The energy regulators from the Republic and Northern Ireland took a major step towards developing an all-island market when they signed a memorandum of understanding yesterday.

Mr Tom Reeves, the Republic's commissioner for energy regulation, and Mr Douglas McIldoon, chairman of the North's Authority for Energy Regulation, signed the document, which establishes how all-island electricity issues should be handled.

The areas it covers include harmonisation of licensing arrangements, all-island transmission planning and renewable energy.

According to the Republic's Commission for Energy Regulation (CER), the two regulators have agreed to a programme that will deliver an all-island electricity market by July 2007.

The CER said the two regulators would put in place a management structure to manage the programme and share costs. Joint consultation on the key area of wholesale trading take place before the end of the year.

The Minister for Communications, Mr Ahern, and Northern Ireland's Economy Minister, Mr Barry Gardiner, both welcomed the initiative yesterday.