Electricity prices in Northern Ireland could be considered a major drawback to investing in the North, according to industry leaders. Northern prices are, on average, higher than corresponding tariffs in other parts of the United Kingdom and the Republic.
Electricity costs are considered too high in Northern Ireland but too low in the Republic to attract new competitors into the energy sector.
The solution, according to the latest report commissioned by governments North and South, is to create an all-island market.
Bombardier Aerospace, the North's largest private sector employer, cites the high price of electricity as a continuing problems, while family-run firms such as Irwin's Bakery in Portadown also blame higher-than-average tariffs as a major issue for smaller companies in Northern Ireland.
Industry bodies including the Confederation of British Industry and the Institute of Directors also believe electricity costs in the North play a major role in making Northern Ireland companies less competitive than their Republic of Ireland or European counterparts.
Mr Douglas McIldoon, the electricity and gas regulator in the North, said he was very aware of how unhappy the business community was about the current electricity prices. Mr McIldoon, who yesterday was reappointed industry regulator until 2005, said his office regularly received complaints about electricity prices, which he saw as unfair compared to prices in other European countries.
But according to a new report on North/South energy studies, electricity prices are not just a concern for Northern Ireland.
The Minister for Public Enterprise in the South, Ms O'Rourke, and Sir Reg Empey, Minister of Enterprise, Trade and Investment, have commissioned a report to examine the prospects for increasing convergence between energy markets in the North and South.
The report, conducted by IPA Energy Consulting, has found there are a number of key issues restricting trade between the North and South, chiefly the dominant position of ESB in the Republic and Northern Ireland Electricity, a division of Viridian.
IPA Energy Consulting argues that, unless the cost of generation is addressed by both governments in an all-island context, it will not be possible to achieve competition in the energy sector.
It proposes that Ministers in the Republic address ESB's position by ordering the disposal of plant, tolling arrangements and contractual arrangements to remove control of the price-setting plant from the organisation. IPA Energy Consulting believes this would stimulate new companies to enter the market.
In the North, the consultants argue that NIE's contracts should be terminated and its plants required to compete directly in the marketplace.
It believes that the Northern Ireland Assembly or relevant authority would either have to buy out its contracts or have them set aside on competition grounds.
IPA Energy argues that until the ESB's position in the South has been eroded, it should be prevented from building new generation plants and that the possibility of prohibiting Viridian from building plants should also be examined.
The report also looks at the issue of creating a market mechanism for wholesale trading of electricity on the island of Ireland. It suggests that both governments should examine the prospect of a unified trading arrangement, which could result in a generation schedule for the whole of the island.
IPA Energy Consultants believes this solution would lead to wholesale, retail and transmission arrangements being overseen by a single regulatory authority.
"A unified arrangement should be efficient and cost effective than separate, duplicate arrangements North and South.
"For market participants the larger market should offer greater commercial opportunities and look more attractive to potential investors and Great Britain suppliers," the report concludes.
