GAS PRICES are to rise by at least 22 per cent from the beginning of October, after the Commission for Energy Regulation announced it will approve increases.
Bord Gáis Energy had initially applied for a 28 per cent rise in its residential gas tariffs after a steep climb in wholesale prices since the start of the year.
The regulator said that after reviewing the submission, it had made a provisional decision to sanction an increase of 6 per cent less than that requested.
The average domestic gas bill is €720 a year and an increase of 22 per cent will push bills up by just under €160 annually.
Earlier this month, Bord Gáis Energy announced an electricity price increase of 12 per cent, which will add a further €144 to consumers’ bills.
Bord Gáis Energy is understood to have sought the 28 per cent increase also to offset the growing problem of bad debts and substantially increased costs associated with managing payments.
It now has more than 114,000 customers in arrears of two months or more, an increase of 300 per cent on 2010, and made provisions for bad debts of about €26 million in its annual report, which was published in April.
However, the regulator has refused to allow the company to factor these higher costs into its price increase submission.
It said the main reason for the requested rise was the higher wholesale cost of gas in the international markets. It pointed out that nearly all of Ireland’s gas was bought externally and said the cost accounted for half the price of gas paid by Irish customers, while the rest was determined by transmission, distribution and administrative costs.
It said a drop in international wholesale gas prices from late 2008 led to significant falls in gas prices for Irish customers by 25 per cent. “Unfortunately, the wholesale gas price has risen dramatically again, more than doubling in price over the last two years.”
Major price rises have recently been announced in neighbouring jurisdictions for the same reason. UK suppliers have increased their gas prices by about 25 per cent over the last year. The regulator said it accepted that gas price rises would add to the pressure faced by many customers but said “wholesale gas costs are not something that Ireland controls”.
Commenting on the proposed price increase, the National Consumer Agency chief executive Ann Fitzgerald said the proposed increases would have a significant effect on consumers’ monthly bills.
“We need to ask whether the consumer should have to bear the entire burden or whether it can be spread. The NCA will be making a submission as part of the public consultation and asking the Commission for Energy Regulation to look at ways to spread the burden of increases for the consumer to avoid forcing people into arrears.”
She said consumers should also not take price increases lying down. “There is now competition in the gas market for domestic customers, so consumers should consider switching if they find better value with another provider.”
Three other gas providers, ESB Ireland, Airtricity and Flogas, have not yet announced any intention to increase prices.
