A new report released last night suggests electricity prices in the Republic could be set to rise by as much as 36 per cent on the back of escalating fuel charges and higher carbon emission costs.
As the price of oil threatened to breach the symbolic $60 a barrel mark in New York, the report from the Commission for Energy Regulation (CER) said the unit price of electricity looks like it will rise from €53.60 per megawatt hour to €72.86, a rise of almost 36 per cent.
The CER has circulated the document among the leading players in the electricity industry for their contribution, including the ESB.
A CER spokesman last night said it was still considering what tariffs would apply to homes and businesses in 2006, but he acknowledged prices would be rising significantly. He described the 36 per cent rise as a "worst case scenario" and said it was possible hedging by the ESB would bring this figure down slightly.
Earlier estimates suggested price rises of between 12 and 14 per cent could be on the cards, but it is likely this figure will be easily surpassed. Over the weekend Gary Ryan, the head of sales and marketing of Energia, the main rival to ESB, acknowledged prices were likely to rise well beyond 12 per cent.
The escalating cost of gas is the main reason for pressure on Irish electricity prices at present. Coal has remained steadier and a CER spokesman pointed out that ESB does have a fuel mix of oil, gas, coal and turf. The CER document also points out that buying carbon credits is becoming more expensive.
Ironically, fuel and carbon are among the few items actually rising in cost in the energy market at present. The CER estimates that insurance for power plants is falling, while the charges for using the electricity system are also dropping.
The latest figures were produced during the CER's annual exercise of working out the best new entrant (BNE) price of electricity. The CER does this exercise so it can work out what the ESB should be charging other companies who buy top-up power from the State-owned utility.
Oil prices rose close to $60 a barrel yesterday on the threat of an oil workers' strike in Norway, the world's third largest oil exporter, and deepening market worries about the lack of refining capacity.
