The Northern Ireland electricity market must be redesigned if wholesale customers are to feel the benefits of competition, according to a consultation paper issued by the regulator, Ofreg.
The watchdog says the current situation for wholesale customers is "fundamentally anti-competitive" and is proposing further liberalisation to put all wholesale customers on a broadly equal footing, regardless of who is generating their electricity.
This would see full competition between independent generators, energy imported through interconnectors and generation currently under contract to Northern Ireland Electricity's power procurement business.
Currently, eligible wholesale customers in Northern Ireland - who account for about 35 per cent of electricity consumed - are free to buy electricity from the supplier and generator of their choice in Northern Ireland, the Republic or Scotland.
Despite this ostensibly competitive environment, generation charges in Northern Ireland are, in some cases, up to 50 per cent higher than those in Britain.
Ofreg says the "fundamental flaw" in current arrangements is the lack of efficient indigenous power stations capable of competing with generators in Scotland and the Republic.
New combined cycle gas turbines are to be commissioned in both Scotland and the Republic next year, thus creating what Ofreg judges to be an opportunity "to inject a new competitive dynamic into the Northern Ireland market".
"To translate these new opportunities into lower prices for customers, some changes in market design are essential," the paper argues.
Northern Ireland Electricity has welcomed the publication of the consultation, saying that it would like to see "an open and competitive all-island electricity industry".
"The price of electricity is Northern Ireland is the overwhelming principal reason for high electricity bills," the company said in a statement.
NIE and Ofreg recently agreed a price-control mechanism under which NIE's portion of consumers' electricity bills is set to fall over the coming five years.
