ESB Presentation

Oireachtas Committee

2nd November 2005

Content• Emergent trends in Europe• Full opening of the Irish electricity market • All Island electricity market• ESB International Investments • ESB Investments

– Networks– Power Generation– Environmental Compliance and Renewables

• Electricity prices• Issues Going forward

Energy Policy

SECURITY OF

SUPPLY

PRICE

ENVIRONMENT

Market Liberalisation

Oil /Gas /Coal Volatility

Full Market Opening • All customers free to choose supplier

• On time and on budget delivery of complex IT systems to enable Market Opening

• ESB commitment to facilitating competition– reduce market share – discount sale of power to competitors– ESB contracts with Independent Generators

• Viridian, BGE, Airtricity, Aughinish, Tynagh

All Island Market • Commitment to integrate markets by July 2007

• Welcome development => fully supported by ESB

• ESB market share reduced to 40%-45%– c 2000MW on new plant in 7 years– 70% owned by Independent Power Producers

• ESB planning to “repower” Aghada power station

ESB’s Amorebieta Power Station in Spain

Distribution & Transmission Investment (€m)

0

200

400

600

800

Ave.1990s

2001 2002 2003 2004 2005

Transmission ReinforcementNRP Other non load relatedNew Business Distribution average 1990s

Infrastructure Delivery 2001 - 2005

• 65,000 km’s of MV renewal• 370,000 customer

connections• 250+ kms of new

transmission circuits (+x%)• 62 new transmission/HV

stations• 60+ refurbished

transmission/HV stations• Capital spend of €3 billion

2001

to

2005

220 kV

110 kV

38 kV

400 kV

1 new 400kV substations

5 new 220kV substations

32 new 110kV substations

24 new 38kV substations

30+ substations refurbished

10

Investment in Generation• Strategy

– Modernise and develop the Portfolio– Implement best practice O&M

• Commissioned two new Peat Stations

• Investment in Moneypoint

• Best practice agreed at many stations

ESB’s Wind Farm at Carnsore Point

Connection of Wind Generation

Approx 300MW connected

Another 600MW accepted

offers to connect

Another 380 MW being

offered to connect

Over 2,000MW of additional

applications being

processed

More than 100 new applicants

Breakdown of ESB Price Increase

• In the period 2000-2006 ESB price increase has totalled 40%.

– Generation / Fuel accounts for c 34%

– 4% relates to networks

– 2% relates to PSO’s (Public Service Obligations) and Supply costs

Gas prices (2004 to 2005)

Gas prices (2004 to 2005) (source Argus)

25

35

45

55

65

75

01JU

L04

09A

UG

04

16S

EP

04

25O

CT

04

01D

EC

04

12JA

N05

18F

EB

05

31M

AR

05

10M

AY

05

17JU

N05

26JU

L05

02S

EP

05

11O

CT

05

p /

th

erm

Oil prices (2004 to 2005)

heavy fuel oil (source Platts)

150

200

250

300

350

40001JU

L04

10A

UG

04

20S

EP

04

28O

CT

04

07D

EC

04

19JA

N05

28F

EB

05

11A

PR

05

20M

AY

05

30JU

N05

09A

UG

05

19S

EP

05

27O

CT

05

$/t

on

ne

Installed capacity – fuel mixInstalled capacity by fuel type

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Franc

e

Scandin

avia

Spain/

Portu

gal

Germ

any

UK

Irelan

d

Other

Gas/HFO

Gas

Oil

Coal

CHP& renewables

Nuclear

Hydro

Forecast Baseload prices 2006

Summary • Imperative to deliver massive future infrastructure needs

– Organisation capability – Funding ability

• Requirement to remain financially strong

• Need to reduce costs and meet regulatory targets

• Important to reach acceptable market share– Security of Supply Vs Liberalisation

• Requirement for international growth to maintain scale and skills