THE Government has agreed in principle on ESB price increases averaging 6 to 7 per cent over the next three years, although final agreement on phasing has still to be reached. Divisions emerged in the Cabinet over the proposal by the Minister for Energy, Mr Lowry, to grant a 6-7 per cent price increase to the ESB.

However it is understood that proposals have been agreed in outline, which would mean an average increase of around 6.5 per cent over the next three years. This year domestic consumers are likely to face an increase of around 2.5 to 2.8 per cent, slightly ahead of inflation.

It is understood that Mr Lowry recommended the increase at Tuesday's Cabinet meeting to meet the capital costs of restructuring electrification plant built in the 1950s. He suggested that it should be phased in over a number of years.

Under the proposal, domestic users would be hit with an increase greater than 6-7 per cent over three years while industrial users would be subjected to a lower increase.

The proposal lead to a heated debate in the Government, according to informed sources. While most Ministers agreed that the increase had to be granted as part of the ESB rationalisation programme, there were deep divisions about how the increase should be phased.

However, senior sources indicated last night that outline agreement had been reached on the increase.