NORTHERN IRELAND Electricity (NIE) has held initial talks with the Northern Ireland Authority for Energy Regulation about increasing its prices for consumers and industrial users.

The discussions took place as an unprecedented increase in gas prices came into effect this week in Northern Ireland. Phoenix Natural Gas, the North’s key gas supplier, said it had been forced to increase prices by 28 per cent this month because the wholesale cost of gas had reached a record high.

The North’s energy regulator,Iain Osborne, has warned that electricity prices are likely to follow a similar upward trend.

The regulator made no comment yesterday following his initial discussions with the electricity company, but he has previously signalled that energy costs could rise by as much as 30 per cent before the end of 2008.

Mr Osborne has said electricity price increases are unavoidable in the North because electricity providers are exposed to the same underlying fuel costs as gas suppliers.

He has said the Northern Ireland Executive needs to act now to work in partnership with other key agencies to create buffers against global energy trends.

NIE last increased its prices by 3.9 per cent in November. Since then, there have been steep rises in the wholesale costs of oil, gas and coal.

The company’s decision to apply for permission to increase its prices reflects a general trend across the UK. Electricity prices have risen on average by 14 per cent in the UK since the beginning of the year.

Consumer groups and business bodies in the North are appealing to the regulator to consider staggering future electricity price increases to ease the impact.

The North has the highest rates of fuel poverty in the UK.