First power auction delivers no surprises

Two independently-owned electricity companies and the ESB have secured rights to supply some 374 megawatts (MW) of power to industrial…

Two independently-owned electricity companies and the ESB have secured rights to supply some 374 megawatts (MW) of power to industrial users in an auction of power by the Commissioner for Electricity Regulation, Mr Tom Reeves.

The development is crucial to the opening of the market, which was partly liberalised last February. Only industrial users of electricity will benefit from the price reductions because, for now, deregulation is limited to the "eligible" market.

While ePower and Viridian Energy do not yet generate their own electricity in the Republic, the power secured in the auction can be sold on to customers. They thus become "virtual" producers of power. This means they will be able to create a market before their own power generation plants are built. Mr Reeves did not reveal the breakdown of power secured by the groups.

Separately, he said ePower and the ESB had secured rights to supply 40 gigawatts of wind-generated - or renewable - power.

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EPower is 65 per cent-owned by Esat Telecom's founder, Mr Denis O'Brien. The company plans to construct a power plant at Mulhuddart, west Dublin, in a joint venture with BP Amoco and Ireland Power, a consortium led by a US businessman, Mr Larry Thomas. It has challenged decisions by Mr Reeves in the courts and was refused planning permission to develop a power plant near Navan, Co Meath.

Viridian is the largest quoted company in Northern Ireland. The former state-owned monopoly in the North plans to construct a power plant at Huntstown, north Dublin, although its joint venture partner CRH wants to sell most of its shareholding in the project.

Because power will be sold to the independent suppliers at reduced rates, the ESB claims the auction will cost it some £20 million (€25 million). But the company was entitled to participate in the auction and was widely expected to be among the successful bidders.

Mr Reeves will auction a further 126 MW next Friday. An additional 100 MW, bringing the total auctioned to 600 MW, will be sold a week later.

The auction was originally planned to take place in May.

Unsuccessful bidders included Bord Gais Eireann, E.Co - The Electricity Company, GV Power, Fingleton White & Co and Cogen. Bord Gais had indicated previously it would not participate in the auction.

The process was overseen by auditors represented by BDO Simpson Xavier.

Arthur Beesley

Arthur Beesley

Arthur Beesley is Current Affairs Editor of The Irish Times