The electricity market is in a transitional phase and further liberalisation will be needed, the Taoiseach has said.

Speaking at the official opening of the Huntstown power station in north Co Dublin, Mr Ahern said 40 per cent of the market was already open, but this would rise to 56 per cent by 2004.

"We need to be mindful of the fact that the emerging electricity market is in a transitional phase. It is moving from a de facto monopoly with a single player to an open market with multiple players," he said.

The €250 million power station is owned by the Northern Ireland electricity group, Viridian. Its managing director Mr Harry McCracken sent a strong signal at the opening that the company intended to expand its interests in the Republic. "We didn't come into the market to build a power station; we came to build a significant business," he said.

He added the company hoped to develop a second generation plant at Huntstown. "We enjoyed this project so much that we would love to have a crack at another one."

While some electricity operators are impatient at the pace of liberalisation, Mr Ahern said the approach was the right one.

"Bearing in mind the relatively long lead-in time for investment and the fact our electricity system is relatively small, the incremental approach to market opening is, unquestionably, the appropriate policy choice for Ireland."

He said the Commission for Energy Regulation was working on set of "market principles" which would underpin the full liberalised market after February 19th, 2005. He said new trading arrangements would encourage competition and exert downward pressure on prices. "The new arrangements must also be able to facilitate participation from Northern Ireland," he added.