Proposed increases in the cost of electricity would deliver a "sucker punch" to small businesses that are already struggling with heavy financial pressures, according to small business lobby group, ISME.

The 12.5 per cent increase requested by the ESB on Friday could lead to job losses among small firms, ISME warns.

Mr Robert Berney, ISME chairman, said yesterday that more increases in electricity prices would represent a "killer blow" to small businesses.

Mr Berney said this would be particularly true for firms involved in manufacturing that have already been hit by rising costs in production, waste and labour.

He called on the Minister for Communications, Marine and Natural Resources, Mr Ahern, to step in to prevent the increases.

The ESB has asked for permission to raise the price of electricity by 8 per cent in September and then by a further 4.5 per cent in January 2005. It has not ruled out requests for further increases over the course of 2005, having already raised prices once this year.

Mr Berney pointed out that if the latest requests for higher prices are approved, they will mean that small businesses have faced a cumulative 43.8 per cent increase in the cost of electricity within three years.

He said it was inconceivable in the wake of the launch of the Enterprise Strategy Group report that "another arm of the State" would be attempting to stifle business.

The ISME warning is the second to emerge from small business since the ESB's new pricing proposals were made public on Friday. The Small Firms Association (SFA) has claimed the move "flies in the face of competitive reality".