45126-Invest. Qual-No111

9.5 ENERGYInfrastructure, Public Utilities and Spatial Development9.5.1 Recent Developments and Current IssuesThe provision of energy through networked industries such aselectricity and gas has undergone fundamental transformation inrecent times with the establishment of the Commission forElectricity Regulation in 1999. It has subsequently taken onresponsibility for gas and became the Commission for EnergyRegulation in April 2002. As noted above, much of this process hasbeen driven by the European internal market programme andlegislation. However, the fact that Ireland opened its energy marketfaster than prescribed under EU directives underlines Ireland’sbelief in the benefits this regulatory approach can deliver.Both electricity and gas supply are subject to substantial economiesof scale. These industries contain elements that are naturallymonopolistic and elements that can, in certain circumstances, beopened to competition. Economies of scale derive from the highfixed cost regardless of throughput. This means that normal pricingmethods, based upon the cost of providing additional units ofoutput, will not cover average costs. There is, therefore, a conflict inthe provision of these important services between the need foraffordable access on the one hand, and their provision at a price thatcovers costs. The general issue of payment and cost recovery forinfrastructure is discussed further below.A major programme of infrastructural investment is currently beingundertaken in both electricity and gas networks. This investmentwill see gas brought to much of the country for the first time. Itinvolves the construction of the gas ring main from Dublin toGalway and Limerick and the announcement of further pipelinesfrom Gormanstown, to connect with the Northern Ireland gassystem and further potential developments in the North West.Meanwhile, security of gas supply will be further assured with theconstruction of a second interconnector with Scotland and thepotential to bring ashore indigenous gas supplies from Corrib offCo. Mayo and Seven Heads off Co. Cork.The programme in electricity will see the construction of lines to467