Battle for national grid to cost the State €5m

The legal fees faced by three State agencies battling for control of the national electricity grid will reach about €5 million, according to informed estimates.

The High Court case taken by the national grid company, Eirgrid, against the energy regulator, Mr Tom Reeves, is listed for two weeks from October 15th. The ESB, from which EirGrid is being separated, is a notice party in the case.

EirGrid wants the court to reverse a direction by Mr Reeves on the terms of the transfer and infrastructural agreements that will govern its separation from the ESB. The ESB is complying with the direction, although there are indications that it was not altogether happy with its terms.

Affidavits have been served in advance of the case and the three State agencies have retained the services of a number of barristers and solicitors. Mr Michael Collins SC and McCann FitzGerald are acting for EirGrid, with a junior counsel. Mr Richard Nesbitt SC and solicitors Mason Hayes & Curran are acting for Mr Reeves with junior counsel. The ESB has also retained senior and junior counsel.

While the Taxing Master will allocate costs, one individual familiar with the case said legal fees were likely to reach €5 million if the case was not settled before it reached court.

Such expenditure by State entities in what has been described as a "turf war" is regarded as "disgraceful" by certain individuals familiar with the case.

Because EirGrid and Mr Reeves's office are funded from electricity revenues, the legal fees will ultimately be paid by power users. The ESB is believed to have sought a 15 per cent rise in power prices from next January, and a decision by Mr Reeves is expected next month.

The direction at the centre of the case followed an intervention by Mr Reeves in 2001 after the grid company failed to reach an infrastructure agreement with the ESB.

While a Statutory Instrument of December 20th 2000 dictates that the ESB retains ownership of the grid assets, the independent entity EirGrid is responsible for its operation.

Such a separation is required to ensure fair competition in the liberalised electricity market by preventing manipulation of the grid by the dominant power producer.

However, EirGrid has claimed that Mr Reeves's direction was anti-competitive and unlawful and would allow the ESB to control its competitors' access to the market. It wants responsibility for functions relating to safety and the detailed design of the transmission grid.

Mr Reeves' office declined to comment.

EirGrid said: "EirGrid continues to work with all parties in this matter in order to achieve a mutually satisfactory resolution to what it considers to be a mismatch between its obligations under the Statutory Instrument and the Commissioner for Energy Regulation's direction. However, it also accepts that in the current regulatory environment, there may be circumstances where issues are best decided by the courts."

In a similar case, Aer Rianta is challenging the aviation regulator, Mr Bill Prasifka over a determination on airport landing charges.

Mr Prasifka's office is believed to have allocated €1.75 million for its defence of the action. This is in addition to ordinary expenditure this year of €2 million.