Eirgrid warns over costs to consumer

The addition of three new power plants in Dublin would increase costs to consumers due to a capacity imbalance on the electricity network, the ESB's national grid division has warned. This would defeat the purpose of deregulation in the industry which, in theory, is designed to reduce the cost of power.

Eirgrid, the State's transmission system operator, will be formally separated from the ESB later this year by means of a statutory instrument. The body has already signed two connection agreements with new proposed generation plants and its latest comments could mean that no plant will be connected to the system Dublin without significant modification of the network.

In a new document, Implications of Additional Generation Locating in the Dublin Area, Eirgid said the addition three 400MW generation plants to the existing network in Dublin would lead to increased system losses. Such losses would be passed on to customers in the form of higher prices, it added.

Stating that independent power producers "should take these factors into account when considering location", the document said: "Excess generation capacity in Dublin has the potential to add considerably to the price that the consumer will have to pay for electricity. Increased costs could result from greater transmission losses, constraints payments to generators and additional network developments as a result of this capacity imbalance."

It continued: "Based on the assumptions in this report, if three new large generators connect in the greater Dublin area, then generation in that area will be restricted. Significant network development would be required to reduce these limitations.

"Because of the design of the transmission system, generation is required to run (i.e. produce output) in all areas of the network to maintain system security. A minimum of generation is required to run in the north-west, the midlands and the south. This acts as a limit to the amount of power that can be generation of power in the greater Dublin area."

Eirgrid existing connection agreement is with an ESB-Statoil joint venture which plans a 400MW power station at Ringsend in Dublin, and another owned by Northern Ireland firm Viridian and building materials group CRH which plans a 270MW plant at Huntstown, north Co Dublin. CRH is seeking to significantly reduce its 50 per cent stake in the project, though a spokesman said this weekend that no deal was imminent.

While the Eirgrid document does not state explicitly that other proposed power plants will not secure connection agreements, these seem increasingly unlikely. When asked whether this was so, an Eirgrid spokesman said: "Further generation connection is likely to increase limitations on Dublin generation. It's really up to the other parties to draw their own conclusions from this."

The spokesman said the document was produced independently of the ESB and there was no suggestion that the body was seeking to reduce the scope for competition in the power market. "It is an independent document. There was no input from the ESB."