apparent that peat-burning power stations operated by the state-run electricity company, the Electricity Supply Board (ESB), in Ireland's midland counties could close if the European Commission decides that they cannot be governed by "public service obligation" (PSO) rules, which allow some exemption from EU competition rules limiting state aid. If the Commission rules that investment in these plants must be treated as state aid, rendering planned investment and refurbishment redundant, this would make them totally uneconomic. It would be cheaper for the company to shut down the plants and pay expensive redundancy lump sums to the employees rather than absorb the cost of maintaining them. For example, the company has confirmed that if the IEP 17 million needed to refurbish the outdated Ferbane plant in County Offaly, was invested in modernisation, the total cost to ESB could be of the order of IEP 90 million over the expected 15-year lifespan of such a remodeled plant. This would be multiplied if planned investment in other uneconomic stations in the midlands were to proceed.
ESB currently faces the added difficulty of securing final agreement on the implementation of local measures agreed with trade unions in the company's three-year "partnership" agreement, the Cost and Competitiveness Review (1996-9) (IE9902272N). Indeed, it appears that the slow pace of change in ESB is now catching up with the company and its unions, even though it has been known for some time that 28% of the Irish electricity market is being opened up to competition in 2000, rising to 32% by 2003.
Fortunately for the government and ESB - and arguably ultimately the trade unions - an agreement in November 1999 to conduct a six-week review of the Ferbane situation, which had seen an unofficial work stoppage, succeeded in halting a company-wide ballot on industrial action by the ESB group of unions.
Commenting recently on industrial relations in ESB, a report by two consultants, John O' Dowd and Phil Flynn, suggested that "failure to grapple now with the current industrial relations challenges could only undermine the extent to which the company, its unions and the workforce will be able to shape their future." The report (IE9910198N) was prompted by an unofficial industrial dispute in March 1999 at an ESB plant in Tarbert, County Clare,
Ultimately, Ireland is only a marginal player at European level when larger issues such as PSOs are being decided. Meanwhile, it will take a concerted effort by all concerned at local level to surmount the difficult challenges which lie ahead for both ESB and its 8,000 workers
Eurofound recommends citing this publication in the following way.
Eurofound (1999), ESB must face up to more EU-driven change, article.
