I’ve previously highlighted the particularly egregious Irish dysfunction piled high on EU-wide energy policy and regulatory dysfunction that these statistics partly reveal and reports of this nature seek to conceal, but there is no interest.
I wonder how long it will take before citizens as taxpayers and consumers revolt against these nonsensical and excessively costly energy policy and regulatory arrangements. It probably needs just one ‘event’.
Given our dependence on Nat gas for electricity generation it makes the electrification of the rail network problematic outside of urban systems with frequent acceleration deceleration profiles.
Also electrification of the urban bus ways with big hills to ascend such as in the Northside of Cork on route 202 & route 203 is worth looking at as I feel the diesel expenditure must be large on these routes.
However when the present locomotives are retired the Cork / Belfast Dublin routes could be electrified.
Again new convential DMU routes will probally give the best bangs for the Buck using the British rail community model.
It cannot be seen now given the inappropriate monetary envoirment we work withen.
But eventually somethings got to give - we should prepare for that moment.
But the easiest thing to deal with now is our oil home central heating dependence which is crazy really.
The Nat gas stations are now sunk capital with little hope for Nuke replacement - we should therefore concentrate on this low hanging fruit rather then insulation drives.
Wood gas stoves should be given some state advertising promotion to make people aware of these devices especially in rural areas.
So for Ireland with fuel at over double this around 1.60 per litre, it is clear that taxes are the main reason for high fuel costs. (So if we banned all private cars tomorrow and jumped on the bus/train/bike this would leave a gaping hole in our tax take – just as happened with the CO2 emission-based car tax. While we might save on imports, consumers would be gouged elsewhere to “maintain services”. The question is would we maintain productivity and economic activity if we sat at home and blogged rather than drove to the mall? I have my doubts….)
Getting back to this report and energy prices, it would be interesting to compare the cost of Energy production between countries excluding input costs, this might tell us about how we compare with our partners. I think Table 25 partly shows this (why is Energy and Supply lumped together?) and even here we do not come out well. Number of employees per unit of energy generated/distributed would be another interesting metric to see how efficient we are.
Also I really think we should add some non-European countries to the comparison mix so we can see how we can compare with developing countries, BRIC and US. These are our real competitors in global economy.
“Not long. Even those lacking knowledge of the intricacy of energy policy can read a table of stats which we do not really understand and ask a simple question, why are we at the top of that table?”
We needed an ESB connection, the ESB came in 3 large vans had a look at a 100ml conduit which contained a draw rope to attach a cable to so that it could be pulled to where it was needed. “We don’t pull cables anymore” at that, out comes the mobile phone, ten minutes later the Polish lads arrive in a pickup truck, jump out attach the cable and pull it through the offending pipe. This took all of about 4 to 5 minutes max then they lords of the ESB could begin their “connection’. This is how they operate, they are royalty, they own the service and if you are nice to them and pay all their charges up front they might connect you. After all it is there company to do with as they please.
I wonder does the bus still go round the fee paying schools of the inner burbs to pick up the offspring of the managers on the way up to bring them to their after school activities. All very progressive but paid for by the poor guy slogging home to the outer burbs to spend an hour with the kids before lights out. If this was Syria, the ESB management would all be colonels.
We’re not at the top of the table - and if the slwight of hand of using power purchasing parities is used we’re pushed further down. The only reason we’re not at at the top or close to the top is that the tax take on electricity and gas is low in Ireland compared to other countries where high taxes are imposed to finance costly and stupid green whizzo schemes. And when it comes to gas ireland should be compared with the UK because it is part of a single wholesale market on these islands.
Staff pay, though generous by international standards, is not a key driver. The principal reason is the way investment is financed and allocated given the capital intensive nature of these businesses.
Table 4 is interesting. (electricity prices for residential) consumers
Lets forget about taxes for a while and look at the basic price as this reflects the success of historical strategic decisions in the main rather then shorter term demand management.
Well we have the second highest prices at 17.55 , with Cyprus at 20.35 and Spain in third at 16.84.
Coal rich Poland , rational mixed fuel Finland & Nuclear / Hydro France are in the 10+~ range
It should be remembered that the above 3 success countries recycle this wealth withen their internal economies rather then stimulate others that they must then export to earn a living.
