An ESB subsidiary has been ordered to submit all new power contracts to the electricity regulator, Mr Tom Reeves.

This follows an investigation by Mr Reeves into allegations that the company, ESB Independent Energy, was engaged in anti-competitive practices.

The inquiry concluded that immediate action was required to level the playing field between ESB Independent Energy and its competitors. ESB Independent Energy was "ringfenced" from its parent company after the market was opened.

It buys power from ESB's generation division for resale in the liberalised market segment. To foster competition, Mr Reeves required that the subsidiary did not have automatic access to customer information held by its parent. Mr Reeves found the company was insufficiently ringfenced. ESB Independent Energy, however, has challenged the direction in the High Court.

Mr Reeves's investigation arose following complaints from a rival supplier, ePower, which is controlled by Esat's founder, Mr Denis O'Brien.

ESB Independent Energy has accused ePower of "whinging" and claimed Mr Reeves's direction was excessive, unreasonable and would cause serious damage to its business. The arrangements were in line with those agreed by Mr Reeves, it has claimed.

But Mr Reeves told the firm in a letter last month that his direction was "proportionate" and did not unfairly prejudice ESB Independent Energy's interests. The Irish Times has established that the regulator directed ESB Independent Energy to refrain from making offers or entering supply contracts without satisfying him in each case that information for the supply terms was acquired directly from the customer and not from other sources. This means ESB Independent Energy will have to submit new contracts to Mr Reeves for approval.

In addition, Mr Reeves said all unaccepted offers to ESB Independent Energy customers - where information was not secured directly from the customers - should be withdrawn.

He told ESB Independent Energy to refrain from using any customer information obtained from ESB and its information systems to target clients or make offers of contracts to them.

ESB Independent Energy should not use its parent firm's telephone switch system. Subsidiary staff should not use fixed line and mobile telephones when working for the parent company. ESB offices and premises should no longer be used by ESB Independent Energy, Mr Reeves added.

ESB Independent Energy staff should not have access to or use ESB's IT systems and software. Its e-mail, Internet and intranet systems should not be accessed by staff of the subsidiary. The subsidiary's IT server should not be linked to that of its parent and there should be no hyperlink between the Internet sites operated by the two.