Among other things, Enron came under fire for manipulating electricity markets in California, leaving the rapidly-growing economy reeling with astronomical electricity prices and power blackouts in 2000-2001. With high prices, alleged abuses of monopoly power and a dangerously overstretched electricity network, Ireland faces the danger of something similar.

"There is a power crisis in this country", says Brendan Butler of Ibec, with Ireland's industrial base increasingly being driven offshore to cheaper locations in Eastern Europe and Asia.

"We have the most expensive electricity in Europe, 20% higher than other EU member states and there are worries about whether we can keep the lights on. That is a nonsensical situation, " says his colleague David Manning.

Wholesale electricity prices are some 50% higher in Ireland than in Britain and 31% above the EU average. For households, electricity prices jumped 41% from 2000 to mid-2005, according to Sustainable Energy Ireland, the highest increase in the EU.

Failures are increasingly likely, with 57 amber alerts warning of power cuts last year, more than double the 2004 figure of 27.

Lack of competition is the obvious culprit. ESB controls about 85% of Irish power generation, so with few alternative suppliers, it can pass on its higher costs to consumers and the independents.

Last month, the European Commission launched a bid to diversify energy generation and supply markets across the EU with an aim to provide better energy security.

Yet in Ireland, by effectively creating market conditions that prevent other suppliers of energy from developing, ESB has left us reliant on its own inefficient operations.

ESB was once known for a strong ethos of public service. Today, the company is a de facto wage racket for the unions. In December 2005, according to several reports, the average industrial wage in Ireland was around 33,500, or 15.54 per hour. At ESB, the average wage stood at 95,000 ( 140,000 at one power station in Dublin) or around 43 per hour. Then there are prospects of massive restructuring payouts, pensions and other benefits for our public energy workers.

According to a Forfas report released last week, ESB has also left Ireland over-dependent on oil, all of which we must import. Renewable sources such as wind have struggled to establish themselves both at the wholesale and small production levels.

A recent investigation by Business & Finance magazine found that, in the small production segment of the market, ESB practices of not crediting excess production by households and small businesses caused a virtual shutdown of the market for small wind generators in Ireland.

At a wholesale level, while Europe has made a determined drive for alternative energy, Ireland has had a moratorium on adding new wind generators to the national grid since 2003, leaving companies like Airtricity unable to open new wind stations. On 4 April, the European Commission took a first step in initiating legal proceedings against Ireland for failing to meet an October 2003 deadline to comply with EU legislation on renewable energy.

Airtricity, a world leader in wind power, when left unable to provide its green electricity to households in Ireland, pulled out of the residential market. The company complained that it had been "failed by the electricity market rules which have not provided a framework for any form of effective competition". Large multinationals which have pulled out of Ireland include major European power firms such as EOn and RWE of Germany and Statoil of Norway.

An independent report commissioned by Airtricity found that, between August and November 2005, ESB decisions on how to run the spill markets designed to cover excess demand for electricity were "unusual", "arbitrary" and/or "unilateral". According to the report, ESB ran the most expensive generating plants, passing the costs on to independent producers. Airtricity further alleged that, for at least three months in 2005, "when it actually came to the running of the system, 32% of the time the price was set by the most expensive plant and that plant never ran. So the Irish consumer was being billed for something that never occurred for 32% of the time".

According to the confidential report, "at the time when capacity was already tight, ESB plant failed to perform when required and caused a capacity crunch". ESB also manipulated electricity prices by switching out of cheaper fuels into more expensive sources of energy, by "reducing output level" and using more expensive plants instead of the available cheaper ones. Overall, this provided ESB with a "massive scope to set prices at any level", a market power usually available to the unregulated monopolies.

Fed up with being bullied in the market, Airtricity is now considering whether to take ESB to court, alleging that ESB chose to run its most expensive plants at points when wind was light, passing the additional cost onto Airtricity's customers and rendering it uncompetitive.

It was supposed to be different. Deregulation of the market occurred in 2000 following European Commission directives. However Tom Reeves, Commissioner for Energy Regulation, has been a weak and accommodating regulator, prompting Mark Fielding of ISME (Irish Small and Medium Enterprises Association) to accuse the commission of becoming "ESB's out-oftown office in Tallaght".

Amidst the alleged abuses of dominant market power by ESB, our regulatory authorities remain largely silent . . . at least in public . . . on the matter of how they plan to deal with deteriorating energy security situation. The review of the energy sector in Ireland prepared for Communications, Marine and Natural Resources minister Noel Dempsey, said to have cost 1.2m, is being kept secret, out of the hands of the Dail, the press and the public. Any requests to the department to release the study were met either with silence or with vague references to the need to protect decision-makers from undue influence by industry players. One logical conclusion is that it is being watered down before its release to make it more palatable to the interest groups that are driving our energy agenda . . . ESB and its trade unions.

The rumoured plans for simply splitting up ESB, while allowing the state-owned components to run monopoly rackets in energy sub-sectors, are hardly convincing. The last thing we need is a CIE-style rebranding of ESB into different state companies. Partial privatisation of ESB, in the style of Eircom or the proposed flotation of Aer Lingus, also offers little hope. In both cases, the company ownership was made less transparent and less efficient by massive payouts to the trade unions laying a claim to what they used to 'guard' as public assets.

It's time to break up ownership and management of the transmission grid and sell off the power stations to the private sector to introduce genuine competition. It is also time to lower planning, regulatory and pricing barriers to market access for independent producers and distributors. The moral of the sorry tale of Ireland's electricity is that power corrupts, state monopoly power corrupts absolutely.

Constantin Gurdgiev is an economist and editor of Business & Financemagazine. Peter Nolan is a former energy trader. The views expressed are their own.