First, Spain in the only country in the world where electricity production and distribution are conducted by separate entities.
The Irish Government engineered a split within the former state monopoly supplier/distributor - ESB - into separate Supply and Network operations - apparently at the EU's behest.
Because the producing arm was still mostly a monopoly, it has been forced to divest itself of a lot of its retail customers by selling wholesale to another state company (Bord Gas) which passes on a 10% discount to customers and still makes a tidy profit.
The Government also allowed huge price hikes in the belief that this would encourage new entrants and develop competition in the market. So far we have had the price hikes but little competition...
AFAIK The ESB was also inhibited from developing new production capacity on the grounds that it already had a dominant position in the market - doh - it used to be the only supplier. This means we are almost entirely dependent on new private entrants to add capacity and enable a switch to renewable... notes from no w here
The point of this exercise is to allow for lower prices to industry and higher prices to consumers. Think of it as yet another subsidy. It's all about the "competiveness".
