A NEW body independent of the ESB which would "mediate" in the purchase of electricity from generators is recommended by the Joint Committee on State-Sponsored Bodies in a report published yesterday. The proposal conflicts with the Department view contained in a consultation paper also issued yesterday.

The report also recommends that an interim independent regulator for the electricity sector, with "pro-competition" terms of reference, be appointed pending the drafting of necessary legislation.

The report says an independent power procurer should be created which would have a mediating role in the negotiation of contracts between ESB power stations and the sales arm of the ESB, ESB Customer Services.

The committee believes that this would be better than having "internal" negotiations between ESB Power Generation and ESB Customer Services.

ESB power stations will generate by far the largest amount of electricity in Ireland for a long time to come yet may not be subject to any kind of competition, the report says.

The independent procurer could also handle competitions for new supplies of electricity to ESB Customer Services.

An independent power procurer could make forecasts of demand and supply, and these forecasts could be cross-checked with the ESB's projections, the committee suggests.

The creation of an independent power procurer would introduce "independence, transparency and expertise", basic principles which should underlie any institutional changes.

An interim electricity regulator to oversee competition is needed as the legislation to set up an independent regulator, which is being prepared by the Department of Transport, Energy and Communications, "is taking a long time to draft".

The committee chairman, Mr Liam Kavanagh, said it was the view of the committee that it would be "very helpful if at this stage, the Department would produce a paper, be it white, green or some other appropriate colour, giving its view of the future".

The lack of any such statement has meant there is "widespread ignorance" of what the main issues are concerning electricity supply in Ireland and the arrival of competition.

Mr Kavanagh's was speaking at the same time as the Department, at short notice, published its consultation document.

The ESB has a good record on prices over the past few years but the committee is concerned about the relative position of ESB prices in the future increasing demand for electricity will create a need for infrastructural investment. "The cost of this will feed through to prices so that some of the ESB price advantage will disappear."

In Britain prices seem to be running below those in Ireland for many types of consumer. The reports says that even after the cost and competitiveness review is completed (in 1998), productivity in the ESB will be lower than it already is in Britain.

"This can all be summed up by saying that the cost and competitiveness review cannot be regarded as a once and for all reduction in costs," Mr Kavanagh said.

The committee believes that "for the medium term at least" it is preferable to retain the ESB as a united organisation organised in semi-independent business units. It also feels that state ownership is advisable "at least for the time being", Mr Kavanagh said.