Power outages for energy intensive businesses would lead to temporary or permanent closures, according to ISME.
"Tariffs would be the lesser of two evils," Neil McDonnell, CEO of ISME said.
The Commission for Regulation of Utilities has told high energy businesses that it will introduce new tariffs designed to reduce demand.
The energy regulator is also looking at imposing new tariffs on households through their energy providers at peak times, between 5 and 7pm.
These measures are being proposed in a bid to avoid blackouts this winter.
ISME said businesses in certain energy intensive areas such as groceries, poultry production and manufacturing have seen their electricity bills increase by 100% or more.
"Gas is going to become more significant as we move into October and November," Mr Donnell said.
He gave the example of a poultry farm: "You have to keep the hens warm, you simply can't turn off the energy for a short period of time. It is going to cause extreme difficulty and very possibly permanent closure if there are just temporary outages."
Similarly, fridges and freezers in food retail operate 27/7 365 days a year. Grocery stores incur very significant refridgeration costs in electricity.
"They are not going to be able to absorb the sorts of increases that are being talked about now," Mr McDonnell said. "They also can't go through void periods where they are looking at two or three hours of a power outage. That would be extremely difficult for them."
He said tariffs would be the lesser of two evils, adding that it is ISME's view should be used to fund direct supports, such as the CRSS for small businesses to assist them get through the winter of price increases.
Greece is giving small businesses a €30 per MW subsidy for the winter. Germany has reduced its VAT on gas by 63%. "We are going to need bold measures like that to support small businesses through this energy crisis."
The lead story on yesterday's Business Post said that members of the government are understood to be "astounded" at the unfolding energy crisis. The ISME CEO is surprised by that. "I don't understand how anyone who has been tracking this issue over a period of time could be 'astounded'.
"There appears to be a complete denial on the need to invest in our energy and distribution capacity. We're certainly not surprised that we've reached this impasse now," he said.
