Bill clears the way for competition in electricity supply for major customers

Some of the Republic's largest electricity customers will be able to choose their own supplier early in the year 2000 under a new Bill presented to the Dail yesterday by the Minister for Public Enterprise Ms O'Rourke.

Any company which uses more than four giga watts of power shall be eligible to choose their own supplier. This represents 28 per cent of the market, a figure which will rise to 32 per cent by 2003. The Bill has been introduced on the back of an EU Directive.

This means that companies like Northern Ireland Electricity and Marathon can target the ESB's top 300 hundred customers and try to supply them with cheaper electricity.

However, the Bill has sought to go some way to protect the ESB, which will be at a competitive disadvantage in the new market, by allowing the new independent regulator for the electricity industry to impose "public service obligations" on electricity providers.

In other words, because the ESB's plants will be older than the arriving competition and because it has to support certain social objectives like operating turf powered plants, all users will be charged to "equalise" the market.

Any such charges are almost certain to be passed on to consumers but the Department said last night that overall competition in the sector should help keep prices down. Ms O'Rourke has already turned down a request from the ESB for a 3 per cent price rise.

However, the Fine Gael spokesman on public enterprise Mr Ivan Yates called for greater clarity on the issue and said the levies which will be imposed because of public service obligations should be spelt out.

He said that if the ESB's loses many of its large corporate customers, it may have to re-coup this lost revenue by increasing domestic charges.

"The Government must ensure that domestic consumers will not have to bear the brunt of cheaper electricity to the corporate/commercial sector through a rebalancing of tariffs whereby householders will have to pay more," he said.

Another Bill next year will deal with how the newly-liberalised market will operate. After that the Government is expected to address the future electricity market for domestic users.

The building of a new power plant by the ESB cannot take place until the new regulator is in place. The ESB declined to comment on the Bill last night, but said it would be considering its implications.

The Electricity Regulation Bill should be enacted early in the new year and Ms O'Rourke said yesterday that the regulator, known as the Commission for Electricity Regulation, "will be independent in the performance of its functions".

Ms O'Rourke rejected a claim by Mr Yates that the new commission would not be properly accountable.

"The Commission will be required to submit accounts to the Comptroller and Auditor General and to report to a joint committee of the Oireachtas," she said. "The Commission's decisions will be subject to an independent appeals mechanism and it will be subject to the Freedom of Information Act," she added.

The new commission will have wide ranging powers under the Bill, including the power to grant licences to the ESB and other providers to build and operate generating stations.

An appeals procedure will exist for providers which are denied authorisation.

Under the Bill, the ESB shall prepare a statement setting out the charges for connection to and use of its transmission and distribution system.

According to the Department no net additional Exchequer costs will arise from the proposals as the new commission is to be fully financed by the industry.

The person to lead the new commission will be decided shortly.