The Government has drafted short legislation to establish an independent electricity regulator and is expected to present it to the Oireachtas "as soon as practicable", according to Government and industry sources.

A cabinet subcommittee, chaired by the Minister for Public Enterprise Ms O'Rourke, has been set up in the past two weeks to address the issue of establishing a regulator, seen as a necessary element because of the impending deregulation of the electricity-generating market.

As the ESB, Northern Ireland Electricity and Marathon are all believed to be interested in building a power station here, Ms O'Rourke feels it is inappropriate that as a shareholder in the ESB she makes regulatory decisions. While a larger piece of legislation is being planned to give effect to an EU directive on the internal electricity market, the Government plans to enact the shorter legislation sooner, possibly next month.

However, unions representing ESB workers are understood to be concerned that the shorter legislation may not take account of agreements they have with the ESB. They are already involved in discussions regarding the implementation of the EU directive, which, they say, makes provision for existing agreements with unions.

The former Labour minister for energy, Mr Emmet Stagg, said yesterday he had serious difficulties with the notion of what he called a "private regulator".

Citing the example of the Director of Telecommunications Regulator, Ms Etain Doyle, who initially refused to appear before a Dail sub-committee earlier this year, he said handing power to regulators creates a "new power base outside the democratic basis".