Energy Ministers Reaffirm Their Commitment To A Competitive Single Electricty Market

17 January 2007
ENERGY MINISTERS REAFFIRM THEIR COMMITMENT TO A COMPETITIVE SINGLE ELECTRICITY MARKET
The Minister for Enterprise, Trade and Investment, Maria Eagle MP and her Irish counterpart, Noel Dempsey T.D., Minister for Communications, Marine and Natural Resources, met on Friday and reaffirmed their commitment to the introduction of the Single Electricity Market (SEM) by 1 November 2007. Both Ministers stressed the absolute necessity of ensuring that the new market is efficient, effective and fully competitive and reiterated that the interests of consumers take primacy in the move to create the Single Electricity Market.
Maria Eagle said: "The SEM is an important and groundbreaking project. It is a practical example of what can be achieved through co-operation between the two jurisdictions. It will bring two small markets together to form a larger and more competitive marketplace. In conjunction with interconnection, the all-island market project is the first logical step toward our goal of creating a regional market between the island of Ireland and Britain. This approach is fully consistent with the development of the EU internal market for electricity and natural gas and the work towards regionalisation of markets."
Minister Dempsey said: "The establishment of the new market by November is our common objective and the two Governments are fully committed to that goal. We welcome the substantial progress that has been made to date. The legislation necessary to underpin the market has already been introduced in both jurisdictions and our shared aim is to have the respective pieces of legislation enacted, North and South, in early March. This will allow the market to be fully operational by the target date of 1 November 2007. We welcome and fully support the work of Regulatory Authorities who have made significant progress on the design of the market. Their work programme is on schedule to deliver the market by the target date, working with EirGrid, SONI and industry players. Both Governments support open, transparent and independent regulation of the market and fully endorse the Regulators' Market Power Mitigation Programme which will complement policy action on dominance both North and South."
Maria Eagle continued: "We both agree that measures need to be taken to tackle the issue of dominance and transparency in both markets. Markets must be competitive to ensure that the full benefits of the SEM are passed on to consumers. I welcome the clarifications given to me by Minister Dempsey and the Chairman of the CER on the recent agreement between the ESB and the Commission for Energy Regulation on the programme of measures to reduce ESB's market share in the power generation market. We welcome the fact that the net effect of this agreement is that ESB's market share will be reduced to below 40% by 2010 in the All-Island Market. Minister Dempsey also briefed me on the Government's decision to permit ESB to build the new power station at Aghada, which is needed for urgent security of supply reasons, by 2009. This permission is subject to full delivery on the CER/ESB agreement and an additional condition requiring all electricity generated from the new plant to be ringfenced (in terms of business and licence separation conditions), and that the output from this plant is to be exclusively sold to independent suppliers (ie. suppliers other than ESB) in the SEM."
She added: "Further measures to ensure more competitive markets, North and South, will become evident over the coming months. A particularly significant and immediate development is the freeing up by ESB, with immediate effect, of an initial two serviced sites with grid and fuel connections which will offer a key incentive to new entrants to the power generation sector. These changes will have a real impact on competitiveness and will help attract new entrants into the all-island market."
Noel Dempsey said: "We want to see the new market deliver practical results for consumers North and South. There is clear consensus on the need to address structural and market issues in the electricity sectors in both jurisdictions to ensure that the SEM delivers real benefits to consumers and enterprise on the island. The Government's White Paper on Energy Policy which will be published early this year will set out our policy commitments for further structural change in the energy market in support of competition and consumer choice. The Irish White Paper will fully reflect our joint goals for the All-Island Energy Market."
He concluded that as a result of the measures being taken construction of all further power generation in Ireland for at least the next 6 years will be exclusively undertaken by independent power generation players.
He said: "We are moving toward a seamless energy market on this island. The establishment of the Single Electricity Market is a central building block in the creation of an all-island energy market. It will facilitate competition, remove market distortions and thereby minimise the wholesale cost of electricity. It will also create an attractive location in terms of scale for new electricity generation investment and improve security of supply throughout the island."
Both Ministers look forward to the commissioning by Viridian of its second 400 MW power station at Huntstown Co Dublin by November this year, which will further enhance Viridian's position in the Irish electricity market and further contribute to security of supply on the island.
Both sides will complete legal unbundling of electricity networks in 2007 in line with EU obligations. Both Ministers agreed to keep the arrangements for electricity distribution and transmission operation and assets under review in light of forthcoming proposals from the EU Commission as signalled in the "Energy Policy for Europe" published last week.
The Ministers also welcomed the continued progress made in other areas under the All-Island Energy Framework including progress towards the all-island gas market, and cooperation on renewable energy, energy efficiency and energy research.
They reaffirmed the joint commitment to set a 2020 all-island target for renewable energy contribution to electricity during the year in light of the All-Island Grid Study.
The Ministers endorsed the work being carried out by the two Transmission System Operators on the construction of a second North-South electricity interconnector no later than 2012. They emphasised the importance they attach to the early construction of the interconnector and encouraged the Transmission System Operators to ensure it is operational at the earliest possible date.
The Ministers also agreed to ensure close cooperation on the planned East/West electricity interconnector with Wales by 2012, which will underpin the development of the regional UK market with the island of Ireland.

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