How ESB can make an ‘obscene’ profit of €357m in six months while families are hit by skyrocketing energy bills

ESB Group has insisted its massive €357 million in first-half profits cannot be used to stop its subsidiary Electric Ireland from spiking household bills.

The gains were described as “obscene” by an opposition spokesman.

The company says its generation and utility businesses, known as Electric Ireland, must operate separately. This means that higher profits from electricity generation cannot affect the prices charged to customers who buy them from Electric Ireland.

The retail company, which changed its name to Electric Ireland in 2012, currently provides electricity, gas and energy services to over 1.2 million homes and 95,000 businesses across the island of Ireland.

Earlier this month, the state-owned provider announced it would raise prices for consumers, its fifth price increase since early 2021.

Home electricity bills are set to rise 26.7 percent from early next month, while home gas bills are set to rise 37.5 percent.

This is expected to add €446 per year to the average household bill, with gas prices expected to increase by €516 as a result of the price increases.

At the time, Electric Ireland commented that there had been an unprecedented rise in wholesale gas prices of over 700 per cent over the past year, adding that prices had risen by over 200 per cent since June this year alone.

For the first six months of this year, ESB reported operating profit before exceptional items of EUR 357 million for the six months ended June 30th.

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Compared to the first half of 2021, this means a decrease of €6 million.

ESB also reported a profit after tax after special items of EUR 390 million compared to EUR 128 million in the same period last year.

The semi-state attributed the decline in operating profit to changes in regulated network tariffs, losses in ESB’s customer solutions business and exchange rate movements.

Geraldine Heavey, ESB’s Chief Financial Officer, said: “Volatility and high wholesale market prices remain a feature of energy markets in 2022.”

ESB added that at the group level, this profit decline was offset in large part by higher energy margins in the generation business.

It said its generation and utility companies must operate separately, so higher profits from its generation business cannot be used to offset Electric Ireland’s costs.

Revenue and other operating income for the six months ended June 30, according to interim results, were €3.68 million, compared to €2.15 billion in the first half of 2021.

The company with around 8,000 employees invested 532 million euros in the energy infrastructure in the first half of 2022.

“This lays the foundation for continued strong investments in energy infrastructure to decarbonize power, improve resilience and empower customers in line with our 2040 Net Zero Strategy,” added Ms. Heavey.

Sinn Féin climate spokesman Darren O’Rourke ESB said the “obscene” gains highlighted the need for full reform of the energy sector and accused Energy Secretary Eamon Ryan of “sitting on his hands”.

“Businesses are on the brink of closure and households are in dread of the next bill so people will understandably be furious to hear that ESB is making €2m a day profits while Electric Ireland is raising prices,” he said the Meath East TD said.

“The government has a number of options to address the underlying issues that are contributing to runaway electricity costs, but so far they have done nothing.

“When EU proposals to decouple gas and electricity prices were put before the European Energy Council in October 2021, Secretary Ryan actively opposed reform.”

He said other countries have since taken unilateral action, “but Minister Ryan just seems to be keeping his fingers crossed that Europe finds a solution for him soon”.

Mr O’Rourke added: “Currently the ESB is not permitted to use group profits to cap, freeze or reduce prices at Electric Ireland. Given the scale of the crisis, this urgently needs to change. The rule book was not designed for the current emergency.

“The question is also rightly asked why producers of renewable energies are allowed to sell renewable electricity here at the same price as gas electricity.

“While renewable energy projects contracted under the Renewable Electricity Support Scheme are required to reimburse the additional price they receive for their electricity through the PSO, the vast majority of renewable energy here is not the case.

“Most of our wind, solar, hydro and biogas projects are being completed under the older REFIT (Renewable Energy Feed-in Tariff) regulations, which allow these companies to offset the difference in the market price at which they sell electricity maintain the original price in their contract. This translates into huge profits for these energy companies.

“A change in the law could cap that price and ensure that these renewable energy producers sell electricity at their actually affordable contracted price.”

His party also called for a pre-winter electricity price cap and a windfall tax for energy companies.

“The minister obviously has a variety of options at his disposal so he needs to stop treating energy companies with kid gloves. It needs to stop sitting on its hands and take action now to help homes and businesses,” Mr O’Rourke said. How ESB can make an ‘obscene’ profit of €357m in six months while families are hit by skyrocketing energy bills

Fry Electronics Team

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