Electricity charges in the Republic are too low to stimulate new competition in the market while the cost of electricity generation in the North is off-putting to new entrants, key government officials have told an all-island energy conference in Belfast.
Mr Martin Brennan, assistant secretary at the Department of Public Enterprise, said both Northern Ireland and the Republic faced specific problems with regards to energy. But they also share a common requirement - competitively priced electricity.
"Both the Minister for Public Enterprise in the Republic, Ms O'Rourke and the Minister of Enterprise, Trade and Investment in the North, Sir Reg Empey, see significant benefits for business and consumers in the convergence of the two markets.
"An all-island energy market is a practical and economically desirable outcome," Mr Brennan said. He said the deregulation of the energy market in the South and the North presented both governments with an opportunity to establish a new structure, but significant issues had firstly to be addressed.
"The existing markets in Northern Ireland and the Republic are too small to attract real competition and to encourage new entrants to invest in the market. Prices in the South are too low, while prices in the North are too high. "One market would certainly stimulate more competition but the issue is how far do we need to integrate the existing markets to start the process," Mr Brennan said.
He said a major North/South study was currently being carried out by Edinburgh-based IPA Energy Consulting on the present status of the market and possible options for the future.
The initial findings of this study were being debated at the energy conference, which continues in Belfast today. Among the issues raised is the question of different transmission operators on each side of the Border, the fact that both operate in different regulatory structures and that current pricing structures are dramatically different in both markets.
Mr Jim McKeown, head of energy with the Department of Enterprise, Trade and Investment in Northern Ireland, said issues such as the current energy infrastructure on the island must be closely examined.
"Both governments are working together to explore the opportunities. We are looking at the alternatives for the future and we would hope that the consultants would deliver the report that will include recommendations, by the end of the summer. "Electricity costs are a major issue in Northern Ireland."
