Householders face massive price rises in electricity bills from January 1st after the energy regulator today sanctioned increases of around 20 per cent.
Average household electricity bills will rise by €12 euro a month from the start of next year.
David Manning, Ibec
In an added burden to consumers already hit hard by high mortgage rates and rising inflation, the Commission for Energy Regulation approved the hike due to spiralling fuel costs.
It comes on top of the 34 per cent increase in gas prices due in October.
The CER said the average electricity bill for a home for two months will increase from €126 to €150 - €12 euro a month.
Dermott Jewell, Consumers' Association chief executive, urged the Government to step in and ease the burden on customers by cutting VAT on electricity.
"They won't lose anything, they will still be taking VAT on increased bills and alleviating some of the pressure on consumers, and even, when they think about it, on voters," he said.
In Britain VAT on electricity is 5 per cent, whereas in the Republic of Ireland it is 13.5 per cent.
The CER agreed a 19.6 per cent increase for small and medium enterprises and 21 per cent for large industrial customers.
Business federation Ibec expressed serious concern at the approved price hike. David Manning, the lobby group's energy executive, said questions had to be asked of the regulator over his failure to deliver competitive prices for consumers.
"Serious questions must be asked of the regulator, who has once again failed to deliver competitive prices for consumers. This increase is yet another blow to Ireland's competitiveness," he said.
Ibec claimed the total energy bill for Irish business had increased dramatically from €3 billion euro in 2003 to €4 billion in 2006 - an increase of €1 billion euro or more than 30 per cent.
The CER revealed the effect rising fuel costs have had on electricity prices since 2004.
Bills went up by 4 per cent in 2005, 3.1 per cent in 2006 and the 19.4 per cent increase proposed will result in a cumulative increase of 28 per cent over the three years, the body said.
In a statement, the regulator Tom Reeves said: "The main driver of the price increase is increased fuel costs.
"When tariffs were set this time last year it was assumed that natural gas would cost 41p/therm; the forward price of gas assumed for 2007 is 58p/therm, a 40 per cent increase. The equivalent increase in oil prices is approximately 36 per cent."
In a bid to ease the burden on the country's biggest electricity users, the regulator has lifted tariff regulation from the industrial supply market because of the competition.
It will allow the top 800 industrial users to shop around for the best price.
Eamon Ryan, Green Party energy spokesman, said the massive rise could have been avoided if more emphasis had been placed on renewable energy.
"Fuel costs are the main drivers behind these price increases and yet the regulator and the ESB have not had the foresight to invest in renewable resources such as wind and biomass, whose fuel costs are zero," Mr Ryan said.
"Today's increase makes ever more urgent the need to turn the ESB from a fossil fuel dinosaur into a modern, progressive green energy company."
Ruairi Quinn, Labour Party enterprise spokesman, called on the Government to hand back the €77 million dividend it is due from ESB this year.
"With Government coffers awash with money, the €77 million they are taking from the ESB will make little or no difference to the overall Exchequer position," Mr Quinn said. "But if the ESB were to be allowed to retain this money it would reduce the need for such a major increase and ease the pressure for future increases."
PA