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Regional electricity market move to impact on ESB

A DIRECTIVE is expected to be voted through today in the EU Parliament which will create a regional electricity market taking in Ireland and Britain.

The move will have far-reaching consequences for the ESB, with some analysts pointing out that it could mean the State electricity company would be gobbled up by British-based rivals if it was to be privatised.

The creation of a so-called British Isles regional market will also undermine arguments for the breaking up of the ESB into separate companies, as the ESB in its present form will account for just 6pc of the market on these islands.

Under the new Electricity Director, eight regional markets will be created as a stepping stone to a fully integrated European single electricity market.

The directive contains measures to deal with market dominance.

However, the MEP who sponsored the legislation through the EU parliament, Claude Turmes, told the Irish Independent yesterday that Ireland was not the target of these provisions.

The EU is prepared to subsidise the cost of a new interconnector for trading electricity between Britain and Ireland.

M Turmes said interconnection was the best way to promote a regional market between the two islands.

It would give Ireland a good opportunity to exploit wind energy by exporting some of it to the UK.

The regional market is expected to be created over the next three to four years, through a new interconnector between the East coast of Ireland and the coast of Wales.

M Turmes acknowledged that the creation of a regional market would mean the ESB would be small relative to other players in Europe.

He added that the three biggest players in the UK market - French group EDF and German companies E.ON and RWE - already control 40pc of the EU market.

M Turmes said the directive was expected to be approved today.

Fianna Fáil MEP Seán Ó Neachtain said the implication of the new directive was that calls by the likes of the Competition Authority for the break-up of the ESB would have dire consequences for the company.

The ESB was already a minnow in the context of a regional market on these islands, he said.

"Interconnection is the way to go rather than breaking up the ESB. If it is broken up it would go to the four corners of the world."

The new directive sets out timetables for allowing electricity customers to choose different suppliers and forces suppliers to state whether their electricity is being produced by gas, coal, nuclear energy or wind.