Electricity providers throughout the island of Ireland have welcomed the creation of the Single Electricity Market (SEM), which went live on Nov. 1 - replacing the previous two electricity markets in the Republic and the North

The ESB said that the SEM will bring many benefits to customers, the island economies and infrastructure. It is designed to attract investment and promote competition, improve system security, increase industry efficiencies and minimise costs.

In the SEM, electricity on the island will now be bought and sold through a pool system at prices set by the market. In the past, the Regulator set the wholesale price of electricity.

ESB Chief Executive, Padraig McManus predicted that - "The fact that power generators in the new market are able to sell all their electricity into a pool means greater financial certainty for new entrants and should also lead to new investment."

He added - "ESB enthusiastically looks forward to the new market arrangements, as we have been a long-term supporter of the SEM. We are going to see downward pressure on prices. The cost of carbon will be a factor from Jan. 1 next, but the benefits of the new market will offset these costs."

ESB has completed a major IT project to ensure that its businesses are ready and in a position to fully compete in the new trading environment.

Harry McCracken, group managing director, Viridian Power and Energy, also welcomed the launch of the Single Electricity Market.

McCracken said - "We are delighted to welcome a new era in the electricity industry on the island of Ireland. Viridian has played a leading role in promoting and developing the all-island electricity market and we believe that the single electricity market will, increasingly, deliver choice and competitively-priced electricity supplies to customers throughout the island."

The Republic's Systems Operator - Eirgrid - and its Northern counterpart - SONI - are responsible for the operation of the new pool system. They have established a Single Market Operator which will operate the new market functions.

Generators will now compete to dispatch power on the basis of bids that they submit to the Operator every half-hour. In addition, generators will be paid what is known as a 'capacity payment' to keep their plants available to meet demand. In the SEM, generators will not be required to have a customer base to participate in the market.

Access to the market will also be easier for new retail suppliers - thereby increasing competition. Suppliers will be in a position to purchase wholesale electricity from the pool, itself, rather than necessarily having bilateral contracts in place with generators.