Service providers should ensure there are no barriers to entering the power market, the Minister for Public Enterprise has said.

Ms O'Rourke is understood to have been referring to the ESB and its National Grid division EirGrid, which operates the electricity distribution system. Her comments are contained in a letter to the EU Competition Commissioner, Mr Mario Monti, who has expressed serious concern about the structure of the partly deregulated market.

The Minister said additional generation capacity was needed immediately along with new entrants to stimulate competition in the partly liberalised market. Her letter said: "I firmly believe there should be no unnecessary barriers to market entry and that key service providers should be proactive in endeavouring to ensure this is the case."

These comments appeared in a response to a letter Mr Monti sent last month. He said fears that the power market would remain "anti-competitive" if new generators were prevented from entering it "have to be taken very seriously".

Ms O'Rourke told Mr Monti she had requested the electricity regulator, Mr Tom Reeves, to implement measures to improve access to the National Grid in Dublin. Such measures were required in the interests of security of supply and the promotion of competition.

But she added that her power to give general directions to Mr Reeves expired when the market was partly liberalised.

The changes to the grid access system Mr Reeves is seeking mean an additional power station could be built in Dublin. A group backed by Esat's founder, Mr Denis O'Brien, wants such a connection to the grid for its proposed plant in Mulhuddart, although its major partner, BP, is withdrawing from the project.

Mr Monti's letter said Mr Reeves's plan was crucial to fostering competition. This was needed because only one independent power group, Viridian, has secured a grid connection for a new generation station. But the ESB and the National Grid operator, EirGrid, have serious reservations about that plan. EirGrid will be formally separated from the ESB later this year.

The ESB awarded a grid connection to a new station at Ringsend, Dublin, before the market was opened last February. Constraints on the system in Dublin prompted EirGrid to warn last year that an additional plant would increase consumer power costs.

It is understood ESB executives fear it may be forced to sell its share of the Ringsend plant because of competition concerns. Ms O'Rourke sanctioned the ESB investment only after it promised to sell the interest if she said this was necessary to foster competition.

Power demand reached a new high on Tuesday when, for the first time, customers used more than 4,000 megawatts (MW). The 3,000 MW barrier was broken in 1995. The system has capacity to produce up to 4,800 MW. An EirGrid spokesman said it had "concerns" that demand might exceed planned generation by 2004.