But Cyprus is a all oil dependent country(even its electricity stations are oil based) and according to what I read on a Bruce Karsting post they lost their primary generating station in 2009 during a curious explosion of captured seized arms that was bound for Syria !
Clearly something is wrong when you have only a marginally more effective energy policey to Cyprus !
Perhaps the price also reflects our scattered population settlement pattern which must also push up costs substantially.
As I said I don’t think you can replace these new Gas turbines anytime soon given its not sunk capital.
But you can tackle the population distribution system tangentially by tackling car dependency.
Given the increase in car fuel efficiency since 2007 a new class A+ type reg of sub 100 g / km can be created while the A B C D etc types can be taxed at a higher rate.
In conjuntion with relinking towns such as New Ross & Youghal back into the rail system this will encourage people who do not farm back into our 10,000~ scale market towns.
Hopefully also reducing the cost of servicing these areas with utilities as their populations increase relative to their Hinterland.
I do not think a major land tax increase will be best as many people live semi independent lives out in the sticks in conjunction with people who could possibly share cars amongest the wider community & relations.
I am therefore uncomfortable with forcing people who perhaps are natural loners into Bandon town like envoirments.
As its best not to force but merely give a option.
Using the ESB as the most egregious example, it’s all ‘hidden in broad daylight’ in the ESB annual accounts and summary regulatory accounts. (I could produce numbers and have dome so in the past -to no avail - but what I have now is a bit dated and would need a bit of effort to up-date it.) But the story is straight forward.
Given the requirement to clear a huge backlog in investment, to invest to support and add new load during the bubble era and to satisfy former Minister Ryan’s grren desires, the net asset value of the networks has more than trebled over the last decade. So how was all this investment (and much more outside of ireland) financed?
The ESB uses a single corporate treasury pot. Even though the networks are ‘technically, commercially and operationally’ unbundled from the generation and supply and other business activities, they are not financially ring-fenced. The ESB uses the networks as a cash cow to finance much of its network and other investments. The CER facilitated this by overvaluing the netwrok assets for regulatory purposes and this generated extra revenue and cash. The state didn’t invest a red cent either directly or indirectly and extracted dividends throughout the period.
The ESB financed more than three-quarters of its network and other investments from the cash generated ultimately by final consumers in the form of the excessive revenues awarded by the CER and customer capital contributions - with the rest coming from borrowings. That is why network charges and final prices are much higher than they need be.
A responsible majority shareholder would have forgone dividends or injected equity directly (or both). But neither was done and final consumers had to cough up. (When large industrial users kicked up, final tariffs were ‘re-balanced’ so that households and small businesses get in the neck even more.)
If the ESB networks were restructured, re-financed and sold as a stand-alone business, network tariffs (and final prices) would fall and there would be funds available to pay down debt or to finance productive investment. It is almost exactly the same for BGE.
But nobody wants to look at this. If there was even a hint, the ESB unions would bring the country to a standstill.
@ JeromeK: “… BRIC and US. These are our real competitors in global economy.”
Eh! I do not think so Jerome. Days of global stuff are numbered (a decade or two). Energy poverty will do for some; water shortages will do for others; many will go hungry. Make friends with folk who can grow their own food.
The pseudo-economic model of Permagrowth (which is absolutely dependent on fossil energy sources) is in big trouble. We are headed away from Permagrowth and toward the real economics of Sustainability - which is based on solar and carbohydrate energy sources. And that is a very unfunny prospect indeed.
Busy looking at the Northern Ireland transport report for Jan - March 2012 which was published today also the European commercial vehicles sales (ACEA) for May.
If we compare Jan to March figure from 2011.
The growth in Northern Ireland was used cars regs up 13% , light goods vehicles regs up 3% , heavy goods vehicles up 15%
There was a 1 % decrease of new Private car regs when compared to the same period last year.
This shows a stabilisation but continued structual shift in the car market.
With 24,056 new cars registered in Jan - march Y2007 while 16,401 cars were registered during jan -march Y2012.
The Bus passenger numbers are also showing slight signs of weakness with weekly bus passenger miles down 2% while rail passenger miles are up 7% when compared with last years quarter.
