The Government needs to give a clearer indication of its plans for the ESB, and address concerns among other electricity providers that it has unfair influence on the market, according to a report by the International Energy Agency (IEA).
Although the IEA says reform of the electricity sector is heading in the right direction, it expresses concern that the ESB's target share of the market of 60% by 2005 still gives the company power to influence prices to its benefit.
The IEA reports on the Irish energy sector every four years, and today presented its findings to the Minister for Communications, Marine and Natural Resources Dermot Ahern.
The report says that the Government faces a 'very significant challenge' if it is to meet Kyoto Protocol targets on reduced greenhouse gas emissions. Ireland has agreed to restrict emission growth to 13% above 1990 levels by 2012, however the IEA says government projections indicate we will be 37% above 1990 levels by 2010 unless significant changes take place.
The IEA is supportive of the government's national climate change strategy, but says it opposes the proposal to change the coal-fired Moneypoint power station to more environmentally friendly gas, because it would make the Irish power generation network overly reliant on the use of gas.
Commenting on the report Minister Ahern said he was keen improve grid connections between the Republic and Northern Ireland, making a bigger market which would attract new entrants to compete with the ESB. He also said he agreed in principle with proposals to build an electricity interconnector between Ireland and Wales, but that the plan required further examination.
On the Kyoto emissions issue, the Minister said it was not just a question of coal-fired power stations like Moneypoint, but also the need to reduce emissions from transport users.
