Despite escalating fuel costs, the ESB is expecting to report an increased operating profit of approximately €375 million for 2004, although higher interest payments are likely to reduce the company's pre-tax performance.
The company is expected to report a pre-tax profit of about €250 million, down from €302 million in 2003, mainly because of rising net interest costs and other financing charges. The company is in the middle of a major capital investment programme.
However, operating profits are forecast to rise from €325 million in 2003 to about €375 million.
The company is scheduled to report a turnover of about €2.4 billion, similar to last year. Connections to new domestic homes are expected to rise from 77,000 to 90,000.
Earlier in the year, the company was fearful about its financial position being eroded by rising fuel costs, but this has not materialised.
The company has been granted two price rises by the energy regulator, Mr Tom Reeves, to help pay for rising fossil fuel costs. A 9 per cent increase has been in place since October, while a 3.5 per cent increase is due to kick in on January 1st.
The regulator allows the company to pass on the cost of rising fuel to customers. The ESB has argued that even the 12.5 per cent increase does not fully compensate the company for rising fuel costs and a truer reflection of its fuel overhead would be 20 per cent.
The regulator has said he will consider future increases next year.
The ESB has one of the largest fuel bills of any company in the State. According to last year's annual report, its fuel bill topped €732 million.
The company's board was recently given an update on trading and the assessment delivered by management was broadly upbeat, according to sources. However, two issues could scupper the current forecasts.
One of these is the €500 million pension deficit at the company. Talks on this issue are ongoing between unions and management. As part of an overall settlement, it is possible the company may have to increase its contribution to the superannuation fund.
Also, as part of a "change process" at ESB, staff numbers may need to be reduced and a re-structuring charge could be included in the 2004 accounts.
However, most sources this weekend said it was unlikely that an overall agreement on change, pensions and staff reductions would be arrived at before Christmas.
The unions are deeply divided over the best way to gain concessions from the company. Any increase in general pay rates would worsen the pension deficit.
Instead, some union figures support non-pensionable lump sum payments or a greater share in the company via the Employee Share Ownership Trust. This body holds 5 per cent of the company's equity on behalf of staff, but unions want to increase this by 14.9 per cent.
