The Minister for Public Enterprise has rejected a claim that the ESB should divest its stake in a new electricity plant in Dublin. Ms O'Rourke is understood to have informed the Competition Authority on Tuesday that she had "no basis" to require the State company to sell its interest in the gas-fired power station at Ringsend.
The Synergen joint venture with the Norwegian Statoil group is designed as the core plant in the ESB's generation business, which is facing competition for the first time. It will be commissioned early next year.
The ESB's investment in a turbine for the £200 million (€254 million) station was sanctioned in late 1999 by Ms O'Rourke only after it gave an undertaking to sell its interest if "competition law makes it appropriate".
In June, the Competition Authority informed Ms O'Rourke it had "concern" that the ESB's participation in the project "might constitute State aid". Its chairman, Dr John Fingleton, asked whether the stake should be sold to foster competition in the market.
Ms O'Rourke's response is understood to state that the "conditionality" linked to the investment would be triggered "only on foot of a specific definitive finding or ruling" by a body such as the authority or the EU Commission.
A direction to sell the stake would be opposed strongly by the ESB, whose attempt to purchase a significant business in Poland was blocked by the Government in June.
Its chairman, Mr Tadhg O'Donoghue, has said it would "scream from high heaven" if asked to leave the project.
If the ESB lost Synergen, it argues it would be left using old plant to face competition from more efficient power generation stations operated by independent companies. In addition, certain observers believe there would be a reluctance to block Synergen in light of the Government's refusal to back the Polish investment.
Still, the project is perceived to be sensitive from a competition perspective because it secured a connection to the National Grid before the market was partly liberalised last year.
Power stations cannot supply electricity to customers without such connections and constraints on the system in Dublin meant only a limited number were available when the industry was opened.
This limitation was perceived to be a barrier to entering the industry because independent generation is seen as crucial to development of competitive markets.
Ms O'Rourke's letter is understood to state that arguments on market dominance in an "internal staff paper" produced by the Competition Authority did not constitute a finding from a formal investigative process.
When Dr Fingleton wrote to Ms O'Rourke he said there was a reluctance to spend public resources on lengthy legal proceedings when there was an alternative. It was in that context that he asked whether divestment should be required.
Dr Fingleton's letter was written on June 29th, about four days after the EU competition commission renewed its scrutiny of the Synergen joint venture. A decision is expected this autumn in a process ultimately led by the EC's competition commissioner, Mr Mario Monti, who said last December that the structure of the market in the Republic was "not favourable to competition".
In correspondence last year with electricity regulator Mr Tom Reeves, the Commission described Synergen's grid connection as "a violation of European law".
