Commission for Energy Regulation

At the end of July 2003, just as this book was going to press, the Commission for Energy Regulation, the body set up to introduce competition to the Irish electricity market, issued a press release outlining the way that electricity would be sold by producers from 2005 onwards. This is the text of the release:

The Commission for Energy Regulation has announced the new wholesale trading arrangements for electricity market in Ireland, which will come into effect in 2005. According to the Commissioner for Energy Regulation, Mr Tom Reeves: "the finalisation of the new market arrangements for the buying and selling of electricity represent a fundamental change in the way electricity will be traded in Ireland and is one of the most significant milestones to date as we progress towards the full opening of the electricity market to competition in 2005"

The new system of trading in electricity will replace the transitional trading arrangements, which were put in place to open the electricity market in 2000. As electricity cannot be stored, it is bought or sold at half hourly intervals throughout the day, for each day of the year. Under the new arrangements, all generators and suppliers of electricity will be required to buy and sell electricity from a centralised wholesale electricity market, operated by EirGrid. Generators will offer their output into this market, allowing EirGrid to select the lowest offers in each period. EirGrid will also contract, on a half-hourly basis, for spare reserve capacity to maintain a secure supply.

The new market arrangements will encourage new market entrants to build new power stations in locations where generation is most needed. The prices generators will receive for electricity may vary depending on location. On the other hand, suppliers will pay a uniform wholesale price for electricity. This means that the price final customers pay will not be dependent on where they are located in the country.

These new arrangements will also facilitate a move towards an All- Island and Single European electricity market over the coming years.

Since its establishment in 1927, the ESB has been a de facto monopoly in relation to the generation, distribution, transmission and supply of electricity in Ireland. The adoption of the European Community Electricity Directive (96/92/EC) in 1996 established the legal framework for a Single European Market for Electricity and introduced competition in the Generation and Supply of electricity throughout member states for the first time. The Directive also guaranteed fair and equal access of all parties to the Electricity Networks throughout the country. In 1999, the Commission for Energy Regulation (CER) was established to introduce competition into the Irish electricity market.

Shortly after the CER was established, 28% of the electricity market here was opened to competition, which meant that the top 400 consumers of electricity were free to move from ESB and be supplied by independent suppliers. In February 2002, an additional 1,200 customers were able to choose their electricity supplier as 40% of the market was opened to competition. In February of next year, SMEs will be free to shop around for electricity when the market opens to 56%. Finally, in 2005, all customers - both domestic and commercial - will be free to choose their electricity supplier.

In tandem with this phased market opening, the markets for "green" electricity or energy generated from renewable sources such as wind and hydro, together with electricity generated by Combined Heat and Power (CHP) are currently fully open to competition. This means that every domestic and commercial customer can currently choose a green or CHP supplier.

Further information on the Trading Arrangements, including a detailed briefing note, is available on the homepage of the CER at .

In another document explaining the arrangements, the CER said that generators would be able to enter the market without having a contract with a distributor. "This will ensure, in particular, that wind generators will not be disadvantaged by the inherent variability of wind generation. Prices will be high in this market at times of peak demand and renewables will get these prices if they are generating."

This is one of almost 50 chapters and articles in the 336-page large format book, Before the Wells Run Dry. Copies of the book are available for £9.95 from Green Books.

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