Energy regulator and EirGrid reach settlement

The protracted dispute between energy regulator, Mr Tom Reeves, and independent national grid operator, EirGrid was settled yesterday, hours before a High Court action on the issue was due to begin.

The two parties have now agreed terms for the transfer of the ESB's operational interest in the national electricity transmission system to EirGrid.

The arrangements are based on an accord reached by ESB and EirGrid last month over their respective roles in the planning and development of the network. Until yesterday, Mr Reeves had difficulties with certain provisions in the deal, believing that it would see some functions being duplicated, thus adding to electricity costs. Those provisions have now been removed.

A spokesman for Mr Reeves said that the Commission for Energy Regulation now looked forward to a speedy conclusion of the infrastructure agreement between EirGrid and ESB.

The High Court had been due to hear a case taken by Mr Reeves against EirGrid. The action followed EirGrid's refusal to comply with a direction he issued late last year in connection with the separation of ESB from the national grid. ESB was a notice party to the action, which was likely to have cost up to €5 million if it had gone ahead.

EirGrid had alleged that the regulator's decision of last year had breached an EU directive concerning deregulation of the electricity market. That directive had separated the operator of the transmission system - which controlled how electricity was distributed - from the owner of the system. ESB currently has a monopoly over generation and supply.

In order to comply with the EU directive the electricity market had been opened and EirGrid was established to take over the functions of the national grid. Difficulties arose between the ESB, Mr Reeves and EirGrid over control of the planning and development of the network.

EirGrid claimed it could not meet its obligations unless it had control of planning, while Mr Reeves's direction gave the ESB a significant role in planning the development of the network.

Yesterday, Mr Reeves said in a letter that he would treat the terms of a settlement handed into the court as complying with his directions. All parties are believed to have come under considerable pressure from Government to conclude a deal before reaching the court. Even though the case did not actually proceed, costs running into hundreds of thousands of euros are likely to have accrued.

Under the agreement EirGrid will recognise that the ESB will be responsible for detailed design of the national grid but EirGrid will be free to review and assess any aspect of the design. In the absence of agreement, the parties will refer any dispute to an expert.

EirGrid, which has been dormant pending the outcome of the proceedings, will now become responsible for providing electricity services to the Republic from supplies generated by the ESB and other suppliers.

The agreement finally reached allows EirGrid to undertake works that are not limited to designs necessary to bring transmission projects through the public planning process. Where detailed designs are required for such projects they will be prepared by ESB at EirGrid's request, but all dealings with the planning authorities are a matter for EirGrid.

EirGrid will be allowed to vary its development plan with the approval of the energy regulator. Goods procured by the ESB for transmission grid work will be subject to review and assessment by EirGrid whose "client engineer" will also have unrestricted access and rights of inspection on all such projects.

The final part of the agreement allows for the development of a joint dispute resolution procedure, other than arbitration, which "allow the concerns of each party to be heard and addressed".

The regulator, officials of the ESB. together with Mr Edward O'Kelly, chairman of EirGrid, and Mr Kieran O'Brien, chief executive-designate of the new company, were present in court. Both ESB and EirGrid have welcomed the resolution to the court action.