The ESB has revealed it is operating with a historically low 1.3 per cent margin on sales of electricity to ordinary households and small businesses.

The disclosure of the margin for domestic households is likely to spark controversy among private sector competitiors who have long complained that ESB artificially keeps margins in the domestic sector low to keep out new entrants. Since it was liberalised, not a single operator has decided to sell electricity to domestic homes.

Private sector companies claim that ESB takes most of its profits from its networks business. According to the most recent accounts, the networks division contributed 63 per cent of the company's profits before interest and tax. The networks arm operates a nationwide distribution system of 150,000 kilometres.

A document sent to the energy regulator Tom Reeves by ESB PES (Public Electricity Supplier), the dominant supplier of electricity to the market with 1.8 million customers, reveals that margins currently stand at 1.3 per cent. This is low by international standards where margins of 3-6 per cent are the norm.

However the document says the margins are low not because of choices made by ESB, but because of the regulatory system imposed by the Commission for Energy Regulation (CER), which is led by Mr Reeves.

"It is important to again emphasise the nature of the PES business. We operate to a tight regulated margin of 1.3 per cent and cannot bear any increased level of risk," says the document.

It also points out that ESB lacks the commercial freedom of other suppliers in that it cannot set its own prices or cherry-pick its customers.