At times, 63-year-old Tadhg O'Donoghue must wish he was back cycling around the uncongested roads of Valentia Island.

Born and educated on Valentia, Mr O'Donoghue retains a strong Kerry accent. He also exhibits an approachability and shrewdness often associated with people from the Kingdom.

However, as chairman of the ESB, patience and political wisdom are probably the qualities most often called upon. With industrial relations strife threatening and financial pressures increasing, the chairman knows that a range of skills will be needed to guide the company through.

With ESB unions threatening to turn the lights out, literally, Mr O'Donoghue could be forgiven for wishing to indulge his hobbies of GAA and cycling a little more.

On the contrary, the chairman is not ruling out serving beyond his five-year term - if asked by the Government again. He will consider that next summer.

Mr O'Donoghue admits the company is facing several "scuds". With his background in tax consultancy (he has been a partner at PricewaterhouseCoopers), he has a natural feel for figures and, contrary to common perception, he says the ESB is not having everything its own way financially.

"Yes we had a good year - €250 million profit in round terms. But the problem is, it's still only a return of 6.5 per cent on capital invested and if you go to the market to borrow money at 5 per cent, to turn it over at 6.5, you are taking all the risk for 1.5 per cent," he points out.

He says this is probably because the company cannot be as dynamic as it wants to be.

"We are seen as the supplier of last resort. If you pull the switch on the light at home and something doesn't happen, then you blame the ESB," he says.

He also acknowledges the company's performance in recent times has been helped by a price increase that was granted by energy regulator Tom Reeves. He says the practice of freezing prices up to 2001 was disastrous as the electricity network was not upgraded.

"We are not gold-plating anything. A lot of the work we are doing on upgrading networks is substantially catch up," he says.

He challenges the portrayal of the company as some kind of rapacious monopolistic giant crushing all competitors. In fact, the company is busily reducing its market share, he points out.

"We are not, at the moment, doing in the market place what an aggressive marketer would do, because we actually need to shed customers. We have got to meet these competition criteria, that we get down below 60 per cent of the market."

He speculates that ESB might end up holding about 50 per cent of the market in the next few years. So growth will have to come from abroad.

"I have a theory. A company either expands or withers. No company has ever succeeded just sitting there," he declares.

So getting a greater foothold in international markets, via ESB International, is key, he says. While this company has picked up plenty of contracts, many of them are in the early stages and the ESB's international endeavours contribute only a small part of the company's overall turnover.

The ESB can wait a while for these projects to gather steam, but Mr O'Donoghue and chief executive Pádraig McManus need to be mindful of other financial challenges in the meantime. One of these is the age of the ESB's power stations, with some of them dating back to the 1960s.

Another one is the rising price of all fuel types: coal, oil and gas. Another is the €250 million price tag associated with renovating Moneypoint, a station that environmentalists dislike because of its dependence on coal. And yet another big challenge is the claim from the group of unions for an 18.5 per cent pay rise.

"I would have to say the opening shot of double-digit figures, high double-digit figures, is off the radar screen."

As for the other staff claim for an almost 20 per cent stake in the company, Mr O'Donoghue says that is a matter for Government.

All these problems mean more sober times may be on the way at the company.

"Last year we had the wind at our backs. Now we are playing up hill for the coming year. But if we don't keep the profit levels at €250 million and up, we are not going to be able to raise money. The first thing a banker looks at is your profitability and your interest cover. Its all part of a jigsaw puzzle. Because you have Moneypoint investment, fuel costs, you have the pension issue, you have the salary negotiations, you have the maintenance of profitability - you don't have to be Einstein to work out they all come into the same category," he says.

The other issue exercising the whole electricity industry is the failure to set up EirGrid, the national grid company, which was supposed to be entirely independent of ESB. Due to a row over staff transferring from ESB to EirGrid, things have been stalled for several years and Mr O'Donoghue is not very happy at the turn of events.

A firm called ESB National Grid is operating the transmission system from the ESB Dublin HQ and Mr O'Donoghue is not keen on the arrangement.

"I don't like them using the phrase ESB National Grid because, while they are still an ESB company, we don't actually control them. Officially they are ESB National Grid, which is a wholly owned subsidiary of ESB, but ESB is precluded from managing them because they have their own separate set up. It's totally unsatisfactory and I've told the civil servants that and I've told the Minister that and in fact I've told the EirGrid chairman and board members.

"We have bent over backwards to solve the thing. Those guys have the best of all worlds. They are not answerable to ESB, they are not answerable to EirGrid. Who are they answerable too? I've asked that question a few times and got no answer."