Madam, - I refer to the article by John McManus, 'Power plant deal proves to be a goldmine' (Oct 31st).
The article is misleading and I should also point out that Mr McManus at no time spoke to anyone in the Commission for Energy Regulation.
In 2002/3 it became clear that, unless new generation plant was built in Ireland, the electricity needs of our fast-growing economy would not be met.
In fact, projections showed that by 2005/6 there would be a significant shortfall of 500MW with inevitable and unacceptable interruptions in supply to homes and businesses.
It was also clear that such plant would not be built in time without action being taken by the commission.
In January 2003, following a public consultation, the commission concluded that the only feasible means of attracting a generator to locate in Ireland at this time was to run a competition which offered a long-term contract with a recognised supplier (ESB). This could offer generators some form of financial security for a limited period of time - a factor that was preventing investors from building new plant. ESB agreed to participate in the process and prepared the contracts to be offered in the competition.
The competition was the option which provided the best chance of securing the required capacity in time and at least cost. The commission received six tenders from generators.
Bidders competed for the contract on the basis of price after having met a number of essential minimum technical, financial and regulatory requirements.
After a detailed evaluation process, Tynagh Energy Ltd and Aughinish Alumina won contracts which together met the capacity shortfall of over 500MW.
Regardless of the "surprise" at the result and far from having been a botched effort, this competition has delivered its key objective.
The construction of these plants is near completion and will ensure that electricity security of supply will be maintained.
In addition, the contracts with ESB do not cover all of the output of these stations, meaning that the remaining power from each station must be used or sold in the electricity market.
It is also noteworthy that no disappointed bidder has challenged the result.
The commercial terms of the Tyangh and Aughinish contracts remain confidential to the parties themselves, to ESB and to the commission.
Mr Mc Manus, who is not privy to this information, can have no basis for his claim that these contracts pose extra unwarranted costs to the Irish electricty customer. Indeed, the commission is satisfied that the competition successfully delivered the required capacity to meet Irish electricity customers' needs at least cost - ensuring continuity of power supply and benefiting electricity customers and the economy as a whole.
Our efforts will now continue to be focused on the future all- island single electricity market and we will not be distracted by unwarranted and inaccurate comments. - Yours etc,
EUGENE COUGHLAN, Director, Commission for Energy Regulation, Dublin 2.