ePower may challenge regulator's gas allocation

E-Power has not yet decided whether to challenge the electricity regulator legally over his allocation of gas to power companies, it is understood.

The electricity company, 70 per cent-owned by Esat's founder Mr Denis O'Brien, failed this week to secure gas in a competition managed by the regulator, Mr Tom Reeves.

It has challenged a decision of Mr Reeves once before.

The regulator's competition was necessary because capacity on Bord Gais's network was limited and power plants consume heavy quantities of gas. The current network has enough gas to supply only two new large-scale power stations.

Mr Reeves allocated gas to large projects in Dublin controlled by the ESB, Northern Ireland firm Viridian and the car-maker Rolls Royce, which plans a small-scale project at Dungarvan, Co Waterford.

There were three phases in the allocation process, which was audited by a former secretary general of the Department of Public Enterprise, Mr John Loughry.

Informed people said Mr Reeves's initial ranking assessed which three projects would be first to bring their power to the market.

In the following phase it is believed e-Power moved up a place in the ranking. This was when Mr Reeves considered which groups would promote competition in the newly liberalised market.

But e-Power fell back a place in the final phase - when Mr Reeves re-ranked the groups again according to when they would feed power into the market. This was due to a possible electricity shortage in 2002, it is understood.

E-Power's spokeswoman said Mr Reeves had yet to explain why it had failed to secure gas in the competition, although the parties met this week.

This was the second major setback to Mr O'Brien's project, which was refused planning permission earlier this year to develop a plant at Navan, Co Meath.

It later joined a partnership with BP Amoco and a US businessman, Mr Larry Thomas, which plans a generation plant at Mulhuddart, west Dublin. Neither BP nor Mr Thomas has commented on the allocation.