45126-Invest. Qual-No111

Investment in Qualityincreased substantially, in many cases in excess of 20 per cent.Competition has been limited to a few large players and it is notclear whether this oligopolistic structure has yet delivered manybenefits to consumers. Meanwhile, some 99 per cent of consumersare currently unable to choose electricity supplier except to chooseto be supplied by currently more costly, but more environmentallyfriendly, forms of energy generated from renewable or alternativesources, or from combined heat and power (CHP). In addition, theindependent TSO established under statute in 2000 has yet to takeon its statutory responsibilities and has only recently emerged fromlengthy legal proceedings with the regulator.The increase in electricity tariffs has come at a time of inflationarypressure and follows only two increases in the previous 15 years.However, the tariffs as previously structured were unsustainable.Indeed, the pressure to rein in cost increases, and to finance anynecessary investment off balance sheet while prices remained staticin the past, has given rise to much of the infrastructural deficitinherited at the time of market opening and subsequent increase inprices.The regulator must ensure that the incumbent firm earns only whatmay be described as a ‘reasonable rate of return’ on investments,that it must not seek to abuse its dominant market position, and thatits capital and operating costs be benchmarked over time and spaceto ensure that they fall in line with prudent and efficient utilitypractice. The regulator must also ensure that fair and transparentopen access is granted to the regulated network infrastructure.In addition to an evaluation of the necessary network infrastructure,the regulator is one of a number of entities charged to have regard tothe need to promote the continuity, security and quality of electricitysupply. Given that electricity cannot be effectively stored, with thelimited means of pumped storage at Turlough Hill providing theonly such facility in Ireland, it is necessary to be able to maintainsupply and demand balance at all times, including the incidence ofpeak demand which may imply electricity generating plant runningfor only a few hours per year or not at all. Given the obvious costsof operating such plant, and the absence of comprehensive470