The energy regulator, Mr Tom Reeves, has approved a 9.1 per cent increase in prices for Bord Gáis, although the State-owned company had sought 17 per cent.
The increase, which applies from April 1st, will have to be paid by the company's 400,000 domestic users and about 15,000 small businesses. For large business users, the average increase will be about 2.5 per cent.
Bord Gáis said the increase was needed because international gas prices had increased greatly in the last few years.
The company is now sourcing more than 80 per cent of its gas in Britain and Europe, as the Kinsale field is becoming seriously depleted. The rising cost of transporting gas was also cited as a contributory factor.
There has not been a price rise since the mid-1980s and the company said yesterday it believed gas prices remained extremely competitive when compared to oil and other fuels.
A 9.1 per cent increase in domestic gas prices will add 0.043 per cent to the annual rate of inflation. Natural gas is estimated to represent 0.424 per cent of the total consumer basket of goods and services.
Mr Reeves said the company sourced the majority of its gas in Britain and prices there were at their highest levels since the mid-1990s.
He also pointed out that Bord Gais had spent €700 million on a second natural gas inter-connector to Britain and a new pipeline to the west.
For domestic customers the average two-monthly domestic gas bill comes to €73. The increases approved by Mr Reeves will add €6.66 to this. This represents an increase of 11 cents per day. The increase for households will be reflected in bills posted in June.
The Commission for Energy Regulation (CER) said it would review gas prices each year. Mr Reeves said he would ensure "fully cost-reflective tariffs" would be in place when the gas market opened up in 2005.
Mr Reeves explained that companies which consume more than 500,000 standard cubic metres of gas are entitled to source their gas on the open market.
These companies often have contracts with Bord Gais as well, and he said while each contract was different, the average increase would be about 2.5 per cent. He said a cap of 15 per cent would be placed on increases in this sector. These large businesses, in terms of volume, now account for 85 per cent of the natural gas market.
The company declined to comment on why the 17 per cent increase was not approved, but it said it welcomed Mr Reeves' decision.
The company said even with the price rises, Irish gas prices remained 25 per cent below the EU average.
