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IP/08/2050

Brussels, 22 December 2008

Commission adopts special measures to increase interconnection between Ireland and Britain

Today, the Commission approved exemptions from rules on regulated pricing and access for two new electricity interconnectors between the United Kingdom and Ireland. The new high tension lines more than double the transfer capacity between the two countries. They will also compete with a third new interconnection which will be operated by the Irish TSO.

"I welcome the building of these two new electric links, which will bring security of supply and more competition to both markets. The derogation granted today by the Commission will ensure the viability of the project while making sure that competition will be respected", said Energy Commissioner, Andris Piebalgs.

According to the directive on the liberalisation of the Energy Markets (2003/54/ EC), the Commission can grant temporary exceptions to the rules that guarantee third party access in order to make the project more attractive to investors. To ensure that the interconnectors have a positive effect on competition the Commission has requested that the Irish and British energy regulators include additional safeguards regarding future capacity allocation.

The Commission decision on the electricity interconnectors proposed by IMERA Limited shows our support for this project. New interconnection will integrate Ireland with the internal EU market in electricity and boost Europe's efforts to increase the share of energy consumption met from renewable sources, contributing to meeting our 2020 targets.

Ireland currently has only limited interconnection with other electricity systems in Europe. Increased competition as a result of new interconnection capacity will put downward pressure on prices in one of the most expensive countries for electricity in Europe. The IMERA interconnectors will also allow Irish wind generators to access the much larger British market.

IMERA applied for exemptions from the general rules of regulated third party access in the United Kingdom and Ireland. Exemption from these rules is provided for in EU legislation and allows major new infrastructure projects, which would otherwise not go ahead, to determine capacity allocation and tariffs more freely.

The safeguards to which the exemption is subject include both a capacity cap of 40% on dominant undertakings and ensuring that users of the interconnectors can participate in daily sessions of British and Irish markets.

IMERA proposes to include so called "Use it or Lose It" provisions when it sells capacity. By ensuring the full capacity is available to the market this should maximise the competitive benefits of the new interconnectors. The Commission has requested that OFGEM and CER review the effectiveness of these measures after one year.

In its assessment of the exemption, the Commission emphasised that the IMERA project will compete with the Irish transmission system operator's interconnector. This justifies granting exemptions from the normal regulatory rules because it removes the risk that the exempted infrastructure is a monopoly.


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