The price of electricity is to rise sharply, the second increase in less than a year with domestic users to be hit hardest.
The ESB had requested increases in electricity tariffs of almost 15 per cent. However, following a review by the Energy Regulator, the increases announced today average just under 10 per cent. Domestic customers will be worst hit by the price hikes in January when the new pricing comes into effect.
Householders won't feel the pinch until their March bills.
Tom Reeves of the Commission for Energy Regulation explains the reasons for the price increases saying that domestic consumers were paying up to 25 per cent below the cost of providing them with electricity. He says that prices must come in line with "a cost effective mode" which means that everybody pays the cost that they actually impose on the electricity system.
There have been two price hikes over the past year amounting to 22.1 per cent. In October 2001, domestic users faced a price rise of almost nine per cent. From January 2003, there will be a further 13.2 per cent.
Industrial users are also paying more with a 20.2 per cent rise in just over a year. Last year, costs rose by 14 per cent. In January 2003, costs will rise by a further 6.2 per cent.
The liberalisation of the electricity market two years ago should in theory have led to more competition and better prices. Instead, customers have seen costs soar. This is largely due to the fact that costs had been subsidised. However, it is anticipated that large price rises will be a thing of the past.
An RTÉ News report broadcast on 6 September 2002. The reporter is Aoife Kavanagh.
