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Dannyboy83

The ESB cannot sell electricity below a price set by the regulator, to allow competition to enter the market. Bord Gais, can and do.

Now the ESB's profits are falling.
So the ESB are going to start selling GAS at a price below which Bord Gais can sell it.

So now we will have two semi-state companies who will be essentially swapping roles, rather than competing.

Perhaps the government should just stop meddling?
Isn't this a bit Irish?

ei.sdraob

what you described is competition, what's the problem (well beside regulator price-fixing)?

Dannyboy83

ei.sdraob wrote: »

what you described is competition, what's the problem (well beside regulator price-fixing)?

How is it competition?

The ESB cannot drop the price of their main service, BG can just undercut them slightly and stay there forever.

BG cannot drop the price of their main service, the ESB can just undercut them slightly and stay there forever.

End result is that the ESB will sell Gas as its main service and the BG will sell electricity as its main service.

Its not competition, just role reversal.

ei.sdraob

Dannyboy83 wrote: »

How is it competition?

The ESB cannot drop the price of their main service, BG can just undercut them slightly and stay there forever.

BG cannot drop the price of their main service, the ESB can just undercut them slightly and stay there forever.

End result is that the ESB will sell Gas as its main service and the BG will sell electricity as its main service.

Its not competition, just role reversal.

you want competition then remove price fixing, and put in better infrastructure to attract other companies

Dannyboy83

ei.sdraob wrote: »

you want competition then remove price fixing, and put in better infrastructure to attract other companies

My point exactly.

PeakOutput

should the regulators role be to set a maximum price rather than an exact price?

Fat_Fingers

PeakOutput wrote: »

should the regulators role be to set a maximum price rather than an exact price?

The ESB unions/workers own 20% of this semi state entity/public utility, which has been built up with money extracted from every worker in the country. In instance of ESB I feel that regulator is here precisely to distort market and to protect price , and in return protect and guard privileges of ESB workers.

We pay for this via very high prices for electricity . ESB is semi-state company where 20% is owned by its workers. Everyone knows workers are massively overpaid and that reflect in price of electricity. Also don’t forget workers benefits such as guaranteed employment or generous voluntary severance;. retail discounts; electricity discounts; medical benefits; the existing shareholding ; creche facilities; parking; career breaks; and gymnasium and sports facilities.

Unlike public service they get all the benefits of public service but none of the pain – no pay reduction, no pension levy. I think this is why regulator sets the price of electricity , normal free market would not support their high operational costs.

Head The Wall

PeakOutput wrote: »

should the regulators role be to set a maximum price rather than an exact price?

Correct although it should be a realistic maximum price

should be no price fixing, the regulator should prevent monopolies and oliopolies forming.

The problem with fixing a maximum price is that profits are lowered meaning its less attractive for new businesses to set up which = less competition to bring the prices back down.

Head The Wall

Deleted User wrote: »

should be no price fixing, the regulator should prevent monopolies and oliopolies forming.

The problem with fixing a maximum price is that profits are lowered meaning its less attractive for new businesses to set up which = less competition to bring the prices back down.

This is the complete opposite of what happened here. The regulator increased the price of electricity to entice competition in here. We havn't really seen much reward from this so called competition. Prices down recently but still way too high.

ESB only produce around 47% of power in this country at the moment

Riskymove

ei.sdraob wrote: »

you want competition then remove price fixing, and put in better infrastructure to attract other companies

the regulator is only stopping ESB from dropping prices for a certain period in order to allow Bord Gais and airtricity and anyone esle develop

if they did not, ESB would simply floor prices to protect their monopoly and there would be no competition at all

at a point in the future the restriction will be removed

conorhal

When has the regulatory system in this country ever worked? Usually it's a non-regulatory system we operate*


*see Taxi's and Finance

douglashyde

The ESB have to lose 700,000 customers before they are completely deregulated. The estimate is for this to happen sometime in November.

Deregulation of the Electricity business market is meant to happen much sooner.

Also, keep in mind, ESB is broken up into different business: Networks, Supply and Generation.

Bord Gais is in competition with ESB Supply - Not the other parts of it's business.

However, The regulator is not just stopping the ESB Supply from cutting prices, it is also stopping them from actively seeking new customers.

Dannyboy83

So will the ESB be able to operate without interference from November onward?
Assuming Bord Gais are still regulated, how will they compete?

Won't they both have to be deregulated at the same time?

douglashyde

Dannyboy83 wrote: »

So will the ESB be able to operate without interference from November onward?
Assuming Bord Gais are still regulated, how will they compete?

Won't they both have to be deregulated at the same time?

November is just an estimate, at the end of the day it's the regulators decision for when to deregulate - the figure of 700,000 lost customers has been given thought.

The Gas and Electric market are not regulated together.

There is an interesting point to be made about Electrical regulation in Ireland. Both the ESB and Bord Gais are semi state (same owners) so they can never be in true competition with each other, the true competitior is actually Airtricity.

ninty9er

Apparently New Zealand re-monopolised the market after diseconomies of scale in a deregulated market pushed prices up significantly.