Case number: OIC-55783-Q5G7S1
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:
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 information such as the terms and conditions and negotiating positions in relation to the LRSAs. It refused access to such records, in whole or in part under sections 30(1)(c), 35(1)(a), 36(1)(b), 36(1)(c) and 37(1).
The applicant sought an internal review of that decision on 14 March 2019, and argued that the CRU had failed to identify all relevant records. On 8 April 2019, the CRU issued its internal review decision, in which it affirmed its original decision and stated that it was unable to locate any further relevant records. In addition to the exemptions relied upon in its original decision, the CRU also relied upon section 15(1)(d) to refuse access to the two CRU papers referenced above, CRU/17/346 and CRU/18/228, and section 15(1)(a) to refuse access to any further records.
During the course of the review, the CRU accepted that three additional records mentioned in record 34 were within the scope of the applicant’s request. It argued that these records, records 35, 36 and 37, were exempt under sections 30(1)(c), 35(1)(a) and 36(1)(b) and (c). The CRU also part-granted access to the email records 22 and 23, refusing access to the remainder of those records under sections 30(1)(c), 35(1)(a), 36(1)(b) and (c), and 37(1).
Subsequently, Mr. Benjamin O’Gorman of this Office provided the applicant with details of the CRU's submissions regarding its records management practices and search details in respect of additional categories of records the applicant had argued the CRU should hold. He also provided the applicant with details of the CRU’s arguments as to why certain types of records were outside the scope of the applicant’s original request. He informed the applicant of his view that the CRU had carried out all reasonable steps in an effort to ascertain the whereabouts of all relevant records and that it was justified in refusing the request on the ground that the additional records sought in the original request do not exist.
The applicant indicated by return that he was amenable to narrowing the scope of the review to only those records already identified by the CRU as relevant. The applicant also indicated that he was not seeking access to any personal information of third parties in the records.
During the course of this review, this Office also sought and received submissions from EirGrid and the Energia Group (Energia), in addition to the CRU and the applicant. Energia confirmed that it owned and controlled Huntstown Power Company and Viridian Power Limited, the two companies that own and run the two Huntstown Units. Energia made submissions on behalf of both companies.
I wish to apologise at the outset for the delay in concluding this review, which was due, in large part, to staff resourcing issues. In conducting the review, I have had regard to the correspondence between the applicant and the CRU as set out above and to the communications between this Office and the CRU, the applicant, EirGrid and Energia on the matter. I have also had regard to the contents of the records concerned. I have decided to conclude this review by way of a formal, binding decision.
For the sake of clarity, I should explain that where an email record contained attachments, the CRU generally labelled the records attached to that email by reference to the record number of the email. Therefore, record 8 is an email with two attachments, and those two attachments are records 8.1 and 8.2.
During the course of this review, the CRU released email records 22 and 23 subject to the redaction of the names and details of staff members of Energia. As the applicant is not seeking that information I do not need to consider those records any further. However, the CRU maintained its reliance on sections 30(1)(c), 35(1)(a), 36(1)(b) and 36(1)(c) to refuse access to the attachment to record 23 (record 23.1).
The CRU redacted all parts of CRU meeting minutes in record 32 except part 2(c) on the basis that they were outside of the scope of the applicant’s request. Having reviewed record 32, I accept that only part 2(c) is within the scope of the request.
Therefore, the records at issue in this review are as follows: 1, 4, 5, 6, 7, 8, 8.1, 8.2, 9, 9.1, 11, 12, 12.1, 12.2, 13, 13.1, 14, 14.1, 16, 17, 18, 19, 20, 20.1, 20.2, 20.3, 20.4, 21, 23.1, 24, 24.1, 25, 26, 27, 28, 29, 29.1, 29.2, 29.3, 29.4, 29.5, 29.6, 29.7, 30, 31, 32, 33, 35, 36, 37.
Accordingly, the scope of this review is concerned solely with whether the CRU was justified in refusing access to the records at issue, in whole or in part, under sections 30(1)(c), 35(1)(a) and 36(1)(b) and (c).
