Go-ahead for dearer electricity and gas

CONSUMERS will be hit with a double price hike next month after the energy regulator gave the go-ahead for an increase in the cost of gas and electricity.

ESB prices will rise by 9% from next month and by a further 3.5% next January, meaning households will have to fork out an extra €78 a year.

This is the second price rise this year for the State-owned company, which made €250 million in profits in 2003. It has already increased prices by 18% last year and 9% on 2002.

The Commission for Energy Regulation (CER) also agreed to a demand by Bord Gáis to raise its prices by 11% for domestic users and by 16% for businesses.

The regulator said the increase will add €73 to the average annual bill of €650. It is the second price rise Bord Gáis has been granted in the space of 18 months. Regulator Tom Reeves was under siege last night to reject the increases following a 40% rise in the past three years at the ESB.

Labour Party natural resources spokesman Tommy Broughan said the latest increase will add to the already high cost of living.

"I am appealing to the CER not to sanction any further increase in the price of gas, having hit customers with such a drastic ESB hike. Many businesses - large and small, as well as domestic consumers, have been pummelled by huge price hikes in the last two years and cannot afford any more."

Business groups last night called for Mr Reeves to be sacked and his office disbanded.

Irish Small and Medium Enterprises Association chief executive Mark Fielding said the regulator had failed to introduce real competition and that the added costs will push many small companies out of business.

"He hasn't achieved effective competition and certainly not achieved price reductions. In fact, it is the complete and utter opposite. You don't need a regulator. The first thing that should be done is get rid of the CER," said Mr Fielding.

In a statement, the regulator said prices had to rise as the ESB was facing a surge in its own costs, mainly from spiralling oil prices.

The ESB said last night it absorbed a €200 million price rise in its fuel costs last year and the situation could not continue with an increase. It said the cost of oil has risen by 59% in the past year, while gas prices have soared 49%. As most ESB stations are oil and gas fuelled, the price had to rise.

The regulator added that if oil prices decline over the next couple of years, it expects the ESB to lower its tariffs.

Pat Delaney of the Small Firms Association said the increases will damage the economy and add 0.25% to inflation.

Price rises - What you will pay:

ESB: 9% rise now and 3.5% in January adding €13 to bi-monthly bill.

Gas: 11% rise adding €65 to average annual bill of €588.