Northern Ireland Electricity (NIE) expects to acquire a site for its first power station in the Republic within 12 to 18 months and says it will be able to supply electricity to customers at rates 5 per cent cheaper than the ESB.
NIE has been holding discussions with several companies in the Republic about supplying them with electricity. The new station will cost about £150 million and be situated on the east coast.
NIE, quoted as Viridian in Dublin and London, says it is awaiting Government guidelines on how the Republic's electricity market will be deregulated in 2000, before it chooses a site.
NIE will still have to pay the ESB for use of its distribution system and the company is waiting to see the cost of this when the market is fully liberalised.
"We see the Republic as a way for us to seriously grow our unregulated earnings and we have already identified several sites and now we just need to choose the right one," said Dr Patrick Haren, NIE chief executive.
He said the station would generate electricity using gas piped from Britain. The availability of the most efficient distribution system for the gas is the main criteria for choosing the site.
Dr Haren claimed the ESB would have to invest £1 billion over the next five years and this would force it to raise prices. "We will need to offer a price reduction of 5 per cent to large companies in the Republic for them to switch to us and that is our plan," said Dr Haren.
He said the move into the market in the Republic is part of an overall strategy of targeting international markets.
The company is already involved in the privatisation of a transmission network in India and is about to enter a joint venture in Australia, said Dr Haren.
He was speaking after announcing Viridian's annual results for the year to March 1998 which showed pre-tax profits increasing from £59.8 million sterling (£69 million) to £76.7 million. This is before exceptional taxation of £42.7 million incurred as part of the one-off "windfall tax" introduced by the British Chancellor, Mr Gordon Brown.
Turnover was down 11 per cent for the year to £500 million, following the imposition of new price controls by the Monopolies and Mergers Commission (MMC). The company is currently awaiting the result of a judicial review on price controls which it decided to seek when its regulator, Ofreg, overruled the findings of the MMC on prices.
Operating profit was reduced by 32 per cent to £74.3 million and earnings per share before windfall tax were 44p, compared to 21.6p the year before.
The company is recommending a 10 per cent increase in total dividend to 23p compared to 20.9p the year before. Dr Haren said 25 per cent of the company's institutional investment is now held in the Republic, a significant increase over the last five years.
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