Viridian queries regulator's electricity 'safety net' plan

Viridian, the electricity group, has questioned the need for a contingency plan for the electricity sector as proposed by the energy regulator Mr Tom Reeves.

Mr Reeves and ESB National Grid have discussed a plan called "Fast Build", which would allow ESB National Grid to step into the electricity market on a temporary basis.

Under the plan, ESB National Grid, which runs the electricity transmission system, would be able to acquire sites, apply for planning permission and ultimately operate temporary or "peaking" power stations.

This would only happen if the private sector could not provide enough capacity.

The temporary stations would later be passed on to the private sector by ESB National Grid.

Described by the Commission for Energy Regulation (CER), which is led by Mr Reeves, as a form of safety net, the plan would only be used if the whole electricity system was stretched and new capacity was needed quickly.

However, Mr Harry McCracken, group managing director, Viridian Power and Energy, said it was "damaging and unnecessary" for the CER to be advancing such a "public sector solution".

"Such a step would signal further market failure. It projects a dangerous tendency for regulatory intervention to new investors.

"New investors need to know that the market will be allowed to work and will not be subject to frequent interference on the assumption that the market is likely to fail," he said.

"CER may be promoting this idea as a safety net measure, but we would suggest they should be focused on saying how they intend to bring forward a market that ensures private sector investment," he added.

"We do not believe that ESB National Grid should be engaged in building power plants," he said.

He said Viridian was keen to proceed with the second phase of its Huntstown plant in north Co Dublin.

The major problem was getting guaranteed access to the electricity system for the station's output.

He said the plant could be built and commissioned in time to meet the forecasted deficits in 2007.