As the Republic grows increasingly entwined with the economics of the technology industry, the rolling power blackouts in the state of California must raise serious concerns here about similar plans to privatise the electricity industry.

Stories on privatisation here tend to have centred only - and short-sightedly - on the vocal battle between the until-now State-run Electricity Supply Board and entrepreneur Mr Denis O'Brien's EPower, which intends to take on the former monopoly. As usual when Mr O'Brien is involved, the war of words has been sharp and entertaining.

But the mechanics and economics of this proposed privatisation have not been made clear, nor does anybody seem to be overly concerned. And indeed, these sorts of policy decisions and their implementation are far less interesting to write about (for journalists) and read about (for newspaper and magazine audiences). It's much easier to have the conflict between a faceless former monopoly and a well-known and generally admired challenger stand as a simple metaphor for the whole process. End of story, and in the meantime we might as well go have a pint, while we look forward to a significant drop in the cost of our electricity bills.

Well, that's just about the same attitude California had over the past two years, as it prepared for privatisation. Consumers were told to prepare for the pleasure of selecting from a broad choice of electricity providers, all of which would undercut their former monopoly provider (be it Pacific Gas and Electric in the north of the state, or Southern California Edison in the south). Choosing a provider would be much like selecting a telecommunications carrier for long-distance calls, consumers were repeatedly told. - Following the deregulation of the long-distance phone market in the States some years back, most people were familiar with that process. The state was running television and radio advertising campaigns over a year ago to this effect, and leaflets occasionally popped through the mailbox to remind consumers and businesses of the coming liberation movement.

The only problem is, no one did the maths. And everyone forgot about the huge growth in electricity-hogging technology companies, and the seemingly endless stream of new residents into the Golden State, with the accompanying demand for new power link-ups. A colder than usual winter meant people throughout the state kept the heat running. And the lower-than-average rainfall meant that hydro-electric plants weren't generating the amount of energy they normally would. And California's ageing plants are inefficient, and the industry has no system to co-ordinate plant maintenance and shutdowns to alleviate further strain.

At the root of the whole complex situation is the fact that following privatisation, the state government assumed that wholesale prices would drop in an open market and that savings would be passed to consumers. The state imposed a price ceiling so that the utility companies couldn't go and raise prices instead. Unfortunately, wholesale prices, for the reasons above, have gone up. Electricity suppliers are losing money and Southern California Edison has even defaulted on a loan of more than half a billion dollars.

Silicon Valley companies are concerned about power outages. Industry analysts estimate tech companies can lose from $1 million (€1.065 million) an hour to $1 million a minute when the power goes down, due to lost sales and lost productivity of their expensive workforce. For a chip manufacturer such as Intel, lost power can mean a glitch in the sensitive chip-fabrication process. Intel chief executive Mr Craig Barrett said recently that Intel would not build further fabrication plants in California because of this power-loss risk. Interestingly, he specifically stated that he would build in the Republic.

Which brings us back to the deeply serious question of how we are proceeding with privatisation here. (I wonder, does Mr Barrett know we are about to jump off the same cliff?) I believe there are two major issues to be addressed.

First, the big picture: how has the State planned for privatisation, and are we at risk of having the same problems as in California (where nobody predicted, or could even have imagined, the current crisis)? What will generate power now and into the future, and could those sources of power be significantly curtailed due to global climate change or environmental objections, or the collapse of one of the electricity providers? Who controls and manages the power grid once it is reliant on private companies rather than a State-run entity? What if private companies simply fail to find the market attractive - who will then be producing and marketing electricity to us all?

The second issue relates to the huge dependence of the technology industry here on a guaranteed and unfluctuating power supply, the huge growth of that industry in the State and the State's reliance (like California) on the industry as an engine of the economy. In recent months, for example, the Republic has seen a great influx of data warehouse companies, which manage and control Internet bandwidth for companies and look after their websites.

These companies each suck down the power of a small town, and a primary location consideration for them is access to the power grid. PC manufacturers also eat up electricity, as do chip creators, other electronics manufacturers, Internet service providers, e-commerce-oriented companies with large clusters of servers, and so on.

We have hundreds of such companies, and almost all require an always-on supply of energy. Does anybody know their overall power demands? Does anybody in Government track what companies are coming in and their electricity needs? Does anyone know what can reasonably be managed and balanced against general business and consumer needs? Who will be accountable? Who will do the planning once responsibility slides out of the State domain?

We are advertising this nation as a prime location for technology companies, e-commerce and related industries. If there is no careful, centralised planning, if alarm bells aren't ringing like mad right now, and if we end up with a California-like situation following privatisation, the Republic could be facing a crisis in its technology industry that will far eclipse any current fears of a US recession.

klillington@irish-times.ie