Electricity prices to rise by nearly 20%

Electricity prices are to go up by almost 20% from next January, it was announced today.

Domestic users will see costs rise by 19.4%, small and medium businesses by 19.6%, and large industry by 21%.

The Commission for Energy Regulation (CER) said the average electricity bill for a home for two months will increase from €126 euro to €150 a month.

Michael Kilcoyne of the Consumers Association is appalled by the increase and says now is the time for the Government do something about the situation.

“There is no real competition in the market place and the Government hasn't encouraged competition,” he said today.

“I think the time is now opportune for the Government to subsidise competition in the electricity market. Electricity is the lifeblood of an economy and it's going to mean many consumers are going to be cold this winter, particularly the elderly.”

David Manning of IBEC said the price hikes will hit his members hard.

“There's 220,000 people employed in the manufacturing sector here in Ireland,” he said.

“That sector has seen an awful lot of pressure in the last few years; input costs are continually going up, there's a lot of competitive pressures coming from Europe and beyond.”

“To give an example, a company with a 20% increase could see their bill go up by €500,000. That's €500,000 off their bottom line in an already pressurised industry.”

The CER revealed the effect rising fuel costs have had on electricity prices since 2004.

Bills went up by 4% in 2005, 3.1% in 2006 and the 19.4% increase proposed will result in a cumulative increase of 28% over the three years, the body said.

In a statement, the regulator Tom Reeves said: “The main driver of the price increase is increased fuel costs.

“When tariffs were set this time last year it was assumed that natural gas would cost 41p/therm; the forward price of gas assumed for 2007 is 58p/therm, a 40% increase. The equivalent increase in oil prices is approximately 36%.”

In a bid to ease the burden on the country’s biggest electricity users, the regulator has lifted tariff regulation from the industrial supply market because of the competition.

It will, according to the CER, allow the top 800 industrial users to shop around for the best price.