The Government intends to take steps to prevent an ESB price rise of at least 10 per cent that it believes could impact on competitiveness.
The Minister for Communications and Natural Resources, Mr Ahern, wants the energy regulator, Mr Tom Reeves, to take national competitiveness into account when deciding on the next price application.
Legislation may be needed to do this, the Minister's spokesman explained, because at present Mr Reeves does not have this power. ESB chairman Mr Tadhg O'Donoghue said yesterday that due to "rocketing fuel costs" customers should brace themselves for higher prices.
But a spokesman for Mr Ahern said the ESB should try to absorb as much of the fuel increases as possible and look for efficiencies within its operations. He said the "last thing" the economy needed was a major price increase.
The Small Firms Association said any further increases would be a "hammer blow" to Irish business. ISME said if another increase was approved electricity prices would have increased by 40 per cent in the last four years.
Speaking during the company's 2003 results presentation, Mr O'Donoghue declined to speculate on what ESB would ultimately submit, but said it would be "double digits".
Mr O'Donoghue and chief executive Mr Padraig McManus said the recent surge in fuel prices had dented ESB's previous cost projections. Mr O'Donoghue accepted that ESB bought oil in dollars and consequently gained from a strong euro, but he said the gap was still "huge".
A statement from the company said it originally hoped to simply seek a "modest" increase from Mr Reeves, but this was no longer possible.
The company announced widely anticipated after-tax profits of €248 million, up from €159 million the year before. Turnover was also up from €2.2 billion in 2002 to €2.4 billion in 2003.
A dividend of almost €68 million will be paid to the Government. Other major features of the results were rising wage costs and a strong performance by its ESB Networks division, which chipped in a pre-tax and interest profit of €216 million.
But in an interview with The Irish Times today, Mr O'Donoghue warns the company is facing a range of financial pressures, including: a bill of at least €250 million for upgrading the coal-burning station at Moneypoint; a pension deficiency of €511 million and an 18.5 per cent pay claim from the ESB group of unions.
Mr O'Donoghue also revealed that fundraising could become a problem in the next few years under State control.
He said there was no discussions about future ownership changes, but the company might one day hit a "glass ceiling" where raising funds while also returning dividends to the State could be problematic.
ESB meanwhile has written down the value of its fibre optic asset, owned by ESB Telecoms, by €41.4 million, in line with other international telecoms operators.
