Call for review of electricity market

The Competition Authority has called for a more detailed review of the Irish electricity market before any steps are taken to liberalise it in compliance with EU requirements.

The introduction of competition is desirable as it is likely to benefit the economy, the authority said in a discussion paper on the industry's future. "The essential message is that liberalisation of the industry could potentially have very substantial positive effects and so it is important to get it right," it said.

The report is an amended version of a report submitted in response to a consultation paper published by the Department of Public Enterprise in May.

While welcoming the Department's paper, the authority said it was extremely brief and did not deal with some crucial issues at any great length.

"Indeed a number of key issues are presented as having been already decided, thus greatly reducing the scope for comment and consultation," the authority said.

The consultation paper provides for the ESB to remain a vertically-integrated company while maintaining separate accounts for the generation, transmission, distribution and supply elements of its business.

The Competition Authority believes the question of vertical separation of the ESB, which would involve establishing separate companies which would own and operate the transmission and distribution networks, deserves more detailed debate.

It says the primary issue is whether vertical separation would lead to higher or lower electricity prices. "It would have been preferable to have undertaken a detailed review of the costs of both options before taking a final decision on the issue of whether the ESB should remain vertically integrated," it says.

The Competition Authority also believes that consideration should be given to limiting the amount of new generating capacity which could be built by the ESB for a period of time to allow new competitors to get into the market.

It calls for a more detailed analysis of the relative merits of the single buyer and third-party access models for supplying power to customers.

The Department's consultation paper opts for the single buyer option, where the successor to the state electricity monopoly is the sole buyer of power from the generators.