Electricity firms have threatened to quit the Irish market if the grid connection system is not reformed, according to the EU Competition Commissioner, Mr Mario Monti.
Mr Monti said in a letter to the Minister for Public Enterprise, Ms O'Rourke, that a new directive on connections must be regarded as crucial to liberalising the market. The current system would not foster competition, he warned. Separately, it has emerged that an authorised officer acting for the electricity regulator, Mr Tom Reeves, staged a dawn raid in December on an ESB subsidiary during an investigation into alleged below-cost selling of power.
That allegation, by ePower, a company controlled by Esat founder Mr Denis O'Brien, is thought not to have been proved, although Mr Reeves's team found ESB Independent Energy was insufficiently ringfenced from its parent.
The new directive, proposed in December by Mr Reeves, has been opposed by the ESB.
In a submission to the commissioner last week, the State-owned company is understood to have expressed grave concern about the plan, claiming it discriminated unfairly against the ESB's legitimate interests.
Mr Monti's letter said indications from market entrants that they would quit the business if the system was not changed had to be taken seriously.
Senior ESB executives are understood to have "major" concerns that issues raised in the Monti letter may force the sale of its 70 per cent share in Synergen. That partnership with Statoil is building a new power station at Ringsend, Dublin.
This is because Ms O'Rourke sanctioned expenditure on machinery for that station on the basis that the ESB provided a written undertaking to sell its share if the Minister believed competition law made that appropriate.
Its grid connection, crucial to power supply to customers, was secured before the market was partly liberalised last February.
In addition to the Synergen venture, another group has secured agreements for "deep" connection to the Dublin grid. Viridian, the former state monopoly in Northern Ireland,
plans a plant at Huntstown in north Dublin.
An ePower-backed consortium supported by the Britishbased multinational BP has agreement for a "shallow" connection for its plant at Mulhuddart, west Dublin.
Constraints on the Dublin network prompted the transmission system operator, EirGrid, to warn last August that the addition of three large plants would increase system losses.
EirGrid is owned by ESB but will be formally separated from the State company this year. Its study on generation demand concluded that the addition of large stations in Dublin would increase costs to consumers. ESB Independent Energy subsidiary has in the High Court separately challenged a directive issued by Mr Reeves after his investigation.
He said immediate action would be necessary to protect the interests of other power suppliers because there was insufficient ring-fencing of resources and information between ESB Independent Energy and its parent.
The subsidiary claimed Mr Reeves's direction was excessive, unreasonable and would cause very serious damage to its business.
Its managing director, Mr John Keating, has accused ePower of whingeing. This was rejected yesterday by his counterpart at ePower, Mr Paul Browne.
