Consumers are facing significant increases in gas and electricity charges starting from October, the energy regulator has announced. Emmet Oliver reports
The regulator has approved an average increase of 4.1 per cent in the price of electricity and a rise of over 25 per cent in the cost of natural gas. The electricity price rise takes effect from next January while the gas price increase will be implemented from next month.
The announcement was widely criticised by business groups and opposition parties last night. However, the energy regulator, Tom Reeves, said that the increases were necessary so that the ESB and Bord Gáis could recoup the escalating cost of fuel on the international markets.
While the average electricity price rise is 4.1 per cent, domestic customers will see their charges rise by 3.1 per cent. However, opposition parties said that this was still ahead of inflation, which is currently at 2.3 per cent.
The rise in the price of electricity was far lower than in previous years, but some observers were surprised by the big increase allowed to Bord Gáis.
However, Mr Reeves said that the company had requested a 34 per cent increase in its original application to his office. He pointed out that the company had little control over the cost of gas on the international markets and said that the forward price of natural gas had gone up by 60 per cent in the past year.
In relation to electricity, small and medium enterprises are facing a rise of 5.2 per cent, with large industrial consumers of electricity facing an increase of 8 per cent. Mr Reeves, who heads the Commission for Energy Regulation, said that while the costs of transporting and distributing electricity were falling, the costs of generation were rising.
He also pointed out that oil and gas prices had risen by 50 and 60 per cent, respectively, over the last year, and this had pushed the price of generating electricity up by 28 per cent.
Another factor was the rising cost of overhauling and maintaining ESB plants. This will increase from €75 million this year to €130 million in 2006.
He said British electricity customers had recently been told to expect price increases of up to 14 per cent. "Typical household bills in the United Kingdom have increased by over 20 per cent in the past 19 months," he added.
Fine Gael said that energy price rises should not exceed inflation. Its enterprise, trade and employment spokesman, Phil Hogan TD, called on the Government to implement "strict new guidelines" to prevent increases in the price of oil and gas.
"Consumers and businesses are once again facing punitive hikes in the price of gas and electricity as a result of the one-sided regulatory environment created by this Government. It's time for the Government to implement Fine Gael proposals which would ensure that the price of utilities like gas and electricity would only increase at or below the rate of inflation," he said.
The Small Firms Association (SFA) said that the latest increases would hit the competitiveness of the economy.
"The scope, scale and extent of these increases will have a wide-ranging impact on Irish business," said SFA director Pat Delaney. "This type of decision has now become the hallmark of the regulation of the Irish public utility sector."