Up to now the ESB has been able to rely on its own stations rather than going to the open market, writes Emmet Oliver.
The Government has instructed the ESB to purchase its electricity from competitors if they can produce it for a cheaper price than the State-owned company.
A regulation introduced by theCommunications Minister Noel Dempsey, means ESB Public Electricity Supply, the subsidiary which supplies the residential sector, must take power from companies such as Viridian if their output is cheaper than the ESB's.
For the last five years, the ESB has been allowed to use its own network of 19 power stations instead of buying power on the open market.
This was part of a tripartite agreement reached by the unions, government and the company when the electricity market was first deregulated.
This was in response to concerns that an openly competitive regime might end up closing certain ESB plants and leading to widespread job losses.
However these arrangements have now expired and the Commission for Energy Regulation (CER) must approve future purchases of power by the ESB.
A CER spokesman explained how the new system would work: "This will mean that in future if independent generators can sell electricity to ESB Public Electricity Supply at a cheaper price than ESB itself then the company must buy from them. We are working on the details of how it will work in practice and we will publish a consultation paper in due course".
In the short term, the regulations are unlikely to have a significant impact. While Viridian's gasfired power station at Huntstown, north Dublin is highly efficient and is capable of under cutting some ESB stations, most of its output is earmarked for large commercial and industrial customers.
However the company hopes when a second gas fired station is built at Huntstown the situation will change.
A spokesman for the company yesterday described the new regulation - known as the economic purchase obligation - as a "milestone".
The other two players in the market - Aughinish Alumina and Tynagh Energy - have long term contracts to supply their power to the ESB.
However, Tynagh expects to have some excess output and under the new regulation it might be able to sell this to ESB Public Electricity Supply. A few months ago it appointed German energy company RWE to manage the sale of its output.
The ESB for its part believes the best way to bring competition into the market is for a new interconnector with Britain to be built. Recently the company's chief executive, Padraig McManus, said this had the potential to lower the price of electricity.
