The new supply deal between Ballylumford power station in Co Antrim and Northern Ireland Electricity (NIE) is part of the continuing transformation of the electricity market, according to Premier Power, the plant's owner. The agreement between it and the NIE was reached after months of negotiations and still has to be approved by the Competition Commission and the European Union.
But according to Mr Nigel Shaw, vice-president (UK Downstream) of BG Group, Premier's parent company, difficulties are not expected. "The agreement has received the approval of the [Northern Ireland electricity] regulator and will mean cheaper electricity for NIE customers," said Mr Shaw.
Part of the deal is the construction of a £200 million sterling (€334 million) combined-cycle gas turbine (CCGT) power station at Ballylumford, which will begin operating by the end of 2002. The project, which will create 400 construction jobs between now and its opening in December 2002, is one of the largest engineering schemes undertaken in Northern Ireland.
According to the electricity regulator, Mr Douglas McIldoon, the savings for the Northern Ireland consumer from the CCGT facility will exceed £90 million over the next 10 years.
The new arrangements have enabled Premier Power to release 220 megawatts (MW), a quarter of Ballylumford's output, to the open market. The surplus capacity can be used by large users in Northern Ireland through three second-tier suppliers: Energia, the ESB, and PowerGen.
Premier's chief executive, Mr Colin Orr Burns, said technology, market forces and legislation were driving Ireland inexorably towards an all-island electricity market.
"Such has been the transformation within utilities that in two years, with the completion of the Moyle inter connector, there will not only be an all-Ireland market, but we will also be connected to Britain and mainland Europe," said Mr Orr Burns.
The Northern Ireland Minister for Enterprise, Sir Reg Empey, said the current upgrading of the North-South electricity interconnector was due to be completed in the second half of next year, and he maintained that an all-island electricity market would enable suppliers to operate equally.
BG wants to sell electricity it generates in Northern Ireland to industrial customers in the Republic. But Mr Orr Burns said issues in the liberalisation of the market had still to be resolved. He warned businesses and consumers not to expect too much.
"The energy market in Northern Ireland is smaller than some English cities, while the energy market in the whole of Ireland is only about half the size of London's. There will be savings, but it will be very difficult to reach a level of prices that can be achieved in much larger markets," he said.
However, he said that even if these low levels were impossible to achieve, the best way to maximise savings for the consumer was to ensure a level playing field throughout the island of Ireland.
"Without this, economic distortions will not allow us to achieve the goal of low consumer prices and a robust utilities sector. The changes we have witnessed in the past few years are only the start. Wholesale changes are ahead as new players enter the market and some old players leave, and the efficient and innovative will drive out the inefficient and the reactionary," he said.
Ballylumford's generating plant was converted from oil to natural gas after Premier Power was privatised early in the 1990s.
