EPower, the electricity company backed by Esat founder Mr Denis O'Brien has secured leave to seek judicial review of a new system for the sale of surplus ESB power to independent suppliers.
This follows publication earlier this week of a decision paper on the trading of top-up supplies by the Commissioner for Electricity Regulation, Mr Tom Reeves.
A summary paper outlining Mr Reeves's original proposal to change the system was challenged last week by ePower. But the company told the High Court yesterday that its original action - the first against the commissioner since the power market was partly liberalised last February - was no longer valid because the commissioner wanted to implement the later plan.
Describing the decision paper as "essentially the same but with nuances", Mr Paul Sreenan SC, for ePower, said his client still believed Mr Reeves's plan to limit the amount of top-up available and apply "secondary" rates for power outside those limits was ultra vires.
The new system was due to be introduced from midnight last night, though Mr Justice Murphy agreed that the change could be postponed until a hearing on the case next Monday. Mr Richard Nesbitt SC, for the commissioner, said there was no objection to this.
Counsel for the ESB, Mr Mel Christle SC, sought a "fortified undertaking" for damages from ePower should its application for judicial review prove unsuccessful, although Mr Justice Murphy said the court was not empowered to do this before a hearing of the case. The ESB was losing money with the current tariffs and the expense would be passed on to its "ordinary franchise customers", Mr Christle said.
"That price is 20 per cent below the actual cost to the ESB of generating electricity and if the board has to supply all of the private supply companies with power the ordinary consumer will end up subsidising the private suppliers."
Mr Sreenan said ePower was dependent on top-up power from the ESB to supply its own customers because its generation plant would not be operational until November 2002. This was the company's sole source of power. "The effect of the said decision, should it take effect from September 1st, would be that the applicants [ePower] would incur significant commercial losses that it could not sustain on an ongoing basis."
The commissioner's position, as outlined in his decision paper, is that the top-up regime was never intended to provide "unlimited" power on demand to the independent sector. The regime, his paper said, was intended only to provide a back-up supply to primary sources of generation.
This was also stated in a "letter of clarification" from the Department of Public Enterprise. The letter said: "It would be reasonable to restrict ESB's obligation to provide electricity at the prescribed top-up prices to energy shortfalls that might be expected to arise."
Mr Reeves wants to limit the power available at top-up rates to 5 per cent of an independent operator's supply contracts, although this will not apply to suppliers of wind-produced electricity. For power exceeding the 5 per cent entitlement, Mr Reeves wants to apply a "secondary" price calculated, at different times, according to multipliers of the standard top-up rate.
Mr Sreenan said this effectively constituted a change to top-up prices.
"No overwhelming reason demonstrating why top-up prices should change appears on the face of the respondent's [Mr Reeves's] decision of August 29th."
The decision paper said the commissioner was finalising discussions with the ESB on the auction of virtual capacity on its network. "These schemes will provide independent suppliers with an opportunity to buy electricity from ESB at a pre-determined base price, up to a limit."
