The ESB has expressed serious concerns about the way the Northern Ireland electricity market is operating, following a decision by the authorities there to increase a levy which goes on all electricity bills.

Last week it was agreed there would be a further £16 million (€23.2 million) increase in a public service obligation (PSO) levy which is applied to all electricity bills in Northern Ireland.

The ESB claimed that in the last two years the PSO levies had increased, without consultation, five-fold from £20 million in 2003/2004 to £101 million for 2005/2006.

"These charges are levied on all customers regardless of whether they purchase their electricity from Northern Ireland Electricity (NIE) or not. The basis for establishing these levies lacks transparency," said the ESB.

The company is now active in the Northern Ireland market via its Coolkeeragh plant in Derry. It has raised the issue of the levies with the Northern Ireland energy regulator Douglas McIldoon.

One of the main contributors to the levies are old contracts between the various Northern power stations and NIE. The cost of buying out these old contracts is spread among all customers as part of a PSO. The ESB claims this process is non transparent. The excess costs should not be levied, it said yesterday. "Our customers who take power only from us have to pay for the contract buyout and other excess costs," the company said.

ESB claims calling the excess costs a "levy" and not allowing them flow into the base price of electricity is the wrong approach.

The ESB has made representations to the energy regulator and has met with Department of Trade and Investment in Northern Ireland on the issue.