Business&Finance: ESB ownership of network is questioned - Competition 
Authority says separation of national grid from core company does not go far 
enough. Arthur Beesley reports 
  
11/13/2000 
Irish Times 
18 
Copyright (C) 2000 Irish Times; Source: World Reporter (TM) 

The Competition Authority has questioned the ESB's ownership of the 
electricity network in the newly deregulated power market.

In a paper submitted to the Department of Public Enterprise, the body said 
the separation of the ESB's National Grid operation from the core company did 
not go far enough to ensure fair competition. 

It said arguments in favour of the ESB retaining the transmission and 
distribution system ignored the 'overwhelming conclusion' that a generation 
company which owns such assets 'will naturally favour itself' at the expense 
of customers and reliability.

The paper has not been published yet. It is believed to state, however, that 
the ESB's retention of its 'non-competitive' transmission and distribution 
assets and its 'competitive' electricity generation business was unwise from 
a competition perspective.

The National Grid, which controls when individual power stations feed 
electricity into the network, was separated from the ESB when 27 per cent of 
the market was opened last February.

In theory, this meant the ESB could not favour its own generation stations 
over more efficient competitors when deciding which plant to switch on and 
off as demand for power fluctuates.

But the authority's response to the Statutory Instrument behind the 
separation - which renamed the National Grid as Eirgrid - said more should be 
done to ensure the market operates fairly.

The paper said: 'Some argue that as long as there is an independent operator 
of the underlying transmission system, ownership of the transmission system 
can remain in the hands of an upstream generation operator.

'In accordance with this line of argument, the shift of operational control 
of electricity transmission to Eirgrid would mean that discrimination in 
dispatch [of power] and other operations would not be possible. However, the 
Competition Authority considers that this argument ignores the overwhelming 
conclusion that the generation company that owns the transmission lines will 
naturally favour itself.'

The Statutory Instrument followed complex talks, which led to an agreement 
between the ESB, its trade unions and the Minister for Public Enterprise, Ms 
O'Rourke.

When Eirgrid was formed, the ESB retained ownership and responsibility to 
develop and maintain the high-voltage national transmission system and the 
low-voltage local distribution network.

The authority says these, too, should be separated from the ESB to ensure the 
competitive market functions fairly, according to a person familiar with its 
paper.

This would ensure equal access to the power network and an objective, 
transparent, non-discriminatory treatment of all electricity generators in 
the market, it said.

The paper argues the ESB has an incentive to allocate as many costs as 
possible to the operation of the transmission and distribution system. 

Folder Name: Utilities, Electric: Deregulation 
Relevance Score on Scale of 100: 100

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