The Minister for Communications Noel Dempsey has written to the ESB board, outlining serious concerns about its financial deal with staff due to transfer to EirGrid, the new national grid company.

The deal will see staff getting bonus payments of €40,000 for transferring to the new entity. EirGrid will be a separate company from ESB Group, but its assets will continue to be owned by the parent company. Approximately 200 staff are likely to ultimately move to EirGrid.

It is understood the letter sent by Mr Dempsey has been brought to the attention of ESB board members. The intervention of the Minister calls into question whether ESB will proceed with offering staff the package. The matter will be discussed again at a future board meeting.

Last night, the ESB and the department declined to comment. However, it is understood that the letter was sent to ESB chairman Tadhg O'Donoghue.

It expresses concern that, while the lump sums involved are described as "bonus" payments, they have not been subject to any kind of performance evaluation.

It also raises concerns that staff transferring may be allowed to go on secondment into EirGrid rather than making a clean break from the ESB Group.

Mr Dempsey points out that EirGrid is meant to be independent and staff must make a full break.

EirGrid is meant to be the transmission system operator for the Republic, but difficulties in getting staff to transfer has led to almost five years of delays. At present, ESB National Grid is acting as the transmission system operator until EirGrid takes over.

The Minister's letter also raises a concern about the different conditions that may arise between ESB staff transferring into EirGrid and staff joining the new company from the outside.

There is growing concern in Mr Dempsey's department that the EirGrid deal could set a precedent for the rest of the public sector and in semi-State companies generally. Some sources believe the EirGrid deal could complicate State attempts to sell the decentralisation package to the civil service.

Pay and conditions at the ESB continue to command public attention, particularly at individual power stations. The company's main rival, Viridian, claims that the company could become more cost-efficient and electricity prices would fall.

The ESB employs 9,289 staff at a total cost, including pension provisions, of €666 million. This works out at an average salary and benefits of €71,702.