ESB to increase its electricity charges

HOUSEHOLDERS face an increase of around €15 in their monthly electricity bills later this year.

The ESB says it needs the revenue to fund a massive programme to upgrade the country's electricity transmission network.

The decision to increase the price is out of their hands but is expected to be taken by the independent Commissioner for Electricity Regulation in September.

Electricity costs in Ireland will still be among the cheapest in the European Union despite the increase.

A new survey by Brussels-based Eurostat shows electricity for home users is the third cheapest in the EU.

However, the price hike will be met with fierce opposition from businesses who, in contrast, are saddled with some of the most expensive electricity bills in the EU.

The cost of electricity to businesses is the second most expensive in the union, with only companies in Belgium paying more.

Intel, one the biggest users of electricity in the State, yesterday expressed opposition to the planned increase and said the costs were moving in the wrong direction.

The price rise will be higher for domestic customers than businesses. As the ESB aims to re-balance previous cross-subsidisation of its domestic market through high industrial charges.

A spokesperson for the ESB yesterday confirmed that a review of the price of its charges was being carried out by the Commissioner but said it had yet to be finalised.

The company said they had consistently offered electricity to customers that was around 10% below the average European price.

There was no major change in price between 1986 and 2001, which means that real cost, when adjusted to take inflation into account, had fallen by 50%, the spokesman added.

Under legislation passed two years ago, the Commissioner for Electricity Regulation, Tom Reeves, carries sole power to sanction a price rise. Unlike VHI charges, a Government Minister does not have the power to overturn any price rise approved by the Commissioner.

If the planned price rise goes ahead, as reported in the Sunday Business Post, it means the Commissioner will have increased electricity prices by some 24% in the space of a year.

As well as being a politically unpopular decision, the price rise would also add to the Government's financial headaches.

With inflation remaining stubbornly high, the combination of increased ESB charges and the 18% price rise in VHI premiums will not ease the pressure on the country's finances.

Inflation in Ireland is running at twice the EU average, although figures released last week showed the rate of increase was beginning to slow.