The ESB may stand down a power plant in Dublin to protect its control of a generation station it plans with Statoil. The European Commission has questioned their joint venture and expressed concern about the new station's connection to the National Grid.
Standing down an old power plant could be used to free access to the National Grid for another Dublin project backed by Esat founder Mr Denis O'Brien and US businessman Mr Larry Thomas. That project has yet to secure a firm grid connection, required to supply the market.
However, such a move by the ESB could provoke industrial relations difficulty. While the ESB has not developed a formal strategy to divest a power station at either Poolbeg or the North Wall, senior sources said the idea has been mooted and was likely to be reconsidered.
There would be significant concern within the company and perhaps politically about any decision that would benefit a competitor. A spokesman said there was no such plan.
However, senior company sources suggest the move may be required to secure European Commission support for the joint venture with Statoil, known as Synergen.
The Commission has yet to sanction that arrangement and has described its grid connection contract as a "violation" of European law. In addition, the ESB's expenditure on the Synergen project was sanctioned by the Minister for Public Enterprise, Ms O'Rourke, only after it agreed to sell its interest if she felt competition law made such a move appropriate.
Such developments are said to have caused "major" concerns at the highest levels within the ESB that it might be forced to divest the Synergen plant, which is crucial to its strategy in the partly liberalised market.
Sources cited a letter by EU competition commissioner Mr Mario Monti to Ms O'Rourke in which he said the market's structure was not favourable to competition.
The letter cited a limitation on connections to the National Grid due to transmission constraints in Dublin. A generation project backed by Mr O'Brien and Mr Thomas in west Dublin did not secure "firm access" to the grid due to such constraints.
Mr O'Brien's company, ePower, is known to be considering leaving the market and BP Amoco, its other partner with Mr Thomas's Ireland Power group, has already left.
A new system for grid connections has been proposed by the electricity regulator, Mr Tom Reeves. Mr Monti has said implementation of that system would be crucial to the liberalisation of the market.
