IBEC has criticised the 3.5% increase in electricity prices saying that Irish prices are now well out of line with the EU average, widening the gap of cost competitiveness between industrial sites located in Ireland and competitor sites overseas.
The increase was announced yesterday by the Commission for Energy Regulation (CER) and will take effect from 1 January 2005. It comes just one week after a 9% increase, announced in September, which took effect this month.
IBEC said the increase will ensure that electricity prices are significantly above the rate of inflation for the fourth year in a row and the price cumulative rate of increase is now over 40% for business customers and 25% higher than the EU average.
The business and employers organisation are concerned that the model of market liberalisationin in the Irish energy market is not working and said that it is imperative that the CER manage energy tariffs in a way that promotes competitiveness and private sector job creation.
The director of the Small Firms Association, Pat Delaney, also slammed the increases saying they will further undermine the ability of Irish manufacturing and production industries to remain in Ireland.
He pointed out that employment in manufacturing and other production industries, which are most exposed to international competition, has fallen from 330,000 three years ago to 300,000.
He warned that there may still be a lagged response if companies in these sectors of the economy continue to see costs spiral with the latest increase adding 0.24% to inflation and putting increased pressure on raw material costs.
