Competition in domestic electricity still years off

Real competition in the domestic electricity market is unlikely to take place for another two to three years, the energy regulator has admitted.

The Commission for Energy Regulation (CER), which regulates the electricity and gas sectors, has blamed the lack of generation capacity for the problems in the market.

The CER is chaired by Tom Reeves. The two other commissioners are former telecoms regulator Regina Finn and former senior Department of Finance official Michael Tutty.

In its current newsletter, the CER says the opening up of the market on February 19th represented the "culmination of almost five years of business planning and technical design", but competition for domestic customers is not likely in the short term.

It says that, for the moment, suppliers will want to concentrate on industrial customers.

"At present, it is likely that independent suppliers will concentrate on building up a solid customer base of business customers. CER believes that the focus will then switch to targeting domestic customers," the newsletter states.

It adds: "Also due to the limited amount of generation available for the next two to three years, there may be a constraint on the ability of many independents to build up a large portfolio of domestic customers."

A spokesman for the CER said that, while two new power plants were being built - by Aughinish Alumina and Tynagh Energy - their output would be sold to ESB under an agreement reached two years ago. He said there would be little spare capacity available for the domestic sector probably until Viridian PLC built its second Huntstown gas-fired plant in north Co Dublin.

So far, major players in the Irish electricity market, such as Viridian and Bord Gáis, have steered clear of the domestic sector. Privately, both companies point out that servicing this market is highly expensive and the returns are small compared to big corporate accounts.

Nevertheless, Bord Gáis has stated publicly its desire to enter the domestic market. With more than half a million natural gas domestic customers, it is probably in the best position to make an offer to householders.

Its major problem is acquiring additional sources of power. It has none of its own generation and sources most of its power via a public auction process from the ESB. It supplements this with power from the interconnector with Northern Ireland.

Bord Gáis suffered a serious setback two years ago when it lost the competition to build the Republic's two newest power plants. The winners of this competition were Aughinish and Tynagh.

The only provider to offer domestic customers a product so far is the wind energy group Airtricity.