The electricity regulator, Mr Tom Reeves, has taken High Court action to enforce a direction on EirGrid, the operator of the National Grid.
The action is the first to be taken by Mr Reeves since the market was opened in 2000 and marks a significant deterioration in EirGrid's relationship with his office. It also sets the grid company's board on a collision course with the Minister for Public Enterprise, Ms O'Rourke, who is thought to have supported the regulator's stance.
Mr Reeves is understood to have warned EirGrid last month that he would seek a High Court order for the direction to be carried out. The case follows months of disagreement over EirGrid's separation from the ESB, which is required to guarantee fair operation of the electricity market.
It centres on a direction which gives EirGrid control over long-term planning of the electricity network, but gives the ESB control over "detailed planning". ESB owns the network, but EirGrid controls the flow of power through it to ensure fair competition to independent producers of electricity.
The regulator is understood to have accused EirGrid's chairman, Prof Eddie O'Kelly, of being "disingenuous" in claiming that the views of its board had been "generally ignored" in the process of its separation from the ESB.
His spokesman said: "Enforcement proceedings in the High Court have been initiated by the Commission for Electricity Regulation against EirGrid because of EirGrid's failure to comply with the direction of November 2nd, 2000."
Mr Reeves intervened last year after a deadline for the conclusion of an infrastructure agreement between EirGrid and the ESB was passed last June. The deadline was outlined in a Statutory Instrument passed in 2000. Mr Reeves' spokesman said the action was being taken under Regulation 30 of the Statutory Instrument, which empowers him to go to the High Court for orders imposing such direction. It is understood that the ESB is a notice party to the proceedings. The State company made no comment on the case.
EirGrid's directors have argued they cannot fulfil their statutory remit without control over detailed planning. But Mr Reeves' office is understood to argue that such a structure would not give the ESB incentives to reduce the cost of a €635 million investment programme needed to upgrade the national electricity system by 2005.
Mr Reeves intervened after the ESB and EirGrid failed to reach agreement in what were described as tough negotiations. EirGrid's stance has been supported by the Competition Authority.
The firm has said it is acting in its own best interests and those of customers, and is not prepared to be exposed to "liabilities" that might flow through accepting the direction. An EirGrid spokesman said: "Nothing has changed as far as we are concerned. We feel that we cannot comply with sections of the direction that was issued by the regulator."
