An electricity firm controlled by Mr Denis O'Brien is abandoning the market just 18 months after it started trading. EPower said it had lost #6 million (£4.7 million) and would cease operations on October 31st.

The company, once seen as a significant competitive threat to the ESB, is the fourth entrant to the partially liberalised market to signal its departure. The others were Scottish Power, the oil multinational BP and the building materials group CRH.

While ePower has suffered a number of serious setbacks since the market was partially liberalised in February 2000, its decision was taken against a backdrop of rising demand for power.

Mr O'Brien owns 70 per cent of the company and a number of its directors were formerly on the board of Esat, the telecoms group he sold to BT last year for £1.9 billion. They include a former Secretary at the Department of the Taoiseach, Mr Padraig O hUiginn.

EPower's chairman, Mr Leslie Buckley, claimed the electricity regulator, Mr Tom Reeves, had insufficient power to ensure "proper competition".

He called on Mr Reeves to resign.

Mr Reeves's office declined to comment on that issue. A spokesman said: "We're disappointed at the development. We had a good relationship with ePower's senior management and hope they will not be lost to the industry."

EPower signalled in March that it might walk away from the business. In April the company shed eight of its 15 staff. Among them was the company's director of development, Mr Paul Browne. He later sought investors to back him in an effort to take an "influential" shareholding in the firm.

Mr Buckley said Mr Browne had eight expressions of interest from potential investors in Britain, the US and Europe.

Three conducted due diligence examinations. All shied away due to the regulatory regime, Mr Buckley said.

But ePower's difficulties ran deeper than regulation in the market. The company failed last year to secure planning permission for a power plant it wanted to build at Navan, Co Meath.

Mr Buckley said it then entered the "final stages" of a shareholding agreement with BP and a US-owned group, Ireland Power, which planned to construct a power plant at Mulhuddart, Dublin.

That project failed to secure a supply of gas for the plant in a competition managed by Mr Reeves.

In addition, constraints on the national grid meant it could not secure a firm connection to it.

Without such connections, power generators are unable to export power into the system. Limits on the number of available connections prompted the EU Competition Commissioner, Mr Mario Monti, to condemn the structure and pace of deregulation in the market late last year.

Around the same time, it became known that BP wanted to sell its interest in the Ireland Power project. Mr Reeves has proposed changing the grid connection system, which would facilitate the plant backed by ePower.

But Mr Buckley said this solution was "too little, too late".

EPower challenged Mr Reeves in the High Court last year and lodged formal complaints alleging anti-competitive behaviour against an ESB subsidiary, which competed against it in the liberalised section of the market.

That complaint prompted Mr Reeves to issue a direction to that subsidiary, forcing it to desist from certain activities.