Minister fears impact of delays in power stations

Critical planning delays in relation to two new power stations in Dublin could put the success of Government plans for an open market in electricity in jeopardy, the Minister for Public Enterprise, Ms O'Rourke warned yesterday. The power stations, to be built in Ringsend and Mulhuddart by consortiums comprising ESB and Statoil on the one hand and Viridian and CRH on the other, are seen as pivotal to the strategy involved in the independent regulation of energy production and supply for the millennium.

The two consortiums had just been informed by An Bord Pleanala that the scheduled hearings of appeals against planning permission in both cases, due to have taken place last month, would not now be heard until "either January or February next year", Ms O'Rourke told a special conference in Dublin of the State's largest users of electricity.

"It seems to me we're in a very worrying period now which could have adverse consequences so far as the open competition programme is concerned," the Minister told the conference. It meant a delay of another six months - and another two years on top of that to build the power stations. "The bright new future held out for the industry will be difficult to achieve if planning permission is not granted."

Ms O'Rourke was addressing representatives of the 320 largest users of electricity - in effect, ESB's biggest customers - which, between them, represent 28 per cent of the electricity market that will initially be open to competition, from February. The Commission for Electricity Regulation was established under new legislation enacted in July to oversee competition in the market. The industry-funded commission would have three regulatory functions, Ms O'Rourke said.

These are:

granting and supervising operating licences;

authorising the construction of generating stations;

approving charges for access to the transmission and distribution systems, as well as the provision of information in relation to both systems.

"The Electricity Regulation Act, 1999 is the first step in introducing both competition and independent regulation to the economically vital industry of electricity generation and supply," said Ms O'Rourke.

The minimum requirements for market opening in the EU Electricity Directive are set at 28 per cent on implementation on February 19th, 2000, and 33 per cent three years later in 2003. "The gradual introduction of liberalisation is the appropriate policy choice for Ireland rather than a faster or bigger opening of that market at the outset."

The forthcoming Electricity Bill, currently being drafted, should be in print by December and would address "residual matters" such as licensing of suppliers as well as transmission and distribution activities and, crucially, the establishment of an independent transmission system operator (separate from ESB).

The new regulator for the electricity industry, Mr Tom Reeves, in response to the Minister's apprehensions, said power stations did not have to be built in Dublin. The task of his office, he said, was to protect the interests of "final customers" and ensure that there was no unfair discrimination between players in the market.

The office was also charged with the promotion of competition in the generation and supply of electricity and must ensure that licence holders were capable of financing their undertakings.

A transitional regime would be necessary, he stressed, during which the Minister - following consultation with the commission - could provide that ESB might recover specified costs or revenue by means of a levy on final customers. There was also provision in the directive for derogations, where appropriate, as against State aid. In most member-states, said Mr Reeves, state aid was an issue and must be approved by DG4, the department responsible for competition.