The increase in electricity tariffs from the start of next year will followa hike in VHI rates and an application by CIÉ to increase its fares
Electricity prices are set to rise by an average of about 10 per cent from the start of next year after a review by the energy regulator, Mr Tom Reeves.
The increases are less than the average 15 per cent sought by the ESB when Mr Reeves began his review last March.
But domestic users will bear the brunt of the rise, with Mr Reeves believed likely to increase tariffs in this area by about 13.4 per cent. Such a rise will be the second in 15 months for customers, whose tariffs rose by 8.9 per cent last October.
It is believed the latest increase, which will be formally announced late next week, will bring the average domestic electricity bill to about €99 every two months.
Domestic customers have still made no gains from the liberalisation of the sector more than two years ago. In theory at least, competition is designed to stimulate reduced tariffs. That has not yet happened.
It is thought that the latest increase will add some 0.26 of a percentage point to the inflation rate by the end of next year. When bi-monthy bills start reflecting the new tariffs from next March, the monthly inflation rate will rise by 0.02 per cent.
The increase in electricity tariffs from the start of the year will follow a hike in VHI rates and an application by CIÉ to increase its fares. At 4.2 per cent last July, the Irish annual inflation rate last month was the highest in the EU.
It is thought that tariffs for large-scale industrial users of electricity will rise by about the same as inflation, with small and medium-sized business users facing an increase of between 4 and 10 per cent.
Mr Reeves is believed likely to justify the higher rate of increase for domestic users on the basis that there has been large-scale cross-subsidisation from industrial customers for years. Before the most recent rise, tariffs had not increased since 1993.
Such rebalancing is required to ensure that tariffs throughout the business are cost-reflective. A further factor in the increase will be rising fuel prices, which make up one of the biggest individual segments in the basket of electricity costs.
The increase follows a pledge by the new ESB chief executive, Mr Pádraig McManus, to double the company's pre-tax profits by 2007. This was despite the company's obligation to significantly reduce its market share and the granting of a 21 per cent pay award to staff as part of the PACT reform programme.
The company's 2001 annual report has not yet been published.
Although the accounts are believed to have been with the Government for some time, it is thought that the company has yet to reach agreement with the Government on its dividend. Initial copies of the ESB annual report and accounts sent to the then Department of Public Enterprise contained "no mention" of a dividend, it is believed.
In addition, it is thought that the company must conduct an a.g.m. for the first time as workers now hold 5 per cent of the company.
The ESB has embarked upon a major renewal of its networks. To part-fund that programme, its chairman, Mr Tadgh O'Donoghue, has indicated that it must raise more than €2 billion in bonds or loans.
The company is attempting to negotiate the closure of a defunct power station at Rhode, Co Offaly, with 100 staff who have manned the plant since production stopped in May last year after an explosion.
It is thought to be incurring expenditure of €60,000 a week to keep the plant open, even though no electricity has been produced. Workers want a payment of two times salary in addition to ongoing payment of half their salary. They also want compensation for "anxiety" they attribute to exposure to asbestos at the plant.
