The decision by electricity regulator Mr Douglas McIldoon to give the go-ahead for the extension of a natural gas pipeline to Derry and the north-west has been welcomed by local political and business leaders. Mr McIldoon recommended that existing power station, Coolkeeragh, in partnership with the ESB International, and British Gas, should be given a licence to build a £250 million (€413 million) power station and bring a gas pipeline to the region.
He said that the joint venture was the proposal which would most effectively drive prices down for the consumer. The decision means that cheaper electricity will be available to private and business consumers along the route of the gas pipeline extension, including Antrim, Ballymena, Coleraine, Limavady, and Strabane. It also creates the opportunity for a possible power link between Derry and Co Donegal. The winning consortium has said that it will do whatever is necessary to have the project operational within four years.
The Mayor of Derry, Mr Cathal Crumley, said the decision to build a new gas-fired power station at Coolkeeragh was good both for the local economy, and for the city's residents.
"It offers potential for substantial environmental improvements," Mr Crumley said, "as well as increased competitive advantage for the region, and better prospects for employment and investment in the future."
Sinn Fein Assembly member Mr Mitchel McLaughlin said the move ensured that there was now an all-Ireland dimension to energy supplies. His party colleague Mr Pat Doherty said the new power source would attract greater investment to the region.
"It is good news for employment in the north-west and also for consumers who will benefit from lower costs as well as a choice of electricity or gas energy," he said.
The announcement was welcomed by the president of the Derry Chamber of Commerce, Mr Alan McClure, who said it would increase competitiveness and reduce the burden on the ordinary household.
"The real prize is increased investment," Mr McClure said, "and a new competitive environment for the northwest."
The regulator's decision was greeted with disappointment by the two unsuccessful bidders. Viridian Power Resources (VPR), which claimed that its CHP project was the most innovative and cost-effective in terms of emissions and efficiency, and it said it was "reviewing the situation".
VPR managing director, Mr Keith Eddington, whose bid partner was French company, Elf, said there was still much negotiating to be done.
"We will look over the next few days at how best to move forward," he said.
The management at Coolkeeragh, which could have been forced to close within two years as existing contracts ran out, said consumers would benefit from cheaper electricity and increased competition.
"What we have now is a significant advance in dismantling the crippling costs of generating and transmitting electricity established at privatisation in 1992," said chief executive Mr Richard Sterling.
He said workers and management had campaigned for the last five years for a new gas-fired power station and access to a natural gas supply. They were hoping OFREG's announcement paved the way for a licence award for the gas pipeline itself.
Trade Minister Mr Reg Empey said his Department would aim to maintain the momentum by processing as quickly as possible any applications for its consent for the construction of a generating facility in the region.
"I look forward to hearing the outcome of the regulator's negotiations with the interested parties on the grant of a licence for the construction and operation of a pipeline to meet the gas requirements of the area," Sir Reg said.
The energy project will allow a sustainable electricity link into Donegal, and should extend the considerable benefits which natural gas can provide to many communities in the north and north-west. Mr McIldoon said his aim had been to promote competition and reduce prices. He said he believed electricity from the new station would be about half the cost of electricity from Northern Ireland's existing power stations.
In addition to the greater availability of natural gas, there are a number of other developments which are expected to maintain the downward pressure on prices.
NIE is freezing tariffs for the fourth year running, and, in a move which could reduce average prices by around 1.3 per cent in the period up to 2010, the final £40 million of a £60 million trust fund set aside when Northern Ireland Electricity was privatised five years ago is to be used to partially buy back the controversial generating contracts with NIGEN and Premier Power, the generating companies which own Northern Ireland's power stations.
Some £30 million is to go to NIGEN, which owns Kilroot Power Station near Carrickfergus and Power Station West in Belfast. The remaining £10 million is to go to BG International, parent company of Premier Power, which owns Ballylumford Power Station, near Larne, and which is a partner in the winning consortium for the northwest pipeline.
The generating companies themselves are also beginning to take steps to upgrade the out-of-date technology which has been a contributory factor to the region's high prices. Premier Power, for example, is to spend £200 million on a new combined cycle gas turbine at its Ballylumford power station near Larne.
The turbine will replace three existing units dating back to 1972 and is expected to reduce Ballylumford's operating costs by up to 50 per cent, as well as significantly reducing carbon dioxide and other emissions. The new plant is due to be fully operational in September 2002.
