An Post has suffered a significant setback with a decision on its controversial stamp price increase application not now expected for several months.

The regulator, ComReg, has requested further information from An Post to support the application it submitted 11 months ago.

An Post will shortly report a small surplus but the delay in granting a price increase for stamps could have financial repercussions. Last May, when the application was submitted, An Post chief executive Donal Curtin said the company believed it was entitled to a "realistic" price increase.

While never disclosed publicly, it is understood the company sought an increase of 14.5 per cent. This would push up the price of a stamp from 48 to 55 cent.

An Post was previously described as being on a financial "knife edge", but the decision not to pay its 10,498 staff the terms of Sustaining Progress has helped improve its financial position. However, if it is forced to pay future pay awards its position could deteriorate.

ComReg emphasised the application from An Post covered more than just the 48 cent stamp and had implications for other forms of mail.

Asked was it close to making a decision, a ComReg spokesman said: "There has been a series of correspondence and meetings in an effort to arrive at a 'fit for purpose' price application. Currently, ComReg is awaiting a final, up-to-date price application from An Post."

When An Post submits what ComReg describes as a "fit for purpose" application, a public consultation process will be initiated. This process can take about three months to complete.

The chances of An Post drawing down a price increase before the end of the summer are slim, according to industry sources.

While any rise in the 48 cent stamp is likely to prove unpopular, businesses will also be concerned if rates for bulk mail increase. On average, the business sector sent 363 pieces of mail per week in 2004.

Despite the increasing use of e-mail, households post an average of 4.7 items (including birthday cards, bill payments, Christmas cards and letters) per week.

ComReg is believed to support strongly the idea that increasing mail volumes is the best way to lower unit costs and, consequently, prices. Improved quality of service performance will be a key factor for ComReg in assessing the tariff increase application.

It is understood the regulator is keen to ensure that any tariff structure is affordable, geared to cost and transparent, and non-discriminatory.