Dáil Éireann debate -
Thursday, 30 Jan 1992

Vol. 415 No. 2

Adjournment Debate. - ESB Sale of Electrical Appliances.

Mr. Pattison

At the outset I should like to point out that I shall give at least one minute of my time to Deputy Tomás Mac Giolla. I should also mention that Deputy Fergus O'Brien and Deputy Eric Byrne asked me for time as well but, unfortunately, the limited time available to me does not permit be to accede to their requests.

I understand that Deputy Fergus O'Brien has had a meeting with the Minister on this subject. All of that indicates to the House how important the matter is. Unless the Minister can address it immediately it will develop into a very serious one for the Minister and his Government.

The real issue is one of jobs. The Minister's prohibition on the sale of electrical appliances by the ESB through its billing system will mean that at least another 400 and anything up to 1,000 people indirectly employed will be added to the dole queues. The prohibition will also seriously affect thousands of people precluded from purchasing essential electrical goods. The Director of Consumer Affairs and Fair Trade carried out a detailed examination for the Minister's colleague, Deputy O'Malley, on the use by the ESB of its billing system for the sale of electrical appliances. That report found that the ESB are not operating unfairly to the detriment of their competitors and that conclusion was endorsed as recently as 27 January 1992 by the Director's successor, Mr. Fagan.

The move against the retail operations of the ESB has, therefore, come as a bolt from the blue. There has been no public debate on the matter and it appears that the Minister has set himself up as a kind of kangaroo court and has listened to the evidence from only one side without considering the evidence available from the other side of the argument.

The question is whether it is fair or just to abolish a system that gives access to credit to hundreds of thousands of people without disclosure of private circumstances. Five hundred thousand people, about 50 per cent of ESB customers and 30 per cent of all adults in Ireland, do not have bank accounts. Is it fair to abolish a system that gives credit facilities to 150,000 customers? Is it fair to abolish a system that is clearly socially desirable as well as profitable? The billing system has the open support of both statutory social welfare services and health services and voluntary social services such as the St. Vincent de Paul Society and other agencies, who are aghast at the Minister's decision. Those agencies realise the impact that the decision will have on consumers.

Is it fair or just to abolish a system that supports every Irish manufacturer of electrical appliances? The ESB have a policy of supporting Irish industry to secure jobs and so on. In conclusion, I have just two questions. Is the Minister satisfied that he has not breached the Programme for Economic and Social Progress. Is he satisfied that he has not breached EC competition policy?

Tomás Mac Giolla

My original concern was with jobs in the ESB that will be affected immediately. Indeed, according to the Director, it is not known whether some shops will be shut down on Monday. However, I now find that the issue is much bigger than that. Major concerns such as Dimplex in Dundalk would not be able to survive without trade through the ESB. Other organisations that come to mind are Krupps and Wang, and the Minister for Industry and Commerce might be interested to know that they could be in grave danger. Wang have been recovering recently on the basis of the sales on television sets through the ESB system.

No electrical goods shop will sell one extra item if the ESB are put out of business because the people affected are not cash customers and they cannot get credit elsewhere — they just will not be able to buy.

I ask the Minister to defer the decision, which is to take effect from tomorrow. In other words, if the order is left in force the ESB will not be able to operate their system from Monday onwards.

I do not know whether the Minister has the legal power to take this action. Surely the sale of washing machines could not be anything other than routine business, with which the Minister is not supposed to interfere.

Mr. Byrne

I should like to be associated with the remarks of the previous two speakers. I oppose the Minister's decision to close down ESB sales.

Minister for Energy (Mr. Molloy)

Deputy Pattison and other Deputies will be aware that on 22 January 1992 I wrote to the Chairman of the ESB requesting him to make the necessary arrangements to cease the use of the ESB billing system for new appliance sales, to take effect from 1 February 1992. The contracts of existing customers for repayments of amounts due may continue until the contract is completed.

I have spent a long time considering the whole question of the ESB retailing business in the marketplace and, in particular, considering whether the use of the ESB billing system for the purpose of promoting goods sold in their shops and collecting instalment payments gives them an unfair competitive advantage in the sale of appliances. I have decided as a matter of policy that the ESB practice of making the billing system available for appliance sales is inappropriate for a semi-State body which is not subject to direct competition. The ESB have monopoly on the supply of one of our most essential services. There is no doubt that the billing system is an asset or a resource that the ESB have derived from the statutory monopoly of their core business of electricity distribution. On the other hand, appliance retailing is and always has been a competitive business. It is for that reason that the ESB should not be allowed to use the billing system outside the area of their statutory monopoly.

The Director of Consumer Affairs and Fair Trade in his May 1990 report clearly stated that his investigation raised complex questions about the dividing line between competition policy and public policy. He concluded that the question of whether a statutory monopoly should be allowed to trade in areas outside the area of statutory monopoly was a matter of public policy.

The only restriction I have placed on the ESB retailing business is that in the public interest they cannot use their billing system in promoting the sale of their goods or in collecting credit for them. I emphasise that my decision will not prevent the ESB from selling white or brown electrical goods and will not prevent them from providing alternative credit arrangements for such sales——

Tomás Mac Giolla

Of course it will. It is stopping 150,000 customers from paying by instalment.

Mr. Molloy

——as long as they are arranged at arm's-length, as is the case for any other appliance dealer. My decision only makes sure that the same ground rules apply to all electrical retailers throughout the country.

Mr. McCartan

Nonsense.

Mr. Molloy

The ESB are a very professional and competent organisation and I am sure they will be quite capable of reacting to the new competitive situation.

The issue of job losses has been raised in newspaper reports. It is illogical to suggest that ESB shops will close and that there will be subsequent job losses just because the ESB cannot use the billing system. The ESB, a large organisation, should be able to purchase goods as keenly as any of their competitors and to sell competitively without the aid of the billing system. There is no need for job losses.

(Interruptions.)

Mr. Molloy

There is nothing unusual in my decision. The separation of the ESB monopoly business from their appliance retailing business brings them into line with the arrangement which has existed for some time between Telecom Éireann and their subsidiary TEIS. In response to their request for more time to consider the consequences and options in preparation for the implementation of this change, I am extending the time allowed to 1 March 1992.

I repeat that it is now up to the ESB to adjust to the new competitive situation in which they will find themselves and to arrange for alternative credit facilities for their customers at arm's-length from their core monopolistic electricity business just like any other electrical retailer.

Tomás Mac Giolla

Thank you very much.

(Interruptions.)

An Leas-Cheann Comhairle

Apart from other considerations, it is illogical for Deputies to ask questions of the Minister and then not be prepared to listen to his reply.

Mr. O'Brien

I heard his reply.