Poor to pay as ESB hike hits next month

THE latest hike in electricity prices will hit the most vulnerable and small businesses very hard, it has been claimed.

The 17.5% increase was announced by the Commission for Energy Regulation (CER) and will come into effect from the start of August. The regulator also warned of another possible increase in January.

Householders are also facing a hike in gas prices, with Bord Gáis confirming it has sought an increase in price from the regulator. A spokesperson for the gas provider refused to comment on the exact amount of the increase.

The National Consumer Agency has questioned the decision by the CER to approve the interim price increase from August, given the ESB’s announcement of a €300m contribution to help offset electricity prices for consumers will not come into effect until January 2009.

Stuart Kenny of St Vincent de Paul said the group was “shocked” at the price hike and that people living on lower incomes and social welfare would be hit hardest.

Mr Kenny said the charity had spent €3.5 million helping people who were struggling to pay energy bills and that with the latest price increase this figure would jump significantly.

“People who live on lower incomes and are assisted on social welfare are hit hardest. They spend disproportionately more on fuel and food. They simply don’t have the elasticity to cope with such an increase,” he said.

Mr Kenny said the number of calls received by St Vincent de Paul in the past year had increased by about 50% in the Dublin region and, with a further decision due from the regulator in November, people would find it increasingly difficult to make ends meet.

ISME, which represents the interests of small business, also reacted furiously to the price increase calling it “a disgrace” and a further body blow to the business community, which is already struggling to cope with ever-increasing business costs.

Chief executive of ISME, Mark Fielding, said the increase represented a doubling in electricity costs since the CER was set up in 1999.

Mr Fielding said the blame for this situation lay “squarely with the energy regulator”, which he said has overseen a situation where Irish electricity costs have gone from being below the EU average to among the highest.

“The current price hike demonstrates quite clearly the influence that the ESB have over the CER, being awarded the exact increase requested without any account taken of incentive regulation and the requirement to increase efficiencies and reduce operating costs,” he said.

The CER said the increase was due to the sharp rise in fuel prices over the past year, the single largest contributor to electricity prices.

It also warned consumers to be prepared for more price increases next year.

“Against this background, it is regrettable but inevitable that consumer electricity prices will rise significantly in Ireland for 2008/’09,” the group said.