Energy prices are set to drop from next month with electricity prices going down 10% and gas prices being reduced by 12%.

The drop in gas prices will also extend to small and medium enterprises.

The reduction in electricity prices will apply to all customers using any of the companies.

Minister for Communications, Energy & Natural Resources Eamon Ryan made the announcement this afternoon.

He said this was welcome news for all energy customers at a time when people need it.

Labour party TD Liz McManus described Minister Ryan's announcement as too little and too late.

Deputy McManus said the system of electricity regulation needed to be over-hauled and she was not convinced that Minister Ryan was capable of delivering it.

Fine Gael's Simon Coveney said while the price reduction was welcome, prices could actually have dropped by up to 20% if real competition existed.

The deputy said the 'shackles' needed to be taken off the ESB so that prices could be driven far lower.

Bord Gáis has confirmed that its offer of undercutting ESB prices by as much as 14% remains in place, despite today's announcement.

It means that customers who switch to Bord Gáis could see their prices drop by as much as 24%.

Airtricity has also confirmed that its prices will remain 13% lower than the ESB, despite today's announcment of a 10% reduction.

A company spokesman said the offer was guaranteed until January of next year.

This means that ESB customers who switch to Airtricity will see a 23% reduction in their bills from next month.

Consumers Association Chief Executive Dermott Jewell said that ‘we hope that this action from the Minister is the beginning of what will be, and needs to be, a concerted and ongoing initiative to bring down unrealistic, unaffordable and uncompetitive prices in Ireland’.