Bus passengers down 1% while rail passengers up 5%
“Brussels, 28/06/2012- In May, new commercial vehicle registrations continued the downward trend commenced in January, facing the sharpest decrease since 2009 (-17.8%, compared to May 2011). The UK was the only market to post growth in the month (+10.0%), while Germany (-13.6%), France (-22.1%), Spain (-27.4%) and Italy (-42.4%) all recorded double-digit downturns. From January to May, the EU* market shrank by 11.8%, compared to the first five months of 2011. The decline ranged from -4.0% in Germany to -6.2% in the UK, -8.5% in France, -24.8% in Spain and -37.9% in Italy. In total, 735,993 new vehicles were recorded throughout the period”
The Bus market is the most interesting segment from my point of view with the UK keeping the entire European market from collapsing once again (goods substitution ?)
“In May, new bus and coach registrations were down 3.5%, despite the good performance of the British market (+109%), which remained the largest. From January to May, the positive results in the UK (+61.1%) and Germany (+2.6%), the two largest markets, counterbalanced the downturn recorded in France (-18.9%), Italy (-30.9%) and Spain (-42.5%), leading to an overall 3.1% increase of the EU* market.”
If we look at the Jan to May Bus figures the UK market is the equivalent of the French , Italian & Spainish market combined !!
Jan to May
France : 1,812
Italy : 1,101
Spain : 803
Total : 3,716
It appears western med activity has shifted towards the far eastern med (Turkey) which is merely banks desperately searching for a yield.
I keep asking why is Turkey the darling of the banks now ?
The place is hopping for some reason.
Video taken this month - notice the new coupled Alstrom trams and the number of people inside…….and out.
@Paul Hunt - many thanks for the comment detailing the Capital issue in the ESB. Very illuminating. Are there Public choice analyses on Ireland’s political institutions? Such analyses would be of great public interest and of great interest to the public in a suitable exec summary form.
Many thanks for your response. I am frequently asked to provide details of these blessed ’structural reform’ that would be sensible, but when I do make some effort there is hardly any interest. Your response and suggestion is the exception that seems to prove the rule.
So far as I can see there is hardly any useful research or analysis of these issues in Ireland, particularly from a public choice perspective, because all such research is publicly funded and securing funding for such research - which could throw up politically difficult issues - is not surprisingly almost impossible to secure. Individual academics might attempt this, in their own time, as it were, but there are few incentives to do so - and many incentives not to. In any event, even if an individual academic were sufficiently brave or rash to produce analysis that might be ‘politically difficult’ it would be very easy to isolate or dismiss him or her.
To their credit some people in the ESRI do, but they are so constrained by the nature of funding, particularly in the energy policy area, and the institutional dysfunction of the ESRI that they have to be extremely careful and circumspect lest they attract the wrath of government and its expansive apparatus.
The first rule of political life in Ireland is that thou shalt not upset the ESB or its unions. Other semi-states, for example BGE, and their unions -as well as public sector unions - have sought to emulate the ESB.
The second and third rules are thou shalt save the domestic banks even to the point of renderng the state insolvent and thou shalt not upset the major professions, the well-heeled and those aspriring to be well-heeled at everyone elses’ expense.
All politicians, policy-makers and regulators steadfastly obey these rules. Once you recognise these rules and the extent to which they are obeyed you will have learned all you need to know about how Ireland got in to this mess and why it is proving so damnably difficult to secure any sort of economic recovery.
Obeying these rules, and being seen to obey these rules, did not provoke any major popular resistance during the bubble era, because there was sufficient largesse to buy it off. Now that the cupboard is bare, there is considerable public discontent. But it is leading to even more disengagement by many voters from the political system or being channeled in a politically profitable manner by SF and the hard left. And these are even more assiduous at protecting the interests of those who are part of the problem than the political supporters, previously of the banks, and continuingly of the professions and the well-heeled nursing a sense of entitlement.
Alll advanced economies have elements of this - it goes a long way to espain the current crisis and the why recovery is proving so elusive - but it ireland this dysfunction characterises the politcial and economic system.
“The ESB financed more than three-quarters of its network and other investments from the cash generated ultimately by final consumers in the form of the excessive revenues awarded by the CER and customer capital contributions - with the rest coming from borrowings. That is why network charges and final prices are much higher than they need be.”
This raises interesting questions. The ESB has thus effectively used its domestic cash flow plus debt raised against future cash flow to buy assets in other jurisdictions. Did they over pay for thses assets? Are domestic consumers paying for this overpayment through higher charges? What is the logic of a domestic regulated entity buying assets overseas other than the fact that management like to travel?
Why expand abroad? Here are some guesses.
Expand revenue base for shareholder, Compensate for forced dispersal of assets and customer base.(i was refused consideration to be retained as esb customer for site with elec bill in excess of 3m/yr due to change in name even though ESB offered best value.}. Leverage skills and Knowledge to market.
Use foreign earnings in event to subsidize Irish operations to keep lights on if necessary.
Get better value from supply chain
Don’t get hung up on on the foreign acquistions - even though they are ‘interesting’. Focus instead on the ‘financing tax’ which Irish gas and electricity consumers pay to keep the ESB management and staff in the style to which they have become accustomed and to finance the green whizzo schemes required to satisfy the woolly-brained Greens while they were in government - and which continue under the present lot.
Electricity and gas regulation and policy is dysfunctional throughout the EU. The Brits have lost the plot for the second time with their proposed Electricity Market Reforms - which was prompted by them losing the plot the first time in terms of going for full retail competition, allowing private equity to hollow out balance sheets and failing to facililitate investment in base load generation. The Germans lost the plot the first time when they eventually opted for full retail competition and adopted UK-style regulation. They lost it the second time with the energiewende - the about-turn on nuclear (Chancellor Mrerkel’s effort to keep the Greens sweet lest the FDP fail to gain the required 5% in the next Bundestag election). All the others have lost the plot to some extent - and this is refected in these price comparions - but Ireland is in a class of its own in the way the ESB and BGE are cossetted at the expense of consumers.
I don’t know why I bother. None of those in a position to do something about it have the slightest bit of interest - though it was explained to some of them in considerable detail previously. Rule Number One: don’t upset the ESB, its staff or unions.
Those who prevent government from governing in the public interest are the government.Irish voters if they were to become of this would be very cross indeed, as they are very jealous of their exercise of thier ultimate authority to decide who governs. It is a tribute to the ESB (and BGE) - and a measure of the fear they and their unions instill in all governments - that they have been able to conceal their usurping and sibversion of governance.
this full retail competition in Germany is not really real.
I do not switch for 1 cent less, and so do most of the people.
Most retail is in the hand of local communities, at least to my feeling.
With the nuclear turn around. I was mad at Angela. But, if 60 % of the population is afraid of nuclear, how much more am I willing to pay ? When was the last nuclear power plant built in Europe? And how much did it cost ?
And if things do not go as planned, we can always keep the old plants running a little longer, built the lignite reserve plants and eliminate our dependence on foreign fossil fuel completely : -)
For the last 18 months the CER has been pfaffing around trying to decide what to do with the gas Interconnectors (IC1 and IC2) from Scotland when Corrib gas comes on stream and, if or when, Shannon LNG comes on stream. The total amount of annual revenue at stake, in the region of €50-60m, may appear piddling in the context of the billions being bandied about for the IBRC and fiscal adjustments, but, as John FitzGerald observed in another context, it is just one of many mole-hills that make a mountain. It is perfectly obvious that some of the investment in the ICs will be stranded, but there is a concerted ‘official’ opposition (Minister, Department, CER, BGE, ESB plus all the other parts of the expansive government apparatus that has some involvement or other in the energy sector) to any consideration of stranding.
There have been three separate public consultation exercises lasting a month or two in the last 18 months starting in Jan. 2011, Jul. 2011 and Feb. 2012. Apart from one contribution by some ESRI staff (which, not surprisingly, was broadly supportive of the ‘official’ position) and a report from another economist commissioned by one of the parties with an interest, none of our illustrious economists engaged in this matter which should be of considerable public interest. The basic economic issues are quite straight forward. They don’t require specific technical expertise. But our academic and research economists suddenly go all quiet and shy - and if pushed tend to support the official line in as tepid a manner as they can get away with without blowing their professional credibility.
It’s just another example of this sophisticated ‘three monkeys’ routine - with self-determined impairment of the relevant faculties. It is nothing short of a disgrace.