It is important to note that while I am required by section 22(10) of the FOI Act to give reasons for my decisions, this is subject to the requirement at section 25(3) of the Act that I take all reasonable precautions to prevent disclosure of information contained in an exempt record or matter that, if it were included in a record, would cause the record to be exempt. Therefore, the description I can provide of the relevant records and of my reasoning in this case is somewhat limited.
Furthermore, section 18(1) provides, that "if it is practicable to do so", access to an otherwise exempt record shall be granted by preparing a copy, in such form as the head of the FOI body concerned considers appropriate, of the record with the exempt information removed. However, this Office takes the view that the provisions of section 18 do not envisage or require the extracting of particular sentences or occasional paragraphs from records for the purpose of granting access to those particular sentences or paragraphs. Generally speaking, therefore, this Office is not in favour of the cutting or "dissecting" of records to such an extent. Being "practicable" necessarily means taking a reasonable and proportionate approach in determining whether to grant access to parts of records.
Finally, it is also relevant to note that section 13(4) of the FOI Act does not allow this review to have regard to any reasons as to why the applicant is seeking the information he has requested (except insofar as such reasons are relevant to consideration of the public interest or other provisions of the Act). It is worth mentioning also that it is outside the remit of the Information Commissioner to carry out any investigation or make any findings on how the FOI body carried out its duties in the circumstances surrounding a review. Therefore, while I note the arguments raised by the applicant concerning the context of his request I cannot have regard to these arguments except and insofar as they are relevant to a consideration of the public interest.
The records at issue concern various communications between the CRU, EirGrid, Viridian/Energia, relating to the negotiation of Local Reserve Supply Agreements (LRSA) between EirGrid and Energia/Viridian, the matters that led to such LRSAs, and alternative options to address the security of supply issue. Broadly speaking, the records consist, amongst other things, of correspondence between the CRU and EirGrid, correspondence between the CRU and Energia/Viridian, correspondence between EirGrid and Energia/Viridian, internal CRU memos and minutes of meetings, various versions of the LRSAs and associated agreements, various reports prepared by EirGrid and sent to the CRU, and other related documentation. Viridian is now known as Energia. Accordingly, those two names are used interchangeably in this decision.
The CRU has relied on a number of exemptions to refuse access to the records in this case. As I consider section 30(1)(c) and section 36 to be of the most relevance I propose to consider those exemptions first.
The CRU is relying on sections 30(1)(c), 36(1)(b) and 36(1)(c) to refuse access, in whole or in part, to all outstanding records in this case, namely records 1, 4, 5, 6, 7, 8, 8.1, 8.2, 9, 9.1, 11, 12, 12.1-12.2, 13, 13.1, 14, 14.1, 16, 17, 18, 19, 20, 20.1-20.4, 21, 23.1, 24, 24.1, 25, 26, 27, 28, 29, 29.1-29.7, 30, 31, 32, 33, 35, 36 and 37.
Section 30(1)(c) provides for the refusal of a request where the body considers that access to the record concerned could reasonably be expected to disclose positions taken, or to be taken, or plans, procedures, criteria or instructions used or followed, or to be used or followed, for the purpose of any negotiations carried on or being, or to be, carried on by or on behalf of the Government or an FOI body.
Section 36(1)(b) must be applied to certain types of information whose disclosure could reasonably be expected to result in a material financial loss or gain to the person to whom the information relates, or could prejudice the competitive position of the person in the conduct of his or her profession or business or otherwise in his or her occupation.
Section 36(1)(c) provides for the refusal of a request if the record sought contains information whose disclosure could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates.
Having regard to section 25(3), the degree to which I can describe the CRU’s submissions on section 30(1)(c) is limited. The CRU argued that the records at issue represent a chain of communications relating to the negotiation of LRSAs in which the CRU repeatedly sets out its position on a number of factors. The CRU argued that the process of negotiating an LRSA is non-competitive and only exists due to the importance of security of supply to the entire country. It argued that LRSAs are therefore negotiated in extreme and exceptional circumstances and that it is vital to the CRU that these circumstances are not made more difficult through the disclosure of the negotiating positions of the CRU and EirGrid. The CRU also argued if it was required to release information on how this negotiation was carried out it would negatively impact the CRU’s ability to respond to a similar situation in the future.
While the substantive arguments in the CRU’s submissions refer to its own negotiating positions, the CRU went on to address each record to which it claimed section 30(1)(c) applied. In doing so, it identified the information in each of the respective records that it considered would disclose negotiating positions of the CRU and/or EirGrid. Having examined the records at issue, it is clear to me that while EirGrid was the FOI body primarily negotiating with Energia, the CRU had a high-level role in those negotiations as the regulator responsible for ultimately deciding whether EirGrid should enter into any LRSAs. I am also satisfied that the CRU’s negotiating positions regarding potential LRSAs fed into and informed the positions of EirGrid on the matter. Accordingly, I accept that the CRU was involved in the negotiations and that its positions on the matter amount to negotiating positions.
The CRU has publicly acknowledged, in CRU/17/346, that the new market arrangements under I-SEM may lead to the abrupt exit of some generators, and this may pose risks to security of supply to the electricity system. Energia noted in its submission that one of the two Huntstown plants had not been successful in a recent auction for capacity year 2022/23. Energia asserted that the Huntstown plant in question continued to be needed to maintain security of supply in Dublin, and that therefore it was reasonably foreseeable that a further LRSA or LRSA extension may be required in the absence of an alternative solution.
Submissions on Section 36(1)
The CRU argued that release of the records would prejudice the competitive position of Energia and could reasonably be expected to result in material financial loss to the person whom the information relates. The CRU contended that Energia’s competitors could use any details that infer the financial distress of the group. The CRU argued that, as a publicly traded company, release of the records could harm Energia’s access to finance. It acknowledged that a publicly traded company is required to disclose certain information, but contended that the information contained within the records had not been publicly released. The CRU also argued that release of the records could lead to Energia’s customers moving to other suppliers.
The CRU also argued that disclosure of the records would prejudice the conduct or outcome of contractual or other negotiations with the CRU on the basis that it may be necessary to negotiate another LRSA in the future. It contended that release of the records would affect these negotiations by providing a blueprint for negotiations with the CRU.
EirGrid stated that it recognised the Huntstown companies are in a competitive market and release of the records would impact their commercial activities. It argued that the records contain commercially sensitive information relating to technical interoperability of the units, technical operating parameters, operational running costs of the units, and grid access rights.
Energia argued that the records contain a large amount of financial and commercial information shared with the CRU during the negotiation process, as well as copies of the ultimate LRSAs. It contended that the disclosure of this information would put the Huntstown companies at a clear disadvantage relative to their competitors should any similar contractual negotiations be required in the future, as it would reveal the Huntstown companies’ views, negotiating positions, cost structures, and analysis. Energia also argued that the Huntstown companies would also be significantly disadvantaged in future annual capacity auctions as competitors would have sensitive information about their costs. It argued that this would be unfairly advantageous to their competitors making them more likely to be awarded a Reliability Option or an LRSA (or to compete in other energy contract contexts), at the Huntstown companies’ expense.
Energia also argued that the disclosure of this information would enable competitors to gain insights into and otherwise profile the Huntstown companies’ operating models, finances and cost structures, which could be used by competitors in determining their own contracting position, thereby prejudicing the competitive position of those competitors. Energia asserted that it is also conceivable that the use of information in this way could result in a material financial loss to the Huntstown companies, particularly in circumstances where the Huntstown plants may not be financially viable in the absence of such a LRSA. It argued that the inability of the Huntstown companies to fairly compete, without their competitors having an undue advantage, in future energy contracts or capacity auctions, would likely be detrimental to the continued operation of the Huntstown plants, thereby resulting in the possible closure of the plants.
Energia noted that one of the two Huntstown plants had not been successful in a recent auction for capacity year 2022/23. Energia asserted that the Huntstown plant in question continued to be needed to maintain security of supply in Dublin, and that therefore it was reasonably foreseeable that a further LRSA or LRSA extension may be required in the absence of an alternative solution. It accepted that there is no legal obligation on EirGrid to decide grant an LRSA or LRSA extension. However, Energia argued that such a decision by EirGrid should be made in a context in which all third parties are on an equal footing with none having commercially sensitive market insights into another party and particularly not in a context in which the competitor has knowledge of the Huntstown companies’ financial solvency and pricing.
The CRU’s position is that all of the withheld information is exempt pursuant to either section 30(1)(c) or section 36(1) or, indeed, both sections. I have examined all of the records at issue. Having done so, and having regard to the CRU’s submission and the individual arguments the CRU made in respect of each record, and having regard to section 18, I am satisfied that the all of the information at issue is exempt under one or both of the sections cited.
On the applicability of section 30(1)(c), I accept that the release of many of the records could reasonably be expected to disclose positions taken, or to be taken, or plans, procedures, criteria or instructions used or followed, or to be used or followed, for the purpose of future negotiations with generators. I am particularly conscious that it is often the case that describing the position of either party in a negotiation will disclose positions taken by both sides. In all the circumstances of this case I accept that it is likely that the positions, plans, procedures, criteria or instructions of the CRU and EirGrid set out in the records at issue would be relevant to future negotiations the CRU and EirGrid may have to engage in with other generators to address security of supply issues.
On the matter of the applicability of section 36(1), I note that the essence of the test in section 36(1)(b) is not the nature of the information but the nature of the harm which might be occasioned by its release. The harm test in the first part of section 36(1)(b) is that disclosure "could reasonably be expected to result in material financial loss or gain". The Commissioner takes the view that the test to be applied is not concerned with the question of probabilities or possibilities but with whether the decision maker's expectation is reasonable.
The harm test in the second part of section 36(1)(b) is that disclosure of the information "could prejudice” the competitive position of the person in the conduct of their business or profession. The standard of proof to be met here is lower than the "could reasonably be expected" test in the first part of the exemption. However, the Commissioner takes the view that, in invoking "prejudice", the damage which could occur must be specified with a reasonable degree of clarity.
As I have outlined above, section 36(1)(c) provides for the refusal of a request if the record sought contains information whose disclosure could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates.
I accept that the release of mush of the information at issue could be used in a manner which would cause commercial harm to Energia and other commercial entities. In particular, having regard to the content of the withheld information and the third party submissions, I am satisfied that disclosing the information to the world at large could prejudice Energia’s competitive position, as it would not otherwise be available to competitors, who could use it to their advantage. I am also satisfied that disclosure could provide insights to others which could prejudice the competitiveness of Energia in negotiations and therefore the conduct and outcome of such negotiations could be prejudiced as far as Energia is concerned. In addition, I am satisfied that the records contain commercially sensitive information relation to EirGrid and other commercial entities.
Accordingly, I find that sections 30(1)(c) and/or 36(1) apply to all of the records at issue. However, that is not the end of the matter as both exemptions are subject to a public interest balancing test, at 30(2) and 36(3) respectively.
The question I must consider is whether the public interest would, on balance, be better served by granting than by refusing access to the withheld information.
On the matter of where the public interest lies, I have had regard to the comments of the Supreme Court in The Governors and Guardians of the Hospital for the Relief of Poor Lying-In Women v The Information Commissioner  1 I.R. 729,  IESC 26. It is noted that any public interest considered by the Commissioner must be a true public interest recognised by means of a well-known and established policy, adopted by the Oireachtas, or by law.
On the matter of the type of public interest factors that might be considered in support of the release of the information at issue in this case, I have had regard to the findings of the Supreme Court in The Minister for Communications, Energy and Natural Resources v The Information Commissioner & Ors  IESC 5. In her judgment, Baker J. indicated that the public interest in favour of disclosure cannot be the same public interest as that broadly stated in the Act. She said the public interest in disclosure must be something more than the general public interest in disclosure and the reason must be found from the scrutiny of the contents of the record. She said there must be a sufficiently specific, cogent and fact-based reason to tip the balance in favour of disclosure.
In essence, the CRU’s argument is that it would be contrary to the public interest to release these records given the possibility for future similar negotiations being required in the future. It stated that the option to enter into an LRSA in future to protect security of supply must remain for the CRU and the release of any negotiations/plans between parties would severely limit the CRU’s ability to negotiate an LRSA in the future. The CRU said that considering the damage release may cause to the general public, through higher energy costs and reduced security of supply, and the fact that it has published a paper setting out the process and overall structure of the LRSA, it was of the view that the potential benefit of additional transparency is small, if any. The CRU argued that the only persons who would stand to benefit through the release of the records would be parties seeking to gain insight into the CRU’s approach in order to secure advantages for themselves in future LRSA processes.
The applicant contended that the CRU had failed to properly balance the application of any of the exemptions it was claiming against the public interest tests within those exemptions. The applicant acknowledged that the CRU had provided certain information to the public through the publication of papers CRU/17/346 and CRU/18/228. However, the applicant contended that further records relating to the decision making process were likely to contain much more detailed information regarding the decision to award an LRSA than has been made available by the CRU.
The applicant argued disclosure of the records would be consistent with the CRU’s overarching statutory duty under section 9(3) of the Electricity Regulation Act 1999 as amended. Section 9(3) provides that “it shall be the duty of the Minister and the Commission to carry out their functions and exercise the powers conferred on them under this Act in a manner which —
The applicant argued that there was a real risk that the LRSA would lead to serious market distortions to the detriment of all other participants, including the applicant itself. The applicant argued that the LRSA had placed Viridian at a distinct advantage to other market participants across a number of I-SEM markets. The applicant argued that the LRSA allows Viridian to bid more aggressively than other players and, where it is unsuccessful, simply recoup payments via the LRSA. The applicant contended that this was inconsistent with the CRU’s requirements to ensure that the CRU accounts for this situation. The applicant stated that only one of the two Huntstown units was successful in the capacity auction in March 2019, and argued that this makes it likely that Viridian will seek a further LRSA. The applicant contended that while that should involve a competitive process, Viridian, having already obtained an LRSA, has a distinct advantage relative to other participants. It stated that the inability of competitors to understand the basis for the LRSA further increases Viridian’s advantage. Finally, the applicant stated that the CRU has recently announced plans to introduce a locational scalar in Dublin and argued that as a result of its LRSA, Viridian would stand to benefit.
In carrying out any review, this Office has regard to the general principles of openness and transparency set out in section 11(3) of the FOI Act. Section 11(3) provides that an FOI body must have regard to the need to achieve greater openness in the activities of FOI bodies and to promote adherence by them to the principles of transparency in government and public affairs and the need to strengthen the accountability and improve the quality of decision making of FOI bodies. However, this Office takes the view that the FOI Act was designed to increase openness and transparency in the way in which FOI bodies conduct their operations and, in general terms, that it was not designed as a means by which the operations of private enterprises were to be opened up to scrutiny
In The Minister for Communications, Energy and Natural Resources v The Information Commissioner & Ors, the Court found, in respect of section 36(1) that;
“The exemption of certain records under s. 36(1) is established to protect commercially sensitive information and that must be seen as a protection of the commercial interests of public bodies. The sub-section recognises that there is a public interest in the protection of commercial sensitivity and this may be normally served by the operation of the exemption itself, which provides for the refusal of an FOI request.”
While those comments were made specifically in respect of section 36(1), it seems to me that they are of general applicability to any exemption that contains the same public interest balance test that is contained in section 36. In other words, the exemption provision recognises that there is a public interest in the providing the protection described in the exemption and that this may be normally served by the operation of the exemption itself, which provides for the refusal of a request.
Having regard to the contents of the records at issue, I accept that the release of the records at issue would give rise to the harms identified and that sections 30(1)(c) and 36(1) seek to protect. I also consider that a considerable amount of information in relation to the LRSA between EirGrid and Energia is in the public domain. In my view, CRU has sought to strike an appropriate balance in releasing such information while at the same time protecting both its own negotiating position and the commercial interests of third parties.
I am not aware of any sufficiently specific, cogent and fact-based reason to tip the balance in favour of disclosure of the information in this case. Accordingly, I consider that the public interest would not be better served by its release.
In conclusion, therefore, I find that the public interest would, on balance, be better served by refusing access to the records at issue. I find, therefore, that the CRU was justified in refusing access to those records under sections 30(1)(c) and/or 36(1)(b) and (c).
As I have found sections 30(1)(c) and 36(1) to apply to the records at issue in this case I do not consider it necessary to examine any of the other exemptions relied upon in this case.
Having carried out a review under section 22(2) of the FOI Act, I hereby affirm the decision of the CRU to refuse access to the relevant records in this case on the basis of sections 30(1)(c), 36(1)(b) and 36(1)(c) of the FOI Act.
Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal.