A controversial new €250 million ESB power plant for Co Cork has received planning permission from Cork County Council.

The plant at Aghada, Co Cork, could supply between 380 and 450 megawatts of power to the national grid, but ESB has yet to seek authorisation from the energy regulator, Mr Tom Reeves, or approval from the Minister for Communications, Mr Dempsey.

The company has an existing plant at the site. It is unclear whether this will be knocked down and replaced or whether ESB will operate both plants on the site.

A few months ago Mr Reeves wrote to the former Minister for Communications, Mr Ahern, warning that allowing the new Aghada plant to proceed could have negative implications for competition in the market.

Mr Reeves told the Minister new entrants might be reluctant to enter the market with ESB controlling so many existing power station sites.

However, it is understood there is little Mr Reeves could do to stop the station proceeding. While he has the power to withhold authorisations, this could only be done if the plant was a danger to the stability of the electricity network or the backers were not "fit and proper" individuals.

Viridian plc, which owns the Huntstown plant in north Co Dublin, last night expressed serious concern at the ESB's move.

"As far as we are concerned this is only going to reinforce the dominance of the ESB in the market. It is a retrograde step. Sites like this should be open to competition. Other generators would be interested in the chance to make a project like this work," said Mr David de Casseres, managing director of Huntstown Power, a Viridian subsidiary.

He said the ESB was meant to only hold 60 per cent of the market, yet the Aghada move could end up leaving the company more dominant.

However, the ESB has rejected this, pointing out that growth in the electricity market generally should leave the company holding about a 60 per cent market share.

The company's chief executive, Mr Padraig McManus, has spoken on several occasions about the company remaining static in the Republic and growing strongly overseas through its subsidiary ESB International.

This company is a direct shareholder in several power stations outside the Republic, but also holds several lucrative consultancy contracts throughout the world.

Staff and management at ESB are currently trying to agree a change programme for the company. These negotiations, involving Mr Peter Cassells, have been stalled over a range of issues.

Foremost among these is the company's €500 million pension deficit. This deficit will have to be plugged by higher contributions by management and/or staff.

But the scale of the deficit means any pay increases for staff could make the situation worse. Consequently some union negotiators have been pushing for lump-sum payments.