Bord Gáis is in discussions with several companies in a bid to find a new source of electricity ahead of full market liberalisation in February, it has emerged. Emmet Oliver reports.
The company has held discussions with various electricity providers North and South and contacts are continuing, it is understood. The company has a preference for purchasing a stake in an existing power station and believes it could fund such a deal from its own balance sheet.
Among the companies it has spoken to are Viridian and US company AES Electric, it is understood. A stake in the Huntstown plant in north Co Dublin would make the most sense for Bord Gáis, but the plant's owner, Viridian, has so far declined to agree a deal.
Bord Gáis initially entered talks in 2001 with Viridian, but these came to nothing. However, talks in more recent times have also occurred, it is believed.
Bord Gáis controls 17 per cent of the current eligible market but, in common with other providers, it needs to access new sources of electricity. Last year, it lost out in the competition to build the State's two latest power stations.
Under chief executive Mr Gerry Walsh the company is determined to become a major electricity supplier. But as things stand, the company is unlikely to have an offering for domestic customers in the short term at least.
The entire electricity market is due to open to full competition on February 19th but concerns are rising that ESB may be the only firm making a large-scale offering to domestic customers.
Its main Irish rival, Viridian, is not expected to enter the domestic market in the short term. Wind energy firm Airtricity, however, will be able to supply some domestic customers.
In an attempt to prompt some competition, energy regulator Mr Tom Reeves is expected to auction off some power next year for the specific purpose of supplying domestic customers.
Bord Gáis is the most likely entrant into the domestic market because it has half a million gas customers. This gives it an advantage over other entrants that do not have a database of customers or an established billing system.
The company currently buys power via other generators and resells it to commercial and industrial customers. This is done through a process known as the Virtual Independent Power Producer (VIPP). This effectively involves power, usually generated by the ESB, being auctioned off to other suppliers who can then sell this power on to their customers.
Bord Gáis has managed to secure large amounts of power through this process, but the VIPP auctioning system is set to end in the next few years and the company is anxious to acquire its own generating capability. It is able to supply its existing customers, but as with other companies, supplying new customers has started to become a challenge.
In his 2003 annual report Mr Walsh outlined the reasons for chasing market share in the electricity business. "We believe that, by broadening our energy supply base, we will offset market share loss in the liberalising gas supply market. Therefore we aim to continue developing our electricity business and to expand in accordance with market deregulation".
