The Government has warned the ESB that it will not approve the company's ambitious US expansion plan, if the Irish electricity market will suffer as a consequence.
Documents released under the Freedom of Information act show that the Government was unhappy at the way the ESB announced last November that it beat 10 other groups to be selected as the preferred bidder to run the US SeTrans Regional Transmission Organisation .
Referring to the reporting of the project, a senior official at the Department, wrote to the ESB chairman, Mr Tadhg O'Donoghue, to express disappointment at the manner in which the announcement was made,reminding him that both sides wished to have a relationship based on "no surprises".
The letter also reminds the ESB that any project would have to be approved by the Government which would "have to consider any potential negative impact on the delivery of the critical domestic agenda".
Mr O'Donoghue subsequently issued an apology to Energy Minister Mr Dermot Ahern and said that steps had been taken to avoid a recurrence.
The ESB announced that it had been selected as the preferred bidder to run the SeTrans Regional Transmission Organisation which supplies Georgia, Alabama, Louisiana, parts of Mississippi, Arkansas, South Carolina, Texas and Florida last On November 1st, 2002.
But departmental documents reveal that 11 days later ESB International chief executive, Mr Kieran O'Brien and managing director, Mr Don Moore, told senior officials at the Irish Embassy in Washington, that the publicity surrounding the electricity contract had been "somewhat overstated".
They explained that their immediate priority was to ensure the deal was "solid" at a meeting with the US Federal Electricity Regulatory Commission (FERC).
The ESBI executives said the company was at the start of a "lengthy and complex process, perhaps lasting 10 months, in which both the individual states of Georgia, Alabama, Florida, Mississippi, Texas and South Carolina and the federal regulator had still to finalise a detailed agreement," according to a note of this meeting.
They also believed the US Congress would have an important scrutinising role to play in the months ahead.
There were also doubts about the involvement of Eirgrid - the national grid operator - which the ESB listed as one of its partners.
In the days after the November 1st announcement, EirGrid company secretary, Ms Niamh Cahill, confirmed to the Electricity Regulation Division at the Department, that it had not entered into any commitment in relation to the SeTrans bid.
"There is still no contract in place and the overall scope of the project is still unclear," she said.
Yesterday a spokesman told The Irish Times, negotiations have got under way since December and the project, which could be signed in November 2003 at the earliest, will require a total investment of $200 million (€185.6 million).
"We are making very good progress in these complex negotiations and we have the full support of the Government," he said.
