Press release

ESB welcomes the introduction of the Single Electricity Market

1st November 2007: ESB welcomes the creation of the Single Electricity Market (SEM) which comes into operation today (Thursday 1st November) replacing the previous two electricity markets in the Republic and the North.

The SEM will bring many benefits to customers, the island economies and infrastructure. It is designed to attract investment and promote competition, improve system security, increase industry efficiencies and minimise costs.

In the SEM, electricity on the island will now be bought and sold through a pool system at prices set by the market. In the past, the Regulator set the wholesale price of electricity.

The ESB Chief Executive, Padraig McManus predicted that, "The fact that power generators in the new market are able to sell all their electricity into a pool means greater financial certainty for new entrants and should also lead to new investment".

"ESB enthusiastically looks forward to the new market arrangements as we have been a long term supporter of the SEM. We are going to see downward pressure on prices. The cost of carbon will be a factor from January 1st next, but the benefits of the new market will offset these costs."

The Republic's Systems Operator, Eirgrid and its Northern counterpart, SONI, are responsible for the operation of the new pool system. They have established a Single Market Operator which will operate the new market functions.

Generators will now compete to dispatch power on the basis of bids that they submit to the Operator every half hour. Additionally, generators will be paid what is known as a "capacity payment" to keep their plants available to meet demand. In the SEM, generators will not be required to have a customer base to participate in the market.

Access to the market will also be easier for new retail suppliers, thereby increasing competition. Suppliers will be in a position to purchase wholesale electricity from the pool itself rather than necessarily having bilateral contracts in place with generators.

ESB has completed a major IT project to ensure that its businesses are ready and in a position to fully compete in the new trading environment.

Ends

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