ESB ESOP Trustee Limited

Extract from Statement made by the ESOP Chairman, David Beattie to the AGM of ESB, Thursday 13th September 2007.

"I think it is appropriate to acknowledge the depth of engagement we have received from management in analysing and understanding the issues regarding the internal market.

I would also wish to acknowledge the support of the Group of Unions in this regard. I am pleased to report that the Revenue Commissioners have also confirmed that they have no issues with our proposed changes.

These proposals, jointly developed by us with ESB and the Unions and which are modest in extent, are now with the other stockholders (by which I mean the Ministers) for consideration and approval.

We look forward to a constructive and rapid engagement so that they can be finalised as soon as possible. Following which it is our intention to commence the distribution of stock to the individual participants.

Short-changing ex-employees who have put in many years of service would not be in the interests of any party represented here today and I look forward to the matter being resolved in time for the distribution of stock to commence this year.

Since the end of the last financial year we have seen the publication of the Government's White Paper on Energy. We welcome many of the strategic directions proposed in the White Paper. Much of the new green policy represents badly needed direction for Ireland to meet its environmental commitments under Kyoto.

It should also offer ESB opportunity to grow and develop aspects of its business in new areas of energy technology and perhaps take the lead in some. However, we are dismayed by much of what it contains and the apparent volteface it represents from the Green Paper that immediately preceded it.

• We believe that the damage that will be caused to ESB by its proposed dismemberment and the knock-on effect on the value of its stock will be enormous and long-term, and a multiple of many times the value of the assets proposed to be expropriated.



• Our participants paid in cash and in kind for the 5% holding in a strong vibrant company and are long term investors interested in the ongoing success and strength of ESB. They are not interested in a quick buck as compensation for owning a share in a weakened company.



• We understand that current EU Commission policy does not require separation of grid assets to take place and know that it is not happening across large swathes of the EU. Indeed we believe that there is a growing recognition in the Commission, that VIU's in smaller markets need to remain intact if they are to compete against the big players. The White Paper ignores these facts.



• With the prospect of the All Island market and EU regional market, ESB will be competing with EDF, RWE etc - utilities that are not being forced to give away their transmission assets. These companies are already much bigger than ESB and yet in Ireland we propose reducing ESB at a time when its only potential for growth is in international markets.



• We have not heard any convincing argument as to how the movement of the Grid assets to EirGrid and forced disposal of sites will create greater efficiencies or reduce costs to the consumer. Indeed we believe that they will have the opposite effect as have a number of regulatory initiatives in recent years. As trustees, we are obliged to, and will, take whatever steps are necessary to protect the investment by our participants."