The process of auctioning electricity generated by the ESB to private suppliers will begin on Friday, the Commissioner for Electricity Regulation said yesterday.

Mr Tom Reeves said he was committed to moving ahead rapidly with the auction to enable supply contracts to commence on November 1st. The development is seen as crucial to the opening of the market, which was partly liberalised on February 19th.

The auction, in which the ESB is expected to participate, will enable independent suppliers who plan to produce power to enter the market before their own generation plants are built. Mr Reeves said his preference was to have completed the auction before the end of September.

Suppliers become "virtual" power producers in this process. They will sell electricity to large industrial users of power in the "eligible" market. An auction of 40 gigawatt hours of "green" or renewable energy will also take place.

The auction, which was originally scheduled to take place in May, was delayed by a High Court action earlier this month. E-Power, an electricity company 65 per cent-owned by Esat's founder, Mr Denis O'Brien, challenged Mr Reeves's introduction of a new tariff regime for the separate sale of supplementary supplies of power from the ESB to private suppliers at favourable rates.

In an affidavit, Mr Reeves argued that the continuation of that "top-up" regime - offering unlimited supply on demand - would mean there was little incentive for independent suppliers to take part in the auction.

The court found that Mr Reeves's proposal could be implemented.

Some 600 megawatts (MW) of power will be sold in one-MW tranches in the latest proposal. The original plan was to auction 400 MW initially, with the possibility of a further 200 MW becoming available after a review.

While some groups who responded to Mr Reeves's draft proposals for the auction last March complained that the reserve price for capacity was too high, this has been lowered.

Mr Reeves has set the reserve price for the capacity component of the auction at £8,760 (€11,123) per MW per calendar month - the indicative range proposed in March was £9,500£11,000 per MW per month.

The draft paper proposed an "indicative" energy price of £14.7 per megawatt-hour (MWh). Mr Reeves has now proposed a weighted average price of £16 per MWh.

The State-owned company had provided written confirmation from its Distribution and National Grid divisions that the charges were "accurately applied" and "based on reasonable forecasts", Mr Reeves said.

The commissioner has invited comments on his latest proposals, which should be submitted before the close of business next Friday.