Gas prices are set to rise by over 25% after the Commission for Energy Regulation approved a substantial price increase. The increase had been signalled by the regulator in July.
Bord Gais Eireann had sought an increase of 34%. The Commission for Energy Regulation said most of the increase arises from the cost of procuring gas from the international markets over which Bord Gais Eireann has little control.
Electricity prices are set to rise by an average of 4.1% from January 1 2006. The greatest impact will be for large industrial users who face a hike of 8%.
Small and medium enterprises will pay 5.2% more, while for domestic users the price hike is 3.1%.
Asked about the potential impact of these price rises on inflation, Tom Reeves said that the inflationary impact would be quite small. He said that each of the price rises would add less than 0.05 percentage points to inflation.
It is estimated that this latest price rise will increase the average two-monthly domestic electricity bill from €120 to €124. The increase in gas prices will take effect in three weeks time on October 1.
Business groups reacted angrily to the decisions. Small Firms Association director Pat Delaney said the move would increase inflation, add to raw material costs and severely hit the manufacturing sector.
ISME described the decision as a disgrace and 'another nail in the coffin for many businesses'.
IBEC's Brendan Butler said energy costs were already significantly out of line with competitor countries and further increases would affect Ireland's ability to compete globally and attract foreign direct investment.