Tom Reeves is a busy man. As Commissioner for Electricity Regulation, he faces a big deadline next week, when a 28 per cent tranche of the electricity market is opened up to competition.

"We're like the dogs in Shelbourne Park, ready to go from the traps," he says. "They're all lining up and it'll be interesting to see what happens."

Appointed last September, the former assistant secretary with responsibility for the energy sector at the Department of Public Enterprise is under no illusions about the challenges posed by liberalisation.

"There's about 800 things to be done to get this market working," he says. "My job is to protect the interest of consumers. By promoting competition in the market, the consumer gets a better chance."

But domestic consumers will not benefit from deregulation in the first instance. Given economies of scale, the liberalised share of the market will be open only to the "eligible" market of 320-350 industrial users of power. "They're entitled from February 19th to buy electricity from whoever they want," says Mr Reeves.

Here, Mr Reeves faces a problem. While about 10 commercial groups have expressed interest in building power stations, none is likely to come on stream until 2002. To get around this, Mr Reeves proposes auctioning off capacity on the ESB network to "virtual" suppliers, who will sell it on to commercial users. "We've asked the ESB to release some capacity for an interim period and they've been very forthcoming," he says.

Though margins in this business will be limited, entry to the "virtual market" will give those proposing to build generating plants with an opportunity to gain market share.

While Mr Reeves's proposals for this part of the market have yet to be finalised, he is likely to release about 400 megawatts (MW) of capacity - enough to supply about 14 per cent of the power market - for auction before the end of next week. "If we sold 400 MW we'd be doing well," he says.

Mr Reeves provided an indication of his thinking last week when he decided to allocate capacity on the north-south interconnector to independent suppliers on a "first-come, first-served" basis from February 19th to March 31st. He says he is "very keen" on north-south trade. Some 100 MW of capacity will be available for export from the North to the Republic and 30 MW will be available for export in the opposite direction.

Fixed fees of £5 sterling (€8.14) per MW each day will apply to capacity imported from the North and €8.25 per MW each day will apply to power exported from the Republic.

Applications will be scaled down pro rata in the case of over-subscription. Capacity for the year after March 31st will be auctioned by Mr Reeves before April 1st in 1 MW tranches with a reserve price of €165 per MW in each month. Only one round of bidding will be held.

"The bidder paying the highest price will be allocated all the capacity bid for, and so on until all the available capacity is exhausted. No one bidder can bid for more than 40 per cent of all available capacity in any one direction," said Mr Reeves's document. Capacity rights will be acquired on a "take or pay" basis and secondary trading in acquired rights will be allowed.

Mr Reeves accepts that it is a complicated business. Another matter will be the minutiae of creating pricing structures in the market for surplus power, where up to 96 different prices will apply to the sale of "top-up" and "spill" capacity in half-hour slots on the 24-hour clock.

Further issues for resolution include the question of a trading and settlement system for power. Ultimately, Mr Reeves favours the development of a sophisticated market, with futures and forward markets similar to those in the Nordic states.

He agrees with proposals to establish the ESB's grid management functions independently of the State-owned company. "I'm very much in favour of an independent TSO [Transmission System Operator]. I think it gives the right signals to everybody."

While the ESB has argued that its internal "Chinese walls" would ensure that it would not exploit its position as the dominant power producer, groups proposing to enter the market disagree. A Government decision on this is expected shortly.

Perhaps of greater sensitivity will be Mr Reeves's allocation of capacity on an energy network crucial to the supply of electricity - gas. In short, Bord Gais Eireann (BGE) will not have capacity to supply each of the proposed power plants - about 10 at present - so Mr Reeves has been asked to allocate gas supply capacity to the consortiums.

With a combined capacity of about 4,000 MW, geared to an 800 MW tranche of the market, no one in the industry suggests that all the proposed stations will go ahead. This means the fate of many of the proposals - at least in the short- to medium-term - will rest with Mr Reeves, who plans to make his decision in April. However, legislation on this question has yet to be finalised.

Of course those seeking to enter the market will be keenly aware of proposals by Premier Transco, a consortium owned by British Gas and US energy group KeySpan, to spend some £120 million developing a natural gas interconnection with the North. Transco has said it needs at least one power station to make its project viable.

Industry sources suggest that Mr Reeves could choose to allocate gas to three power projects with those who fail to secure BGE gas opting to do business with Transco, which has initiated an "open-season" process to assess demand for its product.

This question of exactly how many power stations ultimately come on stream will depend on how much of the market is opened up to competition. Though an additional 5 per cent will be freed in 2002, Mr Reeves - in common with other industry observers - does not rule out the possibility of further capacity being opened up to competition.

"The Minister sets the policies, so we work within that framework. Twenty-eight per cent of the market will be opened up after February 19th. The Government hasn't yet gone beyond it, but it may do - who knows?"