In June of this year, Shepherd and Wedderburn were appointed to the legal consultancy panel for the development of the All Island Electricity Market.  This development is part of the All Island Project ("AIP") which will see the amalgamation of the energy systems currently existing in Northern Ireland and the Republic of Ireland. 

The project's development is being overseen by a Joint Steering Group, which is principally made up of members from the two regulatory authorities: the Republic of Ireland's Commission of Energy Regulation ("CER") and the Northern Ireland Agency for Energy Regulation ("NIAER").  The Steering Group has five specialist consultancy panels to assist them with the detail of the project (Economics, Legal, IT, Technical and Financial).

The project has been split into two focus areas, gas and electricity. The creation of a single electricity market is the AIP's first objective.  The CER and NIAER signed a memorandum of understanding in August 2004 making a commitment to the development of the All Island Electricity Market and proposed that the wholesale electricity market would be in place by 1 July 2007.

The electricity programme will see the creation of a single electricity market stretching the full length of Northern Ireland and the Republic of Ireland.  It will require a great deal of collaboration between the Republic of Ireland and Northern Ireland's industry and government bodies in order to resolve issues ranging from goverence/regulatory matters, amending existing legislation to cover the new structure of the market, developing the necessary infrastructure, harmonising of trading and licensing arrangements, ensuring adequate generation of power, security of supply and implementing sustainable energy and energy efficiency measures.

Another priority of the AIP is the introduction of a second North/South interconnector between Northern Ireland and the Republic of Ireland.  It is also envisioned that the price of electricity will include an element of cost for carbon.  Whilst this will see an increase in the price of electricity for consumers, it will be less expensive for cleaner forms of electricity such as renewables and more expensive for coal power stations. It is hoped that this will encourage growth in the renewables sectors.  There will also be a de minimis threshold for renewable generators with generators above 5MW being required to bid into the market whereas generators below 5MW have the option should they wish to bid into the market.

The target 'go live' date for the Single Electricity Market is 1 July 2007, so the timeframe is tight with much to be achieved, including legislative change to ensure the Single Electricity Market becomes a reality. However, all parties are committed to ensuring that this deadline is met and by July 2007 the island of Ireland should be able to see the benefits of the fully integrated wholesale electricity market for consumers and producers alike.

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