A High Court judge has lifted an order previously granted to Shannon LNG, the developer of a planned liquefied natural gas facility in north Co Kerry, restraining the enforcement of a potential fine of more than €7 million against it.
Ms Justice Mary Rose Gearty had granted the temporary stay following an application brought by Shannon LNG Ltd in its judicial review proceedings against the Commission for Regulation of Utilities (CRU) and EirGrid plc, the national grid operator. The stay was granted with only Shannon LNG represented in court.
Shannon LNG wants the court to quash a decision of CRU refusing to postpone a requirement for the energy provider to post an increased “performance security”. This is a surety to cover penalty charges incurred in the event Shannon LNG’s contract with EirGrid is terminated.
According to its court documents, Shannon LNG faces a requirement to pay its current surety of €7,064,000 to EirGrid, arising from the circumstances of the dispute.
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In an application moved after the temporary stay was granted, Niall Handy SC, for EirGrid, sought to have the restriction on the fine enforcement lifted. Ms Justice Gearty acceded to the application.
The judge noted various submissions made by EirGrid, including that Shannon LNG had an opportunity to avoid the risk of paying the fine by posting extra surety, but didn’t do so.
The substantive judicial review proceedings remain live.
In May 2023 EirGrid, along with its Northern Ireland counterpart SONI Ltd, awarded Shannon LNG a “capacity” contract to provide energy to the grid when required via two 200 megawatt gas-fired generators.
Under the system whereby private generating companies like Shannon LNG sell the power they produce to the grid, an online auction, involving sealed bids, is held four years in advance.
EirGrid and SONI administer what is known as the “capacity market code”, which makes provision for arrangements to secure generation adequacy and capacity to meet the demands of consumers.
Under this code suppliers who are awarded capacity contracts must put up a performance security.
According to Shannon LNG’s court documents, a dispute arose when, in August this year, EirGrid sought from Shannon LNG performance security amounting to €10,596,000, arising from an increase in rates used to calculate the surety.
Shannon LNG had previously provided security amounting to €7,064,000 and according to its court documents is committed to doing so until at least September 2026.
Earlier this month EirGrid indicated it would take “enforcement steps” against Shannon LNG after it alleged defaulted on its contract with EirGrid. This arose from Shannon LNG’s refusal to post the increased surety, requested in August.
According to Shannon LNG this enforcement action will require payment of the €7,064,000 performance security to EirGrid.
In May 2024 Shannon LNG asked the Single Electricity Market Committee (SEMC), a body acting on behalf of CRU and its northern counterpart, to postpone a requirement to post increased performance security arising from hiked rates, in the event that the committee has granted an extension for the delivery of energy capacity – in Shannon LNG’s case, the delivery of the gas-fired generators – due to delays caused by planning permission appeals or judicial reviews.
Planning permission granted to Shannon LNG for the two gas-fired generators is the subject of an ongoing legal challenge brought by Friends of the Irish Environment. It is due to be heard in February next year.
The request for postponement was refused by SEMC. A second, similar request by Shannon LNG was refused in August. This decision is the subject of Shannon LNG’s judicial review challenge.
The case returns next month.
