Mr Q and Commission for Regulation of Utilities

CourtInformation Commission
JudgeSenior Investigator
Judgment Date21 October 2021
Case OutcomeThe Senior Investigator affirmed the decision of the CRU. He found that it was justified in refusing access to the records at issue on the basis of sections 30(1)(c), 36(1)(b) and 36(1)(c) of the FOI Act
RespondentCommission for Regulation of Utilities
Record NumberOIC-55783-Q5G7S1
Whether the CRU was justified in refusing access to particular categories of records relating to Local Reserve Supply Agreements (LRSA) between EirGrid and a named energy company under sections 29, 30, 35, 36 and 37 of the FOI Act.

OIC-55783-Q5G7S1

Background

This review has its origins in steps taken by the CRU, the regulator of the electricity market, and EirGrid, the electricity transmission system operator (TSO), to mitigate for the risk of two electricity generator plants owned by Energia (formerly Viridian), Huntstown 1 and Huntstown 2, exiting the wholesale market and creating a risk to the security of the electricity supply.

This risk arose, in part, due to new wholesale market arrangements recently introduced on the island of Ireland, namely the Integrated Single Electricity Market (I-SEM). I-SEM replaced the previous arrangements, known as the Single Electricity Market (SEM). In particular, the I-SEM established a Capacity Market, to be run as a competitive auction, with electricity generators being paid a fee in return for being available to generate at certain times and certain locations. In contrast, under the previous SEM arrangements, all generators which were available to generate were made payments for being available to generate, known as the Capacity Payment Mechanism. Under the I-SEM, generators do not automatically receive any capacity payment, and payment is linked to the results of the auction. The I-SEM is regulated by the CRU.

According to the CRU, the new arrangements led to lower costs for consumers but also reduced revenues for some generation units. This raised the possibility of the sudden closure of some of these generation units, particularly in the first four years of the I-SEM operating. In response to this risk, the CRU published a paper setting out the process it would follow if such an event occurred, CRU/17/346. One of the options set out in that paper to address that scenario was that the CRU could direct EirGrid to enter into a bi-lateral Transmission Reserve Contract with a generator. This option was presented in response to the potential scenario where other mitigation measures would take too much time to implement, or the generator who wished to exit the market was unable to observe the three year notice period for exit provided by the Grid Code.

The first capacity auction under I-SEM was held on 15 December 2017. It appears that the Viridian Group (Viridian) was awarded a contract for the Huntstown 1 generating unit, but not the Huntstown 2 generating unit.

I understand that Viridian subsequently informed the CRU that the Huntstown Units intended to exit the market in May 2018, upon the commencement of the I-SEM. Following engagements with Viridian, the CRU determined that there was demonstrable, material and imminent likelihood of closure, known as the DMILC Test. As mentioned above, under the Grid Code, a generator that wishes to close must give three-years notice and must close in an orderly manner. A generator that is unable to meet this requirement, and wishes to close in advance of the three year notice period, must submit a closure notice and a request for a derogation from the Grid Code to EirGrid. The CRU’s decision that the Huntstown Units had passed the DMILC Test permitted the Huntstown Units to request a derogation from the three year closure notice period requirement in the Grid Code, without having to first submit a closure notice. EirGrid provided a Derogation Report to the CRU and, on EirGrid’s recommendation, the CRU did not grant the derogation requests.

I understand from the CRU that, as the risk of a sudden and disorderly exit of the Huntstown Units remained, the CRU requested EirGrid to explore options to mitigate the system impacts EirGrid had identified in its Derogation Report.

EirGrid submitted the Huntstown Mitigation Measures Report to the CRU in May 2018. A contract with either of the Huntstown Units was not included as an available option as Viridian, at that time, had not agreed to terms which EirGrid considered consistent with CRU/17/346. The CRU instructed EirGrid to progress a number of the mitigant options set out in the report that were both feasible and available at that time. The CRU also requested that EirGrid submit an Addendum to the Report to provide the CRU with additional information in relation to the options set out in the Report and to, potentially include additional options in the event that any feasible options had subsequently become available. On 11 August 2018, EirGrid submitted an Addendum to the Report, the Addendum included a contract with the Huntstown units as an additional feasible and available option.

I further understand that in October 2018 the CRU publicly announced that it had directed EirGrid to enter into Local Reserve Supply Agreements (LRSAs) with the two Huntstown units. The CRU provided certain details of how it responded to the risk of the exit of the Huntstown units in a paper published on its website, CRU/18/228 (https://www.cru.ie/wp-content/uploads/2018/10/CRU18228-Information-Note-on-DMILC-process-1.pdf).

In a request dated 31 January 2019, the applicant sought access to the following records held by the CRU, dating from 1 December 2017 to 31 January 2019:

  1. Any heads of terms in agreed or draft form between EirGrid plc (EirGrid) and the Viridian Group (Viridian) which relate to local reserve transmission agreements (LRSAs) with the Huntstown plants (Heads of Terms)
  2. Any agreement in agreed or draft form between EirGrid and Viridian with regard to LRSAs with the Huntstown plants (Agreements)
  3. Any analysis undertaken or commissioned or received by the CRU, which relate to or were relied upon in the decision to enter in the Heads of Terms or Agreements, including but not limited to any analysis underpinning the statements at section 3.3 of CRU/18/228, namely that the LRSAs with Viridian were consistent with each of the principles set out in CRU/17/346 (Analysis)
  4. Minutes of any meetings involving the CRU (or documents produced for or at those meetings) where such Heads of Terms or Agreements or Analysis were discussed
  5. Any correspondence between the CRU and the Department for Communications, Climate Action and Environment (the Department), EirGrid or Viridian with regard to the Heads of Terms or Agreements or Analysis including but not limited to correspondence related to the need to notify such Heads of Agreements to the European Commission (including with the intention of seeking State aid approval)
  6. Any notifications (in part, draft or final) which the CRU has produced or commented on which have been (or are planned to be) sent to the European Commission in connection with the Heads of Terms or Agreements or Analysis (including with the intention of seeking State Aid approval) or any other correspondence with the European Commission in this regard, and
  7. Any documents produced or held by the CRU that refer to the local security of supply issues identified by the panel assembled by the Minister for the Department, Denis Naughten, in connection with Viridian’s appeal against the CRU decision to require Viridian to serve three year notice on Huntstown

In its decision of 27 February 2019, the CRU part granted the request. It identified 34 records as falling within the scope of the request. It released certain correspondence from the CRU and certain CRU internal meeting minutes. It refused access to the remaining records it had identified as relevant, such as heads of terms, agreements and analysis and records containing what it described as confidential